Document:

Exhibit 4.1

 

 

K. HOVNANIAN
ENTERPRISES, INC.,

as Issuer

HOVNANIAN ENTERPRISES, INC.

and

the other Guarantors party hereto

and

WACHOVIA BANK, NATIONAL ASSOCIATION,

as Senior Trustee

 

 

 

Indenture

Dated as of August 8, 2005

 

 

 

6.25% Senior
Notes Due 2016

 

 

 

CROSS-REFERENCE TABLE

 

	
  TIA Sections

  	
   

  	
  Indenture Sections

  
	
   

  	
   

  	
   

  
	
  310

  	
  (a)

  	
   

  	
  7.10

  
	
   

  	
  (b)

  	
   

  	
  7.08

  
	
   

  	
  (c)

  	
   

  	
  Inapplicable

  
	
  311

  	
   

  	
   

  	
  Inapplicable

  
	
  312

  	
   

  	
   

  	
  11.02

  
	
  313

  	
   

  	
   

  	
  7.06

  
	
  314

  	
  (a)

  	
   

  	
  4.15, 4.16

  
	
   

  	
  (b)

  	
   

  	
  Inapplicable

  
	
   

  	
  (c)

  	
   

  	
  11.04

  
	
   

  	
  (d)

  	
   

  	
  Inapplicable

  
	
   

  	
  (e)

  	
   

  	
  11.05

  
	
   

  	
  (f)

  	
   

  	
  Inapplicable

  
	
  315

  	
  (a)

  	
   

  	
  7.01, 7.02

  
	
   

  	
  (b)

  	
   

  	
  7.02, 7.05

  
	
   

  	
  (c)

  	
   

  	
  7.01

  
	
   

  	
  (d)

  	
   

  	
  7.02

  
	
   

  	
  (e)

  	
   

  	
  5.09

  
	
  316

  	
  (a)

  	
   

  	
  2.06, 5.01, 5.03, 5.04

  
	
   

  	
  (b)

  	
   

  	
  5.06

  
	
   

  	
  (c)

  	
   

  	
  11.02

  
	
  317

  	
  (a)(1)

  	
   

  	
  5.07

  
	
   

  	
  (a)(2)

  	
   

  	
  5.07

  
	
   

  	
  (b)

  	
   

  	
  2.03

  
	
  318

  	
   

  	
   

  	
  11.01

  

 

 

TABLE OF
CONTENTS

 

	
  RECITALS

  	
   

  
	
   

  	
   

  
	
  ARTICLE 1

  	
   

  
	
  DEFINITIONS AND INCORPORATION BY REFERENCE

  	
   

  
	
   

  	
   

  
	
  Section 1.01.

  	
  Definitions

  	
   

  
	
  Section 1.02.

  	
  Rules of Construction

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE 2

  	
   

  
	
  THE NOTES

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 2.01.

  	
  Form, Dating and Denominations; Legends

  	
   

  
	
  Section 2.02.

  	
  Execution and Authentication; Exchange
  Notes; Additional Notes

  	
   

  
	
  Section 2.03.

  	
  Registrar, Paying Agent and Authenticating
  Agent; Paying Agent to Hold Money in Trust

  	
   

  
	
  Section 2.04.

  	
  Replacement Notes

  	
   

  
	
  Section 2.05.

  	
  Outstanding Notes

  	
   

  
	
  Section 2.06.

  	
  Temporary Notes

  	
   

  
	
  Section 2.07.

  	
  Cancellation

  	
   

  
	
  Section 2.08.

  	
  CUSIP and ISIN Numbers

  	
   

  
	
  Section 2.09.

  	
  Registration, Transfer and Exchange

  	
   

  
	
  Section 2.10.

  	
  Restrictions on Transfer and Exchange

  	
   

  
	
  Section 2.11.

  	
  Regulation S Temporary Global Notes

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE 3

  	
   

  
	
  REDEMPTION; OFFER TO PURCHASE

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 3.01.

  	
  Optional Redemption

  	
   

  
	
  Section 3.02.

  	
  Sinking Fund; Mandatory Redemption

  	
   

  
	
  Section 3.03.

  	
  Method And Effect of Redemption

  	
   

  
	
  Section 3.04.

  	
  Offer to Purchase

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE 4

  	
   

  
	
  COVENANTS

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 4.01.

  	
  Payment of Notes

  	
   

  
	
  Section 4.02.

  	
  Maintenance of Office or Agency

  	
   

  
	
  Section 4.03.

  	
  Existence

  	
   

  
	
  Section 4.04.

  	
  Payment of Taxes and Other Claims

  	
   

  

 

i

 

	
  Section 4.05.

  	
  Maintenance of Properties and Insurance

  	
   

  
	
  Section 4.06.

  	
  Limitations on Indebtedness

  	
   

  
	
  Section 4.07.

  	
  Limitations on Restricted Payments

  	
   

  
	
  Section 4.08.

  	
  Limitations on Liens

  	
   

  
	
  Section 4.09.

  	
  Limitations on Restrictions Affecting
  Restricted Subsidiaries

  	
   

  
	
  Section 4.10.

  	
  Limitations on Dispositions of Assets

  	
   

  
	
  Section 4.11.

  	
  Guarantees By Restricted Subsidiaries

  	
   

  
	
  Section 4.12.

  	
  Repurchase of Notes upon a Change of
  Control

  	
   

  
	
  Section 4.13.

  	
  Limitations on Transactions with Affiliates

  	
   

  
	
  Section 4.14.

  	
  Limitations on Mergers, Consolidations and
  Sales of Assets

  	
   

  
	
  Section 4.15.

  	
  Reports to Holders of Notes

  	
   

  
	
  Section 4.16.

  	
  Reports to Senior Trustee

  	
   

  
	
  Section 4.17.

  	
  Notice of Other Defaults

  	
   

  
	
  Section 4.18.

  	
  Limitation of Applicability of Certain
  Covenants if Notes Rated Investment Grade

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE 5

  	
   

  
	
  REMEDIES

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 5.01.

  	
  Events of Default

  	
   

  
	
  Section 5.02.

  	
  Other Remedies

  	
   

  
	
  Section 5.03.

  	
  Waiver of Defaults by Majority of Holders

  	
   

  
	
  Section 5.04.

  	
  Direction of Proceedings

  	
   

  
	
  Section 5.05.

  	
  Application of Moneys Collected by Senior
  Trustee

  	
   

  
	
  Section 5.06.

  	
  Proceedings by Holders

  	
   

  
	
  Section 5.07.

  	
  Proceedings by Senior Trustee

  	
   

  
	
  Section 5.08.

  	
  Remedies Cumulative and Continuing

  	
   

  
	
  Section 5.09.

  	
  Undertaking to Pay Costs

  	
   

  
	
  Section 5.10.

  	
  Notice of Defaults

  	
   

  
	
  Section 5.11.

  	
  Waiver of Stay, Extension or Usury Laws

  	
   

  
	
  Section 5.12.

  	
  Senior Trustee May File Proof of Claim

  	
   

  
	
  Section 5.13.

  	
  Payment of Notes on Default; Suit Therefor

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE 6

  	
   

  
	
  GUARANTEES; RELEASE OF GUARANTOR

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 6.01.

  	
  Guarantee

  	
   

  
	
  Section 6.02.

  	
  Obligations of each Guarantor Unconditional

  	
   

  
	
  Section 6.03.

  	
  Release of a Guarantor

  	
   

  
	
  Section 6.04.

  	
  Execution and Delivery of Guarantee

  	
   

  
	
  Section 6.05.

  	
  Limitation on Guarantor Liability

  	
   

  
	
  Section 6.06.

  	
  Article 6 Not to Prevent Events of Default

  	
   

  
	
  Section 6.07.

  	
  Waiver by the Guarantors

  	
   

  
	
  Section 6.08.

  	
  Subrogation and Contribution

  	
   

  
	
  Section 6.09.

  	
  Stay of Acceleration

  	
   

  

 

ii

 

	
  Section 6.10.

  	
  Guarantors as “obligors” for Provisions
  Included in the Indenture Pursuant to the Trust Indenture Act

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE 7

  	
   

  
	
  THE SENIOR TRUSTEE

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 7.01.

  	
  General

  	
   

  
	
  Section 7.02.

  	
  Certain Rights of the Senior Trustee

  	
   

  
	
  Section 7.03.

  	
  Individual Rights of the Senior Trustee

  	
   

  
	
  Section 7.04.

  	
  Senior Trustee’s Disclaimer

  	
   

  
	
  Section 7.05.

  	
  Reserved

  	
   

  
	
  Section 7.06.

  	
  Reports by Senior Trustee to Holders

  	
   

  
	
  Section 7.07.

  	
  Compensation and Indemnity

  	
   

  
	
  Section 7.08.

  	
  Replacement of Senior Trustee

  	
   

  
	
  Section 7.09.

  	
  Successor Senior Trustee by Merger

  	
   

  
	
  Section 7.10.

  	
  Eligibility

  	
   

  
	
  Section 7.11.

  	
  Money Held in Trust

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE 8

  	
   

  
	
  DEFEASANCE AND DISCHARGE

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 8.01.

  	
  Legal Defeasance And Discharge

  	
   

  
	
  Section 8.02.

  	
  Covenant Defeasance

  	
   

  
	
  Section 8.03.

  	
  Conditions To Legal Or Covenant Defeasance

  	
   

  
	
  Section 8.04.

  	
  Deposited Money And Government Securities
  To Be Held In Trust; Other Miscellaneous Provisions

  	
   

  
	
  Section 8.05.

  	
  Repayment To Issuer

  	
   

  
	
  Section 8.06.

  	
  Reinstatement

  	
   

  
	
  Section 8.07.

  	
  Survival

  	
   

  
	
  Section 8.08.

  	
  Satisfaction and Discharge of Indenture

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE 9

  	
   

  
	
  AMENDMENTS, SUPPLEMENTS AND WAIVERS

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 9.01.

  	
  Amendments Without Consent of Holders

  	
   

  
	
  Section 9.02.

  	
  Amendments With Consent of Holders

  	
   

  
	
  Section 9.03.

  	
  Effect of Consent

  	
   

  
	
  Section 9.04.

  	
  Senior Trustee’s Rights and Obligations

  	
   

  
	
  Section 9.05.

  	
  Conformity with Trust Indenture Act

  	
   

  
	
  Section 9.06.

  	
  Payments for Consents

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE 10

  	
   

  
	
  RELEASE OF ISSUER AND GUARANTORS

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 10.01.

  	
  Release of Issuer

  	
   

  

 

iii

 

	
  ARTICLE 11

  	
   

  
	
  MISCELLANEOUS

  	
   

  
	
   

  	
   

  	
   

  
	
  Section 11.01.

  	
  Trust Indenture Act of 1939

  	
   

  
	
  Section 11.02.

  	
  Holder Communications; Holder Actions

  	
   

  
	
  Section 11.03.

  	
  Notices

  	
   

  
	
  Section 11.04.

  	
  Certificate and Opinion as to Conditions
  Precedent

  	
   

  
	
  Section 11.05.

  	
  Statements Required in Certificate or
  Opinion

  	
   

  
	
  Section 11.06.

  	
  Payment Date Other Than a Business Day

  	
   

  
	
  Section 11.07.

  	
  Governing Law

  	
   

  
	
  Section 11.08.

  	
  No Adverse Interpretation of Other
  Agreements

  	
   

  
	
  Section 11.09.

  	
  Successors

  	
   

  
	
  Section 11.10.

  	
  Duplicate Originals

  	
   

  
	
  Section 11.11.

  	
  Separability

  	
   

  
	
  Section 11.12.

  	
  Table of Contents and Headings

  	
   

  
	
  Section 11.13.

  	
  No Liability of Directors, Officers,
  Employees, Partners, Incorporators and Stockholders

  	
   

  
	
  Section 11.14.

  	
  Provisions of Indenture for the Sole
  Benefit of Parties and Holders of Notes

  	
   

  

 

iv

 

EXHIBITS

 

	
  EXHIBIT A

  	
   

  	
  Form of
  Note

  
	
  EXHIBIT B

  	
   

  	
  Form of
  Supplemental Indenture

  
	
  EXHIBIT C

  	
   

  	
  Restricted
  Legend

  
	
  EXHIBIT D

  	
   

  	
  DTC
  Legend

  
	
  EXHIBIT E

  	
   

  	
  Regulation
  S Certificate

  
	
  EXHIBIT F

  	
   

  	
  Rule 144A
  Certificate

  
	
  EXHIBIT G

  	
   

  	
  Institutional
  Accredited Investor Certificate

  
	
  EXHIBIT H

  	
   

  	
  Certificate
  of Beneficial Ownership

  
	
  EXHIBIT I

  	
   

  	
  Regulation
  S Temporary Global Note Legend

  

 

v

 

INDENTURE,
dated as of August 8, 2005, among K. HOVNANIAN ENTERPRISES, INC., a
California corporation (the “Issuer”),
HOVNANIAN ENTERPRISES, INC., a Delaware corporation (the “Company”), each of the other Guarantors (as
defined hereafter) and WACHOVIA BANK, NATIONAL ASSOCIATION, as Senior Trustee
(the “Senior Trustee”).

 

RECITALS

 

The Issuer has
duly authorized the execution and delivery of the Indenture to provide for the
issuance of up to $300,000,000 aggregate principal amount of the Issuer’s 6.25%
Senior Notes Due 2016, and, if and when issued, any Initial Additional Notes
(together with any Exchange Notes issued therefor as provided herein, the “Notes”). 
All things necessary to make the Indenture a valid agreement of the
Issuer, in accordance with its terms, have been done, and the Issuer has done
all things necessary to make the Notes (in the case of any Additional Notes,
when duly authorized), when duly issued and executed by the Issuer and
authenticated and delivered by the Senior Trustee, the valid obligations of the
Issuer as hereinafter provided.

 

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

 

This Indenture
is subject to, and will be governed by, the provisions of the Trust Indenture
Act that are required to be a part of, and govern indentures qualified under,
the Trust Indenture Act.

 

THIS INDENTURE WITNESSETH

 

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

 

ARTICLE 1

DEFINITIONS AND
INCORPORATION BY REFERENCE

 

Section 1.01.  Definitions.

 

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

 

1

 

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

 

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

 

“Additional Notes” means any notes of the
Issuer issued under the Indenture in addition to the Original Notes, including
any Exchange Notes issued in exchange for such Additional Notes, having the
same terms in all respects as the Original Notes except that interest will
accrue on the Additional Notes from their date of issuance.

 

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

 

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

 

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

 

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

 

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

 

“Asset Acquisition” means (a) an
Investment by the Company, the Issuer or any Restricted Subsidiary in any other
Person if, as a result of such Investment,

 

2

 

such Person shall become a
Restricted Subsidiary or shall be consolidated or merged with or into the
Company, the Issuer or any Restricted Subsidiary or (b) the acquisition by
the Company, the Issuer or any Restricted Subsidiary of the assets of any
Person, which constitute all or substantially all of the assets or of an
operating unit or line of business of such Person or which is otherwise outside
the ordinary course of business.

 

“Asset Disposition” means any sale,
transfer, conveyance, lease or other disposition (including, without
limitation, by way of merger, consolidation or sale and leaseback or sale of
shares of Capital Stock in any Subsidiary) (each, a “transaction”) by the Company, the Issuer or any Restricted
Subsidiary to any Person of any Property having a Fair Market Value in any
transaction or series of related transactions of at least $5 million. The term “Asset Disposition” shall not include:

 

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

 

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

 

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

 

(d)                                 any
exchange or swap of assets of the Company, the Issuer or any Restricted
Subsidiary for assets that (i) are to be used by the Company, the Issuer
or any Restricted Subsidiary in the ordinary course of its Real Estate Business
and (ii) have a Fair Market Value not less than the Fair Market Value of
the assets exchanged or swapped,

 

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

 

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

 

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

 

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

 

3

 

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

 

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

 

“Board Resolution” means a resolution duly
adopted by the Board of Directors which, as of the date of any certification
thereof, remains in full force and effect.

 

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

 

“Capital Stock” means, with respect to any
Person, any and all shares, interests, participations or other equivalents
(however designated) of or in such Person’s capital stock or other equity
interests, and options, rights or warrants to purchase such capital stock or
other equity interests, whether now outstanding or issued after the Issue Date,
including, without limitation, all Disqualified Stock and Preferred Stock.

 

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

 

“Cash Equivalents” means

 

(a)                                  U.S.
dollars;

 

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

 

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

 

(d)                                 repurchase
obligations with a term of not more than seven days for underlying securities
of the types described in clauses (b) and (c) entered into

 

4

 

with any financial institution
meeting the qualifications specified in clause (c) above;

 

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

 

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

 

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

 

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

 

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

 

“Change of Control” means

 

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

 

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

 

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

 

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

 

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

 

5

 

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

 

“Commission” means the Securities and
Exchange Commission.

 

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

 

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

 

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

 

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

 

(a)                                  income
taxes,

 

(b)                                 Consolidated
Interest Expense,

 

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

 

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

 

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

 

“Consolidated Fixed Charge Coverage Ratio”
means, with respect to any determination date, the ratio of (x) Consolidated
Cash Flow Available for Fixed Charges for the prior four full fiscal quarters
(the “Four Quarter Period”) for
which financial results have been reported immediately preceding the
determination date (the “Transaction Date”),
to (y) the aggregate Consolidated Interest Incurred for the Four Quarter
Period. For purposes of this definition, “Consolidated
Cash Flow Available for Fixed Charges” and “Consolidated

 

6

 

Interest
Incurred” shall be calculated after giving effect on a
pro forma basis for the period of
such calculation to:

 

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

 

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

 

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

 

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

 

(a)                                  interest
on Indebtedness in respect of which a pro
forma calculation is required that is determined on a fluctuating
basis as of the Transaction Date (including Indebtedness actually incurred on
the Transaction

 

7

 

Date) and which will continue
to be so determined thereafter shall be deemed to have accrued at a fixed rate
per annum equal to the rate of interest on such Indebtedness in effect on the
Transaction Date, and

 

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

 

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

 

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

 

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

 

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

 

(b)                                 except
to the extent includable in Consolidated Net Income pursuant to the foregoing
clause (a), the net income (or loss) of any Person that accrued prior to the
date that (i) such Person becomes a Restricted Subsidiary or is merged
with or into or consolidated with the Company, the Issuer or any of its
Restricted Subsidiaries (except, in the case of an Unrestricted Subsidiary that
is redesignated a Restricted Subsidiary during such period, to the extent of
its retained earnings from the beginning of such period to the date of such
redesignation) or (ii) the assets of such Person are acquired by the
Company or any Restricted Subsidiary,

 

8

 

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

 

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

 

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

 

(f)                                    any
non-recurring expense recorded by the Company, the Issuer or any Restricted
Subsidiary in connection with a merger accounted for as a “pooling-of-interests”
transaction;

 

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

 

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

 

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

 

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

 

9

 

“Corporate Trust Office” means the office of
the Senior Trustee at which the corporate trust business of the Senior Trustee
is principally administered, which at the date of the Indenture is located at
21 South Street, Morristown, NJ 07960.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

“Disqualified Stock” means any Capital Stock
that, by its terms (or by the terms of any security into which it is
convertible or for which it is exchangeable), or upon the happening of any
event, (a) matures or is mandatorily redeemable, pursuant to a sinking
fund obligation or otherwise, or is redeemable at the option of the holder
thereof, in whole or in part, on or prior to the final maturity date of

 

10

 

the Notes or (b) is
convertible into or exchangeable or exercisable for (whether at the option of
the issuer or the holder thereof) (i) debt securities or (ii) any
Capital Stock referred to in (a) above, in each case, at any time prior to
the final maturity date of the Notes; provided,
however, that any Capital Stock
that would not constitute Disqualified Stock but for provisions thereof giving
holders thereof (or the holders of any security into or for which such Capital
Stock is convertible, exchangeable or exercisable) the right to require the
Company to repurchase or redeem such Capital Stock upon the occurrence of a
change in control occurring prior to the final maturity date of the Notes shall
not constitute Disqualified Stock if the change in control provision applicable
to such Capital Stock are no more favorable to such holders than Section 4.12
hereof and such Capital Stock specifically provides that the Company will not
repurchase or redeem any such Capital Stock pursuant to such provisions prior
to the Company’s repurchase of the Notes as are required pursuant to Section 4.12
hereof.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

“expiration date” has the meaning ascribed to it in Section 3.04(b) hereof.

 

11

 

“Extinguished Covenants” has the meaning ascribed to such
term in Section 4.18 hereof.

 

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

 

“GAAP” means generally accepted accounting
principles set forth in the opinions and pronouncements of the Accounting
Principles Board of the American Institute of Certified Public Accountants and
statements and pronouncements of the Financial Accounting Standards Board or in
such other statements by such other entity as may be approved by a significant
segment of the accounting profession of the United States, as in effect on May 4,
1999.

 

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

 

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

 

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

 

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

 

12

 

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

 

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

 

“Indebtedness” of any Person means, without
duplication,

 

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

 

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

 

(c)                                  to
the extent not otherwise included, the obligations of such Person under
Currency Agreements or Interest Protection Agreements to the extent recorded as
liabilities not constituting Interest Incurred, net of amounts recorded as
assets in respect of such agreements, in accordance with GAAP, and

 

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

 

provided, that Indebtedness shall not include
accounts payable, liabilities to trade creditors of such Person or other
accrued expenses arising in the ordinary course of business. The amount of
Indebtedness of any Person at any date shall be (i) the outstanding
balance at such date of all unconditional obligations as described above, net
of any unamortized discount to be accounted for as Interest Expense, in
accordance with GAAP, (ii) the maximum liability of such Person for any
contingent obligations under clause (a) above at such date, net of an
unamortized

 

13

 

discount to be
accounted for as Interest Expense in accordance with GAAP, and (iii) in
the case of clause (d) above, the lesser of (x) the fair market value of
any asset subject to a Lien securing the Indebtedness of others on the date
that the Lien attaches and (y) the amount of the Indebtedness secured.

 

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

 

“Initial Additional Notes” means Additional
Notes of the Issuer issued under the Indenture in an offering not registered
under the Securities Act and any Notes issued in replacement therefor, but not
including any Exchange Notes issued in exchange therefor.

 

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

 

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

 

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

 

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

 

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

 

14

 

and (b) all interest
actually paid by the Company or a Restricted Subsidiary under any guarantee of
Indebtedness (including, without limitation, a guarantee of principal, interest
or any combination thereof) of any Person other than the Company, the Issuer or
any Restricted Subsidiary during such period; provided,
that Interest Expense shall exclude any expense associated with the complete
write-off of financing fees and expenses in connection with the repayment of
any Indebtedness.

 

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

 

“Interest Payment Date” means each January 15
and July 15 of each year, commencing January 15, 2006.

 

“Interest Protection Agreement” of any
Person means any interest rate swap agreement, interest rate collar agreement,
option or futures contract or other similar agreement or arrangement designed
to protect such Person or any of its Subsidiaries against fluctuations in
interest rates with respect to Debt permitted to be incurred under the
Indenture.

 

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

 

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

 

“Issue Date” means August 8, 2005.

 

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

 

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

 

15

 

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

 

“Make-Whole Amount” means, in connection with any optional
redemption of any Note pursuant to Section 3.01 hereof, the excess, if
any, of: (a) the aggregate present value as of the date of such redemption
of each dollar of principal being redeemed and the amount of interest
(exclusive of interest accrued to the redemption date) that would have been
payable in respect of such dollar if such prepayment had not been made, determined
by discounting, on a semiannual basis, such principal and interest at the
Treasury Rate (determined on the Business Day preceding the date of such
redemption) plus 0.50%, from the respective dates on which such principal and
interest would have been payable if such payment had not been made; over (b) the
principal amount of the Note being redeemed.

 

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

 

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

 

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

 

“Net Cash Proceeds” means with respect to an
Asset Disposition, cash payments received (including any cash payments received
by way of deferred payment of principal pursuant to a note or installment
receivable or otherwise (including any cash received upon sale or disposition
of such note or receivable), but only as and when received), excluding any
other consideration received in the form of assumption by the acquiring Person
of Indebtedness or other obligations relating to the Property disposed of in
such Asset Disposition or received in any other non-cash form unless and until
such non-cash consideration is converted into cash therefrom, in each case, net
of all legal, title and recording tax expenses, commissions and other fees and
expenses incurred, and all federal, state and local taxes required to be
accrued as a liability under GAAP as a consequence of such Asset Disposition,
and in each case net of a reasonable reserve for the after-tax cost of any
indemnification or other payments (fixed and contingent) attributable to the
seller’s indemnities or other obligations to the purchaser undertaken by the
Company, the Issuer or any of its Restricted Subsidiaries in connection with
such

 

16

 

Asset Disposition, and net of
all payments made on any Indebtedness which is secured by or relates to such
Property, in accordance with the terms of any Lien or agreement upon or with
respect to such Property or which must by its terms or by applicable law be
repaid out of the proceeds from such Asset Disposition, and net of all
contractually required distributions and payments made to minority interest
holders in Restricted Subsidiaries or joint ventures as a result of such Asset
Disposition.

 

“Non-Recourse Indebtedness” with respect to
any Person means Indebtedness of such Person for which (a) the sole legal
recourse for collection of principal and interest on such Indebtedness is
against the specific property identified in the instruments evidencing or
securing such Indebtedness and such property was acquired with the proceeds of
such Indebtedness or such Indebtedness was incurred within 90 days after the
acquisition of such property and (b) no other assets of such Person may be
realized upon in collection of principal or interest on such Indebtedness.
Indebtedness which is otherwise Non-Recourse Indebtedness will not lose its
character as Non-Recourse Indebtedness because there is recourse to the
borrower, any guarantor or any other Person for (i) environmental
warranties and indemnities, or (ii) indemnities for and liabilities
arising from fraud, misrepresentation, misapplication or non-payment of rents,
profits, insurance and condemnation proceeds and other sums actually received
by the borrower from secured assets to be paid to the lender, waste and
mechanics’ liens.

 

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

 

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

 

“offer” has the meaning ascribed to such term in Section 3.04(a).

 

“Offer to Purchase” has the meaning ascribed
to such term in Section 3.04(a).

 

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

 

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

 

17

 

controller, the secretary or
any assistant secretary of the Issuer or the Company, as the case may be.

 

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

 

“Original Notes” means the Initial Notes and
any Exchange Notes issued in exchange therefor.

 

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

 

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

 

“Permitted Hovnanian Holders” means,
collectively, Kevork S. Hovnanian, Ara K. Hovnanian, the members of their
immediate families, the respective estates, spouses, heirs, ancestors, lineal
descendants, legatees and legal representatives of any of the foregoing and the
trustee of any bona  fide trust of which one or more of the
foregoing are the sole beneficiaries or the grantors thereof, or any entity of
which any of the foregoing, individually or collectively, beneficially own more
than 50% of the Common Equity.

 

“Permitted Indebtedness” means

 

(a)                                  Indebtedness
under Credit Facilities which does not exceed $1.0 billion principal amount
outstanding at any one time;

 

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

 

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

 

(d)                                 Indebtedness
of the Company or the Issuer or any Restricted Subsidiary under any Currency
Agreements or Interest Protection Agreements in a notional amount no greater
than the payments due (at the time the related

 

18

 

Currency Agreement or Interest
Protection Agreement is entered into) with respect to the Indebtedness or
currency being hedged;

 

(e)                                  Purchase
Money Indebtedness;

 

(f)                                    Capitalized
Lease Obligations;

 

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

 

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

 

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

 

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

 

“Permitted Investment” means

 

(a)                                  Cash
Equivalents;

 

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

 

(c)                                  any
receivables, loans or other consideration taken by the Company, the Issuer or
any Restricted Subsidiary in connection with any asset sale otherwise permitted
by the Indenture;

 

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

 

19

 

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

 

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

 

(g)                                 Investments
in joint ventures in a Real Estate Business with unaffiliated third parties in
an aggregate amount at any time outstanding not to exceed 10% of Consolidated
Tangible Assets at such time;

 

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

 

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

 

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

 

“Permitted Liens” means

 

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

 

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

 

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

 

20

 

(d)                                 Liens
incurred or deposits made to secure the performance of tenders, bids, leases,
statutory obligations, surety and appeal bonds, development obligations,
progress payments, government contacts, utility services, developer’s or other
obligations to make on-site or off-site improvements and other obligations of
like nature (exclusive of obligations for the payment of borrowed money but
including the items referred to in the parenthetical in clause (a)(i) of
the definition of “Indebtedness”), in each case incurred in the ordinary course
of business of the Company, the Issuer and the Restricted Subsidiaries,

 

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

 

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

 

(g)                                 zoning
restrictions, licenses, restrictions on the use of real property or minor
irregularities in title thereto, which do not materially impair the use of such
real property in the ordinary course of business of the Company, the Issuer and
the Restricted Subsidiaries,

 

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

 

(i)                                     Liens
securing Indebtedness of the Company, the Issuer or any Restricted Subsidiary
permitted to be incurred under the Indenture; provided, that the aggregate amount of all
consolidated Indebtedness of the Company, the Issuer and the Restricted
Subsidiaries (including, with respect to Capitalized Lease Obligations, the Attributable
Debt in respect thereof) secured by Liens (other than Non-Recourse Indebtedness
and Indebtedness incurred pursuant to clause (i) of the definition of
Permitted Indebtedness) shall not exceed 40% of Consolidated Adjusted Tangible
Assets at any one time outstanding (after giving effect to the incurrence of
such Indebtedness and the use of the proceeds thereof),

 

(j)                                     Liens
securing Non-Recourse Indebtedness of the Company, the Issuer or any Restricted
Subsidiary; provided, that such
Liens apply only to the property financed out of the net proceeds of such
Non-Recourse Indebtedness within 90 days after the incurrence of such
Non-Recourse Indebtedness,

 

(k)                                  Liens
securing Purchase Money Indebtedness; provided,
that such Liens apply only to the property acquired, constructed or improved
with the proceeds of such Purchase Money Indebtedness within 90 days after the
incurrence of such Purchase Money Indebtedness,

 

21

 

(l)                                     Liens
on property or assets of the Company, the Issuer or any Restricted Subsidiary
securing Indebtedness of the Company, the Issuer or any Restricted Subsidiary
owing to the Company, the Issuer or one or more Restricted Subsidiaries,

 

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

 

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

 

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

 

(p)                                 any
right of a lender or lenders to which the Company, the Issuer or a Restricted
Subsidiary may be indebted to offset against, or appropriate and apply to the
payment of such, Indebtedness any and all balances, credits, deposits, accounts
or money of the Company, the Issuer or a Restricted Subsidiary with or held by
such lender or lenders or its Affiliates,

 

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

 

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

 

(s)                                  Liens
securing Refinancing Indebtedness; provided,
that such Liens extend only to the assets securing the Indebtedness being
refinanced,

 

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

 

(u)                                 Liens
on property of a Person existing at the time such Person is merged with or into
or consolidated with the Company or any Subsidiary of the Company or becomes a
Subsidiary of the Company; provided,
that such Liens were in existence prior to the contemplation of such merger or
consolidation or acquisition and do not extend to any assets other than those
of the Person merged

 

22

 

into or consolidated with the
Company or the Subsidiary or acquired by the Company or its Subsidiaries,

 

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

 

(w)                               Liens
existing on the Issue Date and any extensions, renewals or replacements thereof,
and

 

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

 

“Person” means any individual, corporation,
partnership, limited liability company, joint venture, incorporated or
unincorporated association, joint stock company, trust, unincorporated
organization or government or any agency or political subdivision thereof.

 

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

 

“Property” of any Person means all types of
real, personal, tangible, intangible or mixed property owned by such Person,
whether or not included in the most recent consolidated balance sheet of such
Person and its Subsidiaries under GAAP.

 

“purchase amount” has the meaning ascribed to it in Section 3.04(b) hereof.

 

“purchase date” has the meaning ascribed to it in Section 3.04(b) hereof.

 

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

 

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

 

23

 

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

 

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

 

“Record Date” for the interest payable on
any Interest Payment Date means the January 1 or July 1 (whether or
not a Business Day) next preceding such Interest Payment Date.

 

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

 

(a)                                  the
Refinancing Indebtedness is subordinated, if at all, to the Notes or the
Guarantees, as the case may be, to the same extent as the Indebtedness being
refunded, refinanced or extended,

 

(b)                                 the
Refinancing Indebtedness is scheduled to mature either (i) no earlier than
the Indebtedness being refunded, refinanced or extended or (ii) after the
maturity date of the Notes,

 

(c)                                  the
portion, if any, of the Refinancing Indebtedness that is scheduled to mature on
or prior to the maturity date of the Notes has a Weighted Average Life to
Maturity at the time such Refinancing Indebtedness is incurred that is equal to
or greater than the Weighted Average Life to Maturity of the portion of the
Indebtedness being refunded, refinanced or extended that is scheduled to mature
on or prior to the maturity date of the Notes, and

 

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

 

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

 

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

 

“Registration Rights Agreement” means (i) the
Registration Rights Agreement dated the Issue Date among the Company, the
Issuer, the other

 

24

 

Guarantors party thereto and
the Initial Purchasers with respect to the Initial Notes, and (ii) with
respect to any Initial Additional Notes, any registration rights agreements
among the Company, the Issuer, the other Guarantors party thereto and the
initial purchasers party thereto relating to rights given by the Issuer to the
purchasers of Initial Additional Notes to register such Initial Additional
Notes or exchange them for Exchange Notes registered under the Securities Act.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

“Restricted Payment” means any of the
following:

 

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

 

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

 

25

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

“Subsidiary” of any Person means any
corporation or other entity of which a majority of the Capital Stock having
ordinary voting power to elect a majority of the Board of Directors or other
persons performing similar functions is at the time directly or indirectly
owned or controlled by such Person.

 

26

 

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

 

“Treasury Rate” means, in connection with the calculation of
any Make-Whole Amount with respect to any Note, the yield to maturity at the
time of computation of United States Treasury securities with a constant
maturity, as compiled by and published in the most recent Federal Reserve
Statistical Release H.15 (519) that has become publicly available at least two
business days prior to the redemption date (or, if such Statistical Release is
no longer published, any publicly available source or similar market data),
equal to the then remaining maturity of the Note being prepaid.  If no maturity exactly corresponds to such
maturity, yields for the published maturities occurring prior to and after such
maturity most closely corresponding to such maturity shall be calculated
pursuant to the immediately preceding sentence and the Treasury Rate shall be
interpolated or extrapolated from such yields on a straight-line basis,
rounding in each of such relevant periods to the nearest month.

 

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

 

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

 

“Unrestricted Subsidiary” means any
Subsidiary of the Company so designated by a resolution adopted by the Board of
Directors of the Company or a duly authorized committee thereof as provided
below; provided, that (a) the
holders of Indebtedness thereof do not have direct or indirect recourse against
the Company, the Issuer or any Restricted Subsidiary, and neither the Company,
the Issuer nor any Restricted Subsidiary otherwise has liability for, any
payment obligations in respect of such Indebtedness (including any undertaking,
agreement or instrument evidencing such Indebtedness), except, in each case, to
the extent that the amount thereof constitutes a Restricted Payment permitted
by the Indenture, in the case of Non-Recourse Indebtedness, to the extent such
recourse or liability is for the matters discussed in the last sentence of the
definition of “Non-Recourse Indebtedness,” or to the extent such Indebtedness
is a guarantee by such Subsidiary of Indebtedness of the Company, the Issuer or
a Restricted Subsidiary and (b) no holder of any Indebtedness of such
Subsidiary shall have a right to declare a default on such Indebtedness or
cause the payment thereof to be accelerated or payable prior to its stated
maturity as a result of a default on any Indebtedness of the Company, the
Issuer or any Restricted Subsidiary. As of the Issue Date, the Unrestricted
Subsidiaries will be the following:

 

12th* Street Residential, Ltd., Brightbeach Development, Ltd.,
Brightchase, Ltd., Brighton Homes at Walden Management, L.L.C., Brighton

 

27

 

Homes at Walden, Ltd.,
Cambridge Mortgage, L.L.C., Cobblestone Square, L.L.C., Eastern Title Agency, Inc.,
Founders Title Agency of Maryland, L.L.C., Founders Title Agency, Inc.,
Gosling Road Development Co., Inc., Governor’s Abstract Co., Inc.,
Heritage Pines, L.L.C., Hexter Fair Land Title Company I, Inc., Homebuyer’s
Mortgage, Inc., Hovnanian Financial Services I, Inc., Hovnanian
Financial Services II, Inc., Hovnanian Financial Services IV, Inc.,
Hovstone Holdings, L.L.C., Hudson Pointe Joint Development, L.L.C., Hunter Mill
Village, L.L.C., Inglewood North, L.L.C., Jaeger Road 530, K. Hovnanian
American Mortgage, L.L.C., K. Hovnanian at Hudson Pointe, L.L.C., K. Hovnanian
at Lake Rancho Viejo, L.L.C., K. Hovnanian at Manalapan II, L.L.C., K.
Hovnanian at Philadelphia I, L.L.C., K. Hovnanian at Port Imperial Urban
Renewal II, L.L.C., K. Hovnanian at Port Imperial Urban Renewal III, L.L.C., K.
Hovnanian at Port Imperial Urban Renewal IV, L.L.C., K. Hovnanian at Port
Imperial Urban Renewal V, L.L.C., K. Hovnanian at Port Imperial Urban Renewal
VI, L.L.C., K. Hovnanian at Port Imperial Urban Renewal VII, L.L.C., K.
Hovnanian at Port Imperial Urban Renewal VIII, L.L.C., K. Hovnanian
Chesterfield Investment, L.L.C., K. Hovnanian Cooperative, Inc., K.
Hovnanian Hudson Pointe Investments, L.L.C., K. Hovnanian Investment Properties, Inc.,
K. Hovnanian Investments II, L.L.C., K. Hovnanian Mortgage, Inc., K.
Hovnanian Poland, sp .z.o.o., K. Hovnanian Properties of Red Bank, Inc.,
K. Hovnanian T&C Homes at Florida, L.L.C., K. Hovnanian T&C Homes at
Illinois, L.L.C., K. Hovnanian T&C Homes at Minnesota, L.L.C., K. Hovnanian
Title Reinsurance, Inc., K. Hovnanian Venture I, L.L.C., K. Hovnanian’s
Four Seasons at Beaumont, L.L.C., Kings Crossing at Montgomery, L.L.C., Laurel
Highlands, LLC, M&M at Monroe Woods, L.L.C., McKinley Court, L.L.C.,
MM-Beachfront North I, L.L.C., MM-Beachfront North II, L.L.C., Mshov Holding
Company, L.L.C., New Homebuyers Title Co. (Virginia) L.L.C., New Homebuyers
Title Company, L.L.C., New Homebuyers Title Company, L.L.C. (West Virginia),
North Manatee, L.L.C., NRD, L.L.C., Old City Development, Inc, Old City Joint
Development, L.L.C., Park Title Company, LLC, Parkway Development Company, PI
Investments I, L.L.C., PI Investments II, L.L.C., Pinnacle Mortgage Group, Inc.,
Preston Parker, RR Houston Developers, LLC, RR Houston Development, L.P., RR
Houston Investment, L.P., RR Houston Investors, LLC, Thompson Ranch Joint
Development, L.L.C., Title Group II, L.L.C., Town Homes at Montgomery, L.L.C.,
WHI-Republic, LLC and Wright Farm, LLC.

 

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

 

28

 

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

 

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

 

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

 

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

 

29

 

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

 

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

 

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

 

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

 

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

 

ARTICLE 2

THE NOTES

 

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

 

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

 

(ii)          Each Global Note,
whether or not an Original Note or Additional Note, will bear the DTC Legend.

 

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

 

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

 

30

 

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

 

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

 

(c)                                                          (i) If
the Issuer determines (upon the advice of counsel and after consideration of
other certifications and evidence as the Issuer may reasonably require) that a
Note is eligible for resale pursuant to Rule 144(k) under the Securities
Act (or a successor provision) and that the Restricted Legend is no longer
necessary or appropriate in order to ensure that subsequent transfers of the
Note (or a beneficial interest therein) are effected in compliance with the
Securities Act, or

 

(ii)          after an Initial Note or
any Initial Additional Note is

 

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

 

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

 

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

 

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

 

Section 2.02.  Execution
and Authentication; Exchange Notes; Additional Notes.  (a)  An Officer
shall execute the Notes for the Issuer by facsimile or manual signature in the
name and on behalf of the Issuer.  If an
Officer whose signature is on a Note no longer holds that office at the time the
Note is authenticated, the Note will still be valid.

 

31

 

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

 

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

 

(i)             Initial Notes for
original issue in the aggregate principal amount not to exceed $300,000,000,

 

(ii)          Initial Additional Notes
from time to time for original issue in aggregate principal amounts specified
by the Issuer, and

 

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

 

after the
following conditions have been met:

 

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

 

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

 

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

 

(3)    in
the case of  Initial Additional Notes,
that the issuance of such Notes does not contravene any provision of Article 4,

 

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

 

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

 

(B)                           In the
case of Initial Additional Notes, receipt by the Senior Trustee of an Opinion
of Counsel confirming that the Holders of the outstanding Notes will be subject
to federal income tax in the same amounts, in the same manner and at the same
times as would have been the case if such Initial Additional Notes were not
issued.

 

32

 

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

 

Section 2.03.  Registrar,
Paying Agent and Authenticating Agent; Paying Agent to Hold Money in Trust.  (a) The Issuer
may appoint one or more Registrars and one or more Paying Agents, and the Senior
Trustee may appoint an Authenticating Agent, in which case each reference in
the Indenture to the Senior Trustee in respect of the obligations of the Senior
Trustee to be performed by that Agent will be deemed to be references to the
Agent.  The Issuer may act as Registrar
or (except for purposes of Article 8) Paying Agent.  In each case, the Issuer and the Senior
Trustee will enter into an appropriate agreement with the Agent implementing
the provisions of the Indenture relating to the obligations of the Senior
Trustee to be performed by the Agent and the related rights.

 

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

 

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

 

33

 

has become or is about to become due and payable, the Issuer in its
discretion may pay the Note instead of issuing a replacement Note.

 

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

 

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

 

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

 

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

 

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

 

Section 2.06.  Temporary Notes.  Until definitive Notes are
ready for delivery, the Issuer may prepare and the Senior Trustee will
authenticate temporary Notes.  Temporary
Notes will be substantially in the form of definitive Notes but may have
insertions, substitutions, omissions and other variations determined to be
appropriate by the Officer executing the temporary Notes, as evidenced by the
execution of the temporary Notes.  If
temporary Notes are issued, the Issuer will cause definitive Notes to be
prepared without unreasonable delay. 
After the preparation of definitive Notes, the temporary Notes will be
exchangeable for definitive Notes upon surrender of the temporary Notes at the
office or agency of the Issuer designated for the purpose pursuant to Section 4.02
without charge to the Holder.  Upon
surrender for cancellation of any temporary

 

34

 

Notes, the Issuer will execute and the Senior Trustee will authenticate
and deliver in exchange therefor a like principal amount of definitive Notes of
authorized denominations.  Until so  exchanged, the temporary Notes will be
entitled to the same benefits under the Indenture as definitive Notes.

 

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

 

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

 

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

 

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

 

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

 

35

 

Depositary in accordance with customary procedures
of the Depositary and in compliance with this Section and Section 2.10.

 

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

 

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

 

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

 

(d)                                 A
Holder may transfer a Note (or a beneficial interest therein) to another Person
or exchange a Note (or a beneficial interest therein) for another

 

36

 

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

 

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

 

(ii)          the Senior Trustee will
not be required (x) to issue, register the transfer of or exchange any Note for
a period of 15 days before a selection of Notes to be redeemed or purchased
pursuant to an Offer to Purchase, (y) to register the transfer of or exchange
any Note so selected for redemption or purchase in whole or in part, except, in
the case of a partial redemption or purchase, that portion of any Note not
being redeemed or purchased, or (z) if a redemption or a purchase pursuant to
an Offer to Purchase is to occur after a Record Date but on or before the
corresponding Interest Payment Date, to register the transfer of or exchange
any Note on or after the Record Date and before the date of redemption or
purchase.  Prior to the registration of
any transfer, the Issuer, the Senior Trustee and their agents will treat the
Person in whose name the Note is registered as the owner and Holder thereof for
all purposes (whether or not the Note is overdue), and will not be affected by
notice to the contrary.

 

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

 

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

 

(e)                  (i) 
Global Note to Global Note.  If a beneficial interest in a Global Note is
transferred or exchanged for a beneficial interest in another Global Note, the
Senior Trustee will (x) record a decrease in the principal amount of the
Global Note being transferred or exchanged equal to the principal amount of
such transfer or exchange and (y) record a like increase in the principal
amount of the other Global Note.  Any
beneficial interest in one Global Note that is transferred to a Person who
takes delivery in the form of an interest in another Global Note, or exchanged

 

37

 

for an interest in another Global Note, will,
upon transfer or exchange, cease to be an interest in such Global Note and
become an interest in the other Global Note and, accordingly, will thereafter
be subject to all transfer and exchange restrictions, if any, and other
procedures applicable to beneficial interests in such other Global Note for as
long as it remains such an interest.

 

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

 

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

 

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

 

Section 2.10.  Restrictions
on Transfer and Exchange.  (a) The transfer or exchange
of any Note (or a beneficial interest therein) may only be made in

 

38

 

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

 

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

 

	
  A

  	
   

  	
  B

  	
   

  	
  C

  	
   

  
	
  Rule 144A Global Note

  	
   

  	
  Rule 144A Global Note

  	
   

  	
  (i)

  	
   

  
	
  Rule 144A Global Note

  	
   

  	
  Regulation S Global Note

  	
   

  	
  (ii)

  	
   

  
	
  Rule 144A Global Note

  	
   

  	
  Certificated Note

  	
   

  	
  (iii)

  	
   

  
	
  Regulation S Global Note

  	
   

  	
  Rule 144A Global Note

  	
   

  	
  (iv)

  	
   

  
	
  Regulation S Global Note

  	
   

  	
  Regulation S Global Note

  	
   

  	
  (i)

  	
   

  
	
  Regulation S Global Note

  	
   

  	
  Certificated Note

  	
   

  	
  (v)

  	
   

  
	
  Certificated Note

  	
   

  	
  Rule 144A Global Note

  	
   

  	
  (iv)

  	
   

  
	
  Certificated Note

  	
   

  	
  Regulation S Global Note

  	
   

  	
  (ii)

  	
   

  
	
  Certificated Note

  	
   

  	
  Certificated Note

  	
   

  	
  (iii)

  	
   

  

 

(i)             No certification is
required.

 

(ii)          The Person requesting
the transfer or exchange must deliver or cause to be delivered to the Senior
Trustee a duly completed Regulation S Certificate; provided, that if the requested transfer or exchange is made
by the Holder of a Certificated Note that does not bear the Restricted Legend,
then no certification is required.

 

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

 

39

 

(iv)      The Person requesting the
transfer or exchange must deliver or cause to be delivered to the Senior
Trustee a duly completed Rule 144A Certificate and must comply with all
applicable securities laws of any state of the United States or any other
jurisdiction.

 

(v)         If the requested transfer
involves a beneficial interest in a Regulation S Temporary Global Note, the
Person requesting the registration of transfer must deliver or cause to be
delivered to the Senior Trustee (x) a duly completed Rule 144A Certificate
or (y) a duly completed Institutional Accredited Investor Certificate and/or an
opinion of counsel and such other certifications and evidence as the Issuer may
reasonably require in order to determine that the proposed transfer is being
made in compliance with the Securities Act and any applicable securities laws
of any state of the United States.  If
the requested transfer or exchange involves a beneficial interest in a
Permanent Regulation S Global Note, no certification is required and the Senior
Trustee will deliver a Certificated Note that does not bear the Restricted
Legend.  Notwithstanding anything to the
contrary contained herein, no such exchange is permitted if the requested
exchange involves a beneficial interest in a Regulation S Temporary Global
Note.

 

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

 

(i)             after such Note is
eligible for resale pursuant to Rule 144(k) under the Securities Act (or a
successor provision); provided,
that the Issuer has provided the Senior Trustee with a certificate to that
effect, and the Issuer may require from any Person requesting a transfer or
exchange in reliance upon this clause (i) an opinion of counsel and any
other reasonable certifications and evidence in order to support such
certificate; or

 

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

 

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

 

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

 

40

 

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

 

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

 

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

 

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

 

ARTICLE 3

REDEMPTION; OFFER TO PURCHASE

 

Section 3.01.  Optional
Redemption.  The Notes will be
redeemable, in whole, at any time, or in part, from time to time, at the option
of the Issuer upon not less than 30 nor more than 60 days’ notice at a
redemption price equal to the sum of:

 

(a)                                  100%
of the principal amount thereof, plus accrued and unpaid interest thereon to
the redemption date; plus

 

41

 

(b)                                 the
Make-Whole Amount.

 

The Senior
Trustee shall have no responsibility in connection with the calculation of such
redemption price.

 

Section 3.02.  Sinking Fund;
Mandatory Redemption.  There
is no sinking fund for, or mandatory redemption of, the Notes.

 

Section 3.03.  Method And
Effect of Redemption.  (a) If
the Issuer elects to redeem Notes, it must notify the Senior Trustee of the
redemption date and the principal amount of Notes to be redeemed by delivering
an Officers’ Certificate at least 45 days before the redemption date (unless a
shorter period is satisfactory to the Senior Trustee).  If fewer than all of the Notes are being
redeemed, the Officers’ Certificate must also specify a record date not less
than 15 days after the date of the notice of redemption is given to the Senior
Trustee, and the Senior Trustee will select the Notes to be redeemed pro rata,
or as nearly a pro rata basis as is practicable (subject to the procedures of
DTC), unless such method is otherwise prohibited, in which case, by lot or by
any other method the Senior Trustee in its sole discretion deems fair and
appropriate, in denominations of $1,000 principal amount and multiples
thereof.  The Senior Trustee will notify
the Issuer promptly of the Notes or portions of Notes to be called for
redemption.   Notice of redemption must
be sent by the Issuer or, at the Issuer’s request, by the Senior Trustee in the
name and at the expense of the Issuer to Holders whose Notes are to be redeemed
at least 30 days but not more than 60 days before the redemption date.  Notices of redemption may not be conditional.

 

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

 

(i)             the redemption date;

 

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

 

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

 

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

 

(v)         that if any Note is
redeemed in part, the portion of the principal amount thereof to be redeemed,
and that on and after the

 

42

 

redemption date, upon surrender of such Note,
new Notes equal in principal amount to the unredeemed portion will be issued;
and

 

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

 

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

 

Section 3.04.  Offer to Purchase.  (a) An “Offer to Purchase” means an offer by the
Issuer to purchase Notes as required by the Indenture.  An Offer to Purchase must be made by written
offer (the “offer”) sent to the
Holders.  The Issuer will notify the
Senior Trustee at least 15 days (or such shorter period as is acceptable to the
Senior Trustee) prior to sending the offer to Holders of its obligation to make
an Offer to Purchase, and the offer will be sent by the Issuer or, at the
Issuer’s request, by the Senior Trustee in the name and at the expense of the
Issuer.

 

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

 

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

 

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

 

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

 

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

 

43

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

(xi)                                Holders
are entitled to withdraw Notes tendered by giving notice, which must be
received by the Issuer or the Senior Trustee not later than the close of
business on the expiration date, setting forth the name of the Holder, the
principal amount of the tendered Notes, the certificate number of the tendered
Notes and a statement that the Holder is withdrawing all or a portion of the
tender;

 

44

 

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

 

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

 

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

 

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

 

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

 

ARTICLE 4

COVENANTS

 

Section 4.01.  Payment of
Notes.   (a)  The Issuer agrees to
pay the principal of, premium, if any, and interest and Additional Interest, if
any, on the Notes on the dates and in the manner provided in the Notes and the
Indenture.  The Issuer shall pay Additional
Interest in the amounts set forth in the Registration Rights Agreement.  Not later than 9:00 A.M. (New York City
time) on the due date of any principal of, premium, if any, or interest and
Additional Interest, if any, on, any Notes, or any redemption or purchase price
of the Notes,

 

45

 

the Issuer will deposit with the Senior Trustee (or Paying Agent) money
in immediately available funds sufficient to pay such amounts; provided, that if the Issuer or any
Affiliate of the Issuer is acting as Paying Agent, it will, on or before each
due date, segregate and hold in a separate trust fund for the benefit of the
Holders a sum of money sufficient to pay such amounts until paid to such
Holders or otherwise disposed of as provided in the Indenture.  In each case the Issuer will promptly notify
the Senior Trustee of its compliance with this paragraph.

 

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

 

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

 

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

 

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

 

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

 

46

 

Section 4.03.  Existence.  The Company and the Issuer will
each do or cause to be done all things necessary to preserve and keep in full
force and effect their existence and the existence of each of the Restricted
Subsidiaries in accordance with their respective organizational documents, and
the material rights, licenses and franchises of the Company, the Issuer and
each Restricted Subsidiary; provided,
that the Company and the Issuer are not required to preserve any such right,
license or franchise, or the existence of any Restricted Subsidiary, if the
maintenance or preservation thereof is no longer desirable in the conduct of
the business of the Company and its Restricted Subsidiaries taken as a whole;
and provided, further, that this Section not
prohibit any transaction otherwise permitted by Section 4.10 or Section 4.14.

 

Section 4.04.  Payment of
Taxes and Other Claims.  The
Company will pay or discharge, and cause each of its Subsidiaries to pay or
discharge before the same become delinquent (a) all material taxes,
assessments and governmental charges levied or imposed upon the Company or any
Subsidiary or its income or profits or property, and (b) all material lawful
claims for labor, materials and supplies that, if unpaid, might by law become a
Lien upon the property of the Company or any Subsidiary, other than any such
tax, assessment, charge or claim the amount, applicability or validity of which
is being contested in good faith by appropriate proceedings and for which
adequate reserves have been established.

 

Section 4.05.  Maintenance
of Properties and Insurance. (a)  The Company will cause all
properties used or useful in the conduct of its business or the business of any
of its Restricted Subsidiaries to be maintained and kept in good condition,
repair and working order as in the judgment of the Company may be necessary so
that the business of the Company and its Restricted Subsidiaries may be
properly and advantageously conducted at all times; provided, that nothing in this Section prevents the
Company or any Restricted Subsidiary from discontinuing the use, operation or
maintenance of any of such properties or disposing of any of them, if such
discontinuance or disposal is, in the judgment of the Company, desirable in the
conduct of the business of the Company and its Restricted Subsidiaries taken as
a whole.

 

(b)                                 The
Company will provide or cause to be provided, for itself and its Restricted
Subsidiaries, insurance (including appropriate self-insurance) against loss or
damage of the kinds customarily insured against by corporations similarly
situated and owning like properties, including, but not limited to, products
liability insurance and public liability insurance, with reputable insurers, in
such amounts, with such deductibles and by such methods as are customary for
corporations similarly situated in the industry in which the Company and its
Restricted Subsidiaries are then conducting business.

 

Section 4.06.  Limitations
on Indebtedness.  (a) 
The Company and the Issuer will not, and will not cause or permit any
Restricted Subsidiary, directly or

 

47

 

indirectly, to create, incur, assume, become liable for or guarantee
the payment of (collectively, an “incurrence”)
any Indebtedness (including Acquired Indebtedness) unless, after giving effect
thereto and the application of the proceeds therefrom, the Consolidated Fixed
Charge Coverage Ratio on the date thereof would be at least 2.0 to 1.0.

 

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

 

(i)             Permitted
Indebtedness,

 

(ii)          Refinancing
Indebtedness,

 

(iii)       Non-Recourse Indebtedness,

 

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

 

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

 

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

 

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

 

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

 

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

 

(d)                                 The
Company and the Issuer will not, and will not cause or permit any Guarantor to,
directly or indirectly, in any event incur any Indebtedness that purports to be
by its terms (or by the terms of any agreement governing such Indebtedness)
subordinated to any other Indebtedness of the Company or of such Guarantor, as
the case may be, unless such Indebtedness is also by its terms (or by the terms
of any agreement governing such Indebtedness) made expressly subordinated to
the Notes or the Guarantee of such Guarantor, as the case may be, to the same
extent and in the same manner as such Indebtedness is subordinated to such
other Indebtedness of the Company or such Guarantor, as the case may be.

 

48

 

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

 

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

 

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

 

(iii)       immediately after giving
effect to such Restricted Payment, the aggregate amount of all Restricted
Payments (including the Fair Market Value of any non-cash Restricted Payment)
declared or made after May 4, 1999 does not exceed the sum of:

 

(A)      50% of the Consolidated Net
Income of the Company on a cumulative basis during the period (taken as one
accounting period) from and including February 1, 1999 and ending on the
last day of the Company’s fiscal quarter immediately preceding the date of such
Restricted Payment (or in the event such Consolidated Net Income shall be a
deficit, minus 100% of such deficit), plus

 

(B)        100% of the aggregate net
cash proceeds of and the Fair Market Value of Property received by the Company
from (1) any capital contribution to the Company after February 1,
1999 or any issue or sale after February 1, 1999 of Qualified Stock (other
than to any Subsidiary of the Company) and (2) the issue or sale after February 1,
1999 of any Indebtedness or other securities of the Company convertible into or
exercisable for Qualified Stock of the Company that have been so converted or
exercised, as the case may be, plus

 

(C)        in the case of the
disposition or repayment of any Investment constituting a Restricted Payment
made after May 4, 1999, an amount (to the extent not included in the
calculation of Consolidated Net Income referred to in (A)) equal to the lesser
of (x) the return of capital with respect to such Investment (including by
dividend, distribution or sale of Capital Stock) and (y) the amount of such
Investment that was treated as a Restricted Payment, in either case, less the
cost of the disposition or repayment of such Investment (to the extent not
included in the calculation of Consolidated Net Income referred to in (A)), plus

 

49

 

(D)       with respect to any
Unrestricted Subsidiary that is redesignated as a Restricted Subsidiary after May 4,
1999, in accordance with the definition of Unrestricted Subsidiary (so long as
the designation of such Subsidiary as an Unrestricted Subsidiary was treated as
a Restricted Payment made after the Issue Date, and only to the extent not included
in the calculation of Consolidated Net Income referred to in (A)), an amount
equal to the lesser of (x) the proportionate interest of the Company or a
Restricted Subsidiary in an amount equal to the excess of (I) the total assets
of such Subsidiary, valued on an aggregate basis at the lesser of book value
and Fair Market Value thereof, over (II) the total liabilities of such
Subsidiary, determined in accordance with GAAP, and (y) the Designation Amount
at the time of such Subsidiary’s designation as an Unrestricted Subsidiary, plus

 

(E)         $17 million, minus

 

(F)         the aggregate amount of
all Restricted Payments (other than Restricted Payments referred to in clause (iii) of
paragraph (b) below) made after February 1, 1999 through May 4,
1999.

 

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

 

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

 

(ii)          the repurchase,
redemption or retirement of any shares of Capital Stock of the Company in
exchange for, or out of the net proceeds of the substantially concurrent sale
(other than to a Subsidiary of the Company) of, other shares of Qualified
Stock; and

 

(iii)       the purchase, redemption or
other acquisition, cancellation or retirement for value of Capital Stock, or
options, warrants, equity appreciation rights or other rights to purchase or
acquire Capital Stock, of the Company or any Subsidiary held by officers or employees
or former officers or employees of the Company or any Subsidiary (or their
estates or beneficiaries under their estates) not to exceed $10 million in the
aggregate since May 4, 1999;

 

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

 

50

 

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

 

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

 

Section 4.08.  Limitations
on Liens.  The Company and the
Issuer will not, and will not cause or permit any Restricted Subsidiary to,
create, incur, assume or suffer to exist any Liens, other than Permitted Liens,
on any of its Property, or on any shares of Capital Stock or Indebtedness of
any Restricted Subsidiary, unless contemporaneously therewith or prior thereto
all payments due under the Indenture and the Notes are secured on an equal and
ratable basis with the obligation or liability so secured until such time as
such indebtedness is no longer secured by a Lien.

 

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

 

(a)                                  pay
dividends or make any other distributions on its Capital Stock or any other
interest or participation in, or measured by, its profits, owned by the

 

51

 

Company or any
other Restricted Subsidiary, or pay interest on or principal of any
Indebtedness owed to the Company or any other Restricted Subsidiary,

 

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

 

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

 

except for:

 

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

 

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

 

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

 

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

 

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

 

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

 

52

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

Section 4.10.  Limitations on Dispositions of Assets.  (a) The Company and the Issuer will not, and will not cause
or permit any Restricted Subsidiary to,

 

53

 

make any Asset Disposition unless (x) the Company (or such Restricted
Subsidiary, as the case may be) receives consideration at the time of such
Asset Disposition at least equal to the Fair Market Value thereof, and (y) not
less than 70% of the consideration received by the Company (or such Restricted
Subsidiary, as the case may be) is in the form of cash, Cash Equivalents and
Marketable Securities.

 

The amount of (i) any
Indebtedness (other than any Indebtedness subordinated to the Notes) of the
Company or any Restricted Subsidiary that is actually assumed by the transferee
in such Asset Disposition and (ii) the fair market value (as determined in
good faith by the Board of Directors of the Company) of any property or assets
received that are used or useful in a Real Estate Business, shall be deemed to
be consideration required by clause (y) above for purposes of determining the
percentage of such consideration received by the Company or the Restricted
Subsidiaries.

 

(b)                                 The
Net Cash Proceeds of an Asset Disposition shall, within one year, at the
Company’s election, (1) be used by the Company or a Restricted Subsidiary
in the business of the construction and sale of homes conducted by the Company
and the Restricted Subsidiaries or any other business of the Company or a
Restricted Subsidiary existing at the time of such Asset Disposition or (2) to
the extent not so used, be applied to make an Offer to Purchase Notes and, if
the Company or a Restricted Subsidiary elects or is required to do so repay,
purchase or redeem any other unsubordinated Indebtedness (on a pro rata basis if the amount available for such repayment,
purchase or redemption is less than the aggregate amount of (i) the
principal amount of the Notes tendered in such Offer to Purchase and (ii) the
lesser of the principal amount, or accreted value, of such other unsubordinated
Indebtedness, plus, in each case accrued interest to the date of repayment,
purchase or redemption) at 100% of the principal amount or accreted value
thereof, as the case may be, plus accrued and unpaid interest, if any, to the
date of repurchase or repayment.

 

(c)                                  Notwithstanding
the foregoing, (A) the Company will not be required to apply such Net Cash
Proceeds to the repurchase of Notes in accordance with clause (2) of the
preceding paragraph except to the extent that such Net Cash Proceeds, together
with the aggregate Net Cash Proceeds of prior Asset Dispositions (other than
those so used) which have not been applied in accordance with this provision
and as to which no prior Offer to Purchase shall have been made, exceed 5% of
Consolidated Tangible Assets and (B) in connection with an Asset
Disposition, the Company and the Restricted Subsidiaries will not be required
to comply with the requirements of clause (y) of the first sentence of the
first paragraph of this covenant to the extent that the non-cash consideration
received in connection with such Asset Disposition, together with the sum of
all non-cash consideration received in connection with all prior Asset
Dispositions that has not yet been converted into cash, does not exceed 5%

 

54

 

of
Consolidated Tangible Assets; provided, however,
that when any non-cash consideration is converted into cash, such cash shall
constitute Net Cash Proceeds and be subject to the preceding sentence.

 

Section 4.11.  Guarantees By
Restricted Subsidiaries.  Each
existing Restricted Subsidiary (other than the Issuer (for so long as it
remains the Issuer), KHL, Inc. and K. Hovnanian Poland, sp.zo.o.) will be
a Guarantor. The Company is permitted to cause any Unrestricted Subsidiary to
be a Guarantor.  If the Issuer, the
Company or any of its Restricted Subsidiaries acquires or creates a Restricted
Subsidiary after the Issue Date, such Restricted Subsidiary shall (subject to Section 6.03(b))
execute a guarantee substantially in the form included in Exhibit A,
execute a supplemental indenture in the form of Exhibit B, and deliver an
Opinion of Counsel to the Senior Trustee to the effect that the supplemental
indenture has been duly authorized, executed and delivered by the new
Restricted Subsidiary and constitutes a valid and binding obligation of the new
Restricted Subsidiary, enforceable against the new Restricted Subsidiary in
accordance with its terms (subject to customary exceptions).

 

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

 

(b)                                 On
or before the thirtieth day after any Change of Control, the Issuer is
obligated to mail, or cause to be mailed, to all Holders of record of Notes and
the Senior Trustee a notice regarding the Change of Control and the repurchase
right. The notice shall state the Repurchase Date, the date by which the
repurchase right must be exercised, the price for the Notes and the procedure
which the Holder must follow to exercise such right.  Substantially simultaneously with mailing of
the notice, the Issuer shall cause a copy of such notice to be published in a
newspaper of general circulation in the Borough of Manhattan, The City of New
York.  To exercise such right, the Holder
of such Note must deliver at least ten days prior to the Repurchase Date
written notice to the Issuer (or an agent designated by the Issuer for such
purpose) of the Holder’s exercise of such right, together with the Note with
respect to which the right is being exercised, duly endorsed for transfer; provided, however,
that if mandated by applicable law, a Holder may be permitted to deliver such
written notice nearer to the Repurchase Date than may be specified by the
Issuer.

 

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

 

55

 

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

 

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

 

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

 

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

 

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

 

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

 

56

 

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

 

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

 

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

 

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

 

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

 

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

 

Section 4.14.  Limitations on Mergers, Consolidations and
Sales of Assets.  Neither
the Issuer nor any Guarantor will consolidate or merge with or into, or sell,
lease, convey or otherwise dispose of all or substantially all of its assets
(including, without limitation, by way of liquidation or dissolution), or
assign any of its obligations under the Notes, the Guarantees or the Indenture
(as an entirety or substantially as an entirety in one transaction or in a
series of related transactions), to any Person (in each case other than in a
transaction in which the Company, the Issuer or a Restricted Subsidiary is the
survivor of a consolidation or merger, or the transferee in a sale, lease,
conveyance or other disposition) unless:

 

(i)             the Person formed by
or surviving such consolidation or merger (if other than the Company, the
Issuer or the Guarantor, as the case may be), or to which such sale, lease,
conveyance or other disposition or assignment will be made (collectively, the “Successor”), is a corporation

 

57

 

or other legal entity organized and existing
under the laws of the United States or any state thereof or the District of
Columbia, and the Successor assumes by supplemental indenture in a form
reasonably satisfactory to the Senior Trustee all of the obligations of the
Company, the Issuer or the Guarantor, as the case may be, under the Notes or a
Guarantee, as the case may be, and the Indenture,

 

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

 

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

 

The foregoing
provisions shall not apply to (i) a transaction involving the sale or
disposition of Capital Stock of a Guarantor, or the consolidation or merger of
a Guarantor, or the sale, lease, conveyance or other disposition of all or
substantially all of the assets of a Guarantor, that in any such case results
in such Guarantor being released from its Guarantee pursuant to Section 6.03,
or (ii) a transaction the purpose of which is to change the state of
incorporation of the Company, the Issuer or any Guarantor.

 

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

 

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

 

58

 

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

 

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

 

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

 

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

 

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

 

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

 

Section 4.18.  Limitation
of Applicability of Certain Covenants if Notes Rated Investment Grade.  (a) The Issuer’s, the Company’s and its
Restricted Subsidiaries’ obligations to comply with the provisions of the
Indenture under this Article 4 (except for Sections 4.01, 4.02, 4.03,
4.04, 4.05, 4.08, 4.11 (subject to

 

59

 

Section 6.03(b)), 4.12, 4.14 (other than clause (iii) of the
first paragraph thereof), 4.15, 4.16, 4.17 and this Section 4.18, will
terminate (such terminated covenants, the “Extinguished Covenants”)
and cease to have any further effect from and after the first date when the
Notes issued under the Indenture are rated Investment Grade; provided, that if the Notes subsequently cease to be rated Investment
Grade, then, from and after the time the Notes cease to be rated Investment
Grade, the Issuer’s, the Company’s and its Restricted Subsidiaries’ obligation
to comply with the Extinguished Covenants shall be reinstated.

 

(b)                                 In
the event of any such reinstatement of the obligation to comply with the
Extinguished Covenants, no action taken or omitted to be taken by the Issuer,
the Company or any of its Subsidiaries prior to such reinstatement shall give
rise to a Default or Event of Default under the Indenture upon reinstatement; provided, that with respect to Restricted Payments made after any such
reinstatement, the amount of Restricted Payments made after May 4, 1999
will be calculated as though Section 4.07 hereof had been in effect during
the entire period after such date.

 

ARTICLE 5

REMEDIES

 

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

 

(i)                  the
failure by the Company, the Issuer and the Guarantors to pay interest on, or
Additional Interest, if any, with respect to, any Note when the same becomes
due and payable and the continuance of any such failure for a period of 30
days;

 

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

 

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

 

(iv)           the
acceleration of any Indebtedness (other than Non-Recourse Indebtedness) of the
Company, the Issuer or any Restricted Subsidiary that has an outstanding
principal amount of $10 million or more, individually or in the aggregate, and
such acceleration does not

 

60

 

cease to exist, or such Indebtedness is not
satisfied, in either case within 30 days after such acceleration;

 

(v)              the
failure by the Company, the Issuer or any Restricted Subsidiary to make any
principal or interest payment in an amount of $10 million or more, individually
or in the aggregate, in respect of Indebtedness (other than Non-Recourse
Indebtedness) of the Company or any Restricted Subsidiary within 30 days of
such principal or interest becoming due and payable (after giving effect to any
applicable grace period set forth in the documents governing such
Indebtedness);

 

(vi)           a
final judgment or judgments that exceed $10 million or more, individually or in
the aggregate, for the payment of money having been entered by a court or
courts of competent jurisdiction against the Company, the Issuer or any of its
Restricted Subsidiaries and such judgment or judgments is not satisfied,
stayed, annulled or rescinded within 60 days of being entered;

 

(vii)        the
Company, the Issuer or any Restricted Subsidiary that is a Significant
Subsidiary pursuant to or within the meaning of any Bankruptcy Law:

 

(A)                         commences
a voluntary case,

 

(B)                           consents
to the entry of an order for relief against it in an involuntary case,

 

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

 

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

 

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

 

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

 

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

 

61

 

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

 

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

 

(ix)             any
Guarantee of a Guarantor which is a Significant Subsidiary ceases to be in full
force and effect (other than in accordance with the terms of such Guarantee and
this Indenture) or is declared null and void and unenforceable or found to be
invalid or any Guarantor denies its liability under its Guarantee (other than
by reason of release of a Guarantor from its Guarantee in accordance with the
terms of the Indenture and the Guarantee).

 

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

 

If an Event of
Default (other than an Event of Default with respect to the Company or the
Issuer resulting from subclauses (vii) or (viii) above), shall have
occurred and be continuing under the Indenture, the Senior Trustee by notice to
the Company, or the Holders of at least 25 percent in principal amount of the
Notes then outstanding by notice to the Company and the Senior Trustee, may
declare all Notes to be due and payable immediately.  Upon such declaration of acceleration, the
amounts due and payable on the Notes will be due and payable immediately.  If an Event of Default with respect to the
Company or the Issuer specified in subclauses (vii) or (viii) above
occurs, such an amount will ipso facto
become and be immediately due and payable without any declaration, notice or
other act on the part of the Senior Trustee and the Company or any Holder.  This provision, however, is subject to the
condition that, if at any time after the unpaid principal amount (or such
specified amount) of the Notes shall have been so declared due and payable and
before any judgment or decree for the payment of the moneys due shall have been
obtained or entered as hereinafter provided, the Issuer shall pay or shall
deposit with the Senior Trustee a sum sufficient to pay all matured
installments of interest and Additional Interest, if any, upon all of the Notes
and the principal of all the Notes which shall have become due otherwise than
by acceleration (with interest on overdue installments of interest and
Additional Interest, if any, to the extent that payment of such interest is
enforceable under applicable law and on such principal at the rate borne by the
Notes to the date of such payment or deposit) and the reasonable compensation,
disbursements, expenses and advances of the Senior Trustee and all other
amounts

 

62

 

due the Senior
Trustee under Section 7.07, and any and all defaults under this Indenture,
other than the nonpayment of such portion of the principal amount of and
accrued interest and Additional Interest, if any, on Notes which shall have
become due by acceleration, shall have been cured or shall have been waived in
accordance with Section 5.03 or provision deemed by the Senior Trustee to
be adequate shall have been made therefor, then and in every such case the
Holders of a majority in aggregate principal amount of the Notes then
outstanding, by written notice to the Issuer and to the Senior Trustee, may
rescind and annul such declaration and its consequences; but no such rescission
and annulment shall extend to or shall affect any subsequent default, or shall
impair any right consequent thereon. 
Notwithstanding the previous sentence, no waiver shall be effective
against any Holder for any Event of Default or event which with notice or lapse
of time or both would be an Event of Default with respect to any covenant or
provision which cannot be modified or amended without the consent of the Holder
of each outstanding Note affected thereby, unless all such affected Holders
agree, in writing, to waive such Event of Default or other event.

 

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

 

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

 

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

 

Section 5.03.  Waiver of
Defaults by Majority of Holders.  By
written notice to the Senior Trustee and the Company, the Holders of a majority
in aggregate principal amount of the Notes then outstanding may on behalf of
the Holders of all of the Notes waive any past Default or Event of Default
hereunder and its consequences, except a Default in the payment of interest and
Additional Interest, if any, on, or the principal of, the Notes.  Upon any such waiver, the

 

63

 

Issuer, the Senior Trustee and the Holders of Notes shall be restored
to their former positions and rights hereunder, respectively; but no such
waiver shall extend to any subsequent or other Default or Event of Default or
impair any right consequent thereon. 
Whenever any Default or Event of Default hereunder shall have been
waived as permitted by this Section 5.03, said Default or Event of Default
shall for all purposes of the Notes and this Indenture be deemed to have been
cured and to be not continuing.

 

Section 5.04.  Direction of Proceedings.  The Holders of a majority in aggregate
principal amount of the outstanding Notes shall have the right to direct the
time, method, and place of conducting any proceeding for any remedy available
to the Senior Trustee, or exercising any trust or power conferred on the Senior
Trustee with respect to the Notes; provided, however, that (subject to the provisions of Section 7.01)
the Senior Trustee shall have the right to decline to follow any such direction
if the Senior Trustee shall determine upon advice of counsel that the action or
proceeding so directed may not lawfully be taken or if the Senior Trustee in
good faith by its board of directors, its executive committee, or a trust
committee of directors or Responsible Officers or both shall determine that the
action or proceeding so directed would involve the Senior Trustee in personal
liability.

 

Section 5.05.  Application
of Moneys Collected by Senior Trustee.  Any moneys collected by the Senior Trustee
pursuant to this Article respect to outstanding Notes shall be applied in
the order following, at the date or dates fixed by the Senior Trustee for the
distribution of such moneys, upon presentation of the Notes and stamping
thereon the payment, if only partially paid, and upon surrender thereof, if
fully paid:

 

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

 

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

 

THIRD: If the principal of the Notes shall have become due, by declaration
or otherwise, to the payment of the whole amount then owing and unpaid upon the
Notes for principal, interest and Additional Interest, if

 

64

 

any, with interest on the overdue principal
and (to the extent that such interest has been collected by the Senior Trustee)
upon overdue installments of interest and Additional Interest, if any, at the
rate borne by the Notes, and in case such moneys shall be insufficient to pay
in full the whole amounts so due and unpaid upon the Notes, then to the payment
of such principal and interest and Additional Interest, if any, without
preference or priority of principal over interest or Additional Interest, if
any, or of interest or Additional Interest, if any, over principal, or of
interest over Additional Interest, if any, or of any installment of interest,
if any, or Additional Interest, if any, over any other installment of interest
or Additional Interest, if any, ratably to the aggregate of such principal and
accrued and unpaid interest and Additional Interest, if any; and

 

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

 

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

 

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

 

65

 

of any other Holder of Notes, or to obtain or seek to obtain priority
over or preference as to any other such Holder, or to enforce any right under
this Indenture or the Notes, except in the manner herein provided and for the
equal, ratable and common benefit of all Holders of Notes.

 

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

 

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

 

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

 

Section 5.09.  Undertaking
to Pay Costs.  All parties to
this Indenture agree, and each Holder of any Note by his acceptance thereof
shall be deemed to have agreed, that any court may in its discretion require,
or in any suit for the enforcement of any right or remedy under this Indenture,
or in any suit against the Senior Trustee for any action taken or omitted by it
as Senior Trustee, the filing by any party litigant in such suit of an
undertaking to pay the cost of such suit, and that such court may in its
discretion assess reasonable costs, including reasonable attorneys’ fees and
expenses, against any party litigant in such suit, having due regard to the
merits and good faith of the claims or defenses made by

 

66

 

such party litigant; but the provisions of this Section 5.09 shall
not apply to any suit instituted by the Senior Trustee, to any suit instituted
by any Holder, or group of Holders, holding in the aggregate more than 10% in
principal amount of the then outstanding Notes, or to any suit instituted by
any Holders for the enforcement of the payment of the principal of, premium, if
any, or interest or Additional Interest, if any, on any Note against the Issuer
on or after the due date of such Note.

 

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

 

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

 

Section 5.11.  Waiver of
Stay, Extension or Usury Laws.  The
Company, the Issuer and each Guarantor covenants, to the extent permitted by
applicable law, that it will not at any time insist upon, or plead, or in any
manner whatsoever claim or take the benefit or advantage of, any stay or
extension law or any usury law or other law that would prohibit or forgive the
Company, the Issuer or the Guarantor from paying all or any portion of the
principal of, premium, if any, or interest or Additional Interest, if any, on
the Notes as contemplated herein, wherever enacted, now or at any time
hereafter in force, or that may affect the

 

67

 

covenants or the performance of the Indenture.  The Company, the Issuer and each Guarantor
hereby expressly waives, to the extent that it may lawfully do so, all benefit
or advantage of any such law and covenants that it will not hinder, delay or
impede the execution of any power herein granted to the Senior Trustee, but
will suffer and permit the execution of every such power as though no such law
had been enacted.

 

Section 5.12.  Senior
Trustee May File Proof of Claim.  The Senior Trustee may file proofs of claim
and other papers or documents as may be necessary or advisable in order to have
the claims of the Senior Trustee (including any claim for the compensation,
expenses, disbursements and advances of the Senior Trustee, its agents and
counsel, and any other amounts due the Senior Trustee hereunder) and the
Holders allowed in any judicial proceedings relating to the Company, the Issuer
or any Guarantor or their respective creditors or property, and is entitled and
empowered to collect, receive and distribute any money, securities or other
property payable or deliverable upon conversion or exchange of the Notes or
upon any such claims.  Any custodian,
receiver, assignee, trustee, liquidator, sequestrator or other similar official
in any such judicial proceeding is hereby authorized by each Holder to make
such payments to the Senior Trustee and, if the Senior Trustee consents to the
making of such payments directly to the Holders, to pay to the Senior Trustee
any amount due to it for the reasonable compensation, expenses, disbursements and
advances of the Senior Trustee, its agent and counsel, and any other amounts
due the Senior Trustee hereunder. 
Nothing in the Indenture will be deemed to empower the Senior Trustee to
authorize or consent to, or accept or adopt on behalf of any Holder, any plan
of reorganization, arrangement, adjustment or composition affecting the Notes
or the rights of any Holder thereof, or to authorize the Senior Trustee to vote
in respect of the claim of any Holder in any such proceeding.

 

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

 

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attorneys and counsel, and any expenses or liabilities incurred by the
Senior Trustee hereunder other than through its negligence or bad faith.

 

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

 

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

 

69

 

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

 

ARTICLE 6

GUARANTEES; RELEASE OF GUARANTOR

 

Section 6.01.  Guarantee.
Each of the Guarantors hereby unconditionally guarantees, jointly
and severally with each other Guarantor, to each Holder and to the Senior
Trustee and its successors and assigns, irrespective of the validity and
enforceability of this Indenture, the Notes or the obligations of the Issuer
hereunder or thereunder, that:  (i) the
due and punctual payment of the principal of, premium, if any, and interest or
Additional Interest, if any, on the Notes, whether at maturity or on an
interest payment date, by acceleration, pursuant to an Offer to Purchase or
otherwise, to the extent lawful, and all other obligations of the Issuer to the
Holders or the Senior Trustee hereunder or thereunder shall be promptly paid in
full when due, all in accordance with the terms hereof and thereof, including
all amounts payable to the Senior Trustee under Section 7.07 hereof, and (ii) in
case of any extension of time of payment or renewal of any Notes or any of such
other obligations, the same shall be promptly paid in full when due or
performed in accordance with the terms of the extension or renewal, whether at
stated maturity, by acceleration or otherwise.

 

If the Issuer
fails to make any payment when due of any amount so guaranteed for whatever
reason, each Guarantor shall be obligated, jointly and severally with each
other Guarantor, to pay the same immediately. 
Each Guarantor hereby agrees that its obligations hereunder shall be
continuing, absolute and unconditional, irrespective of, and shall be
unaffected by, the validity, regularity or enforceability of the Notes, this
Indenture, the absence of any action to enforce the same, any waiver or consent
by any Holder or the Senior Trustee with respect to any provisions hereof or
thereof, the recovery of any judgment against the Issuer, any action to enforce
the same or any other circumstance which might otherwise constitute a legal or
equitable discharge or defense of such Guarantor.  If any Holder or the Senior Trustee is
required by any court or otherwise to return to the Issuer or any Guarantor, or
any custodian, trustee, liquidator or other similar official acting in relation
to the Issuer or such Guarantor, any amount paid by the Issuer or any Guarantor
to the Senior Trustee or such Holder, this Article 6, to the extent
theretofore discharged with respect to any Guarantee, shall be reinstated in
full force and effect.  Each Guarantor
agrees

 

70

 

that it shall
not be entitled to any right of subrogation in relation to the Holders in
respect of any obligations guaranteed hereby by such Guarantor until payment in
full of all such obligations.  Each
Guarantor further agrees that, as between such Guarantor, on the one hand, and
the Holders of Notes and the Senior Trustee on the other hand, (i) the
maturity of the obligations guaranteed hereby may be accelerated as provided in
Article 5 hereof for the purposes of such Guarantee, notwithstanding any
stay, injunction or other prohibition preventing such acceleration in respect
of the obligations guaranteed hereby and (ii) in the event of any
acceleration of such obligations as provided in Article 5 hereof such
obligations (whether or not due and payable) shall forthwith become due and
payable by such Guarantor, jointly and severally with each other Guarantor, for
the purpose of this Article 6.  In
addition, without limiting the foregoing, upon the effectiveness of an
acceleration under Article 5, the Senior Trustee may make a demand for
payment on the Notes under any Guarantee provided hereunder and not discharged.

 

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

 

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

 

Upon any
distribution of assets of a Guarantor referred to in this Article 6 the
Senior Trustee, subject to the provisions of Article 7, the Holders shall
be entitled to rely upon any order or decree made by any court of competent
jurisdiction in which such dissolution, winding up, liquidation or
reorganization proceedings are pending, or a certificate of the liquidating
trustee or agent or other person making any distribution to the Senior Trustee
or to such Holders for the purpose of ascertaining the persons entitled to
participate in such distribution, the holders of other indebtedness of such
Guarantor, the amount thereof or payable thereon, the amount or amounts paid or
distributed thereon and all other facts pertinent thereto or to this Article 6.

 

71

 

Section 6.03.  Release of
a Guarantor.  (a) If all
or substantially all of the assets of any Guarantor other than the Company or
all of the Capital Stock of any Guarantor other than the Company is sold
(including by consolidation, merger, issuance or otherwise) or disposed of
(including by liquidation, dissolution or otherwise) by the Company or any of
its Subsidiaries, or, unless the Company elects otherwise, if any Guarantor
other than the Company is designated an Unrestricted Subsidiary in accordance
with the terms of the Indenture, then such Guarantor (in the event of a sale or
other disposition of all of the Capital Stock of such Guarantor or a
designation as an Unrestricted Subsidiary) or the Person acquiring such assets
(in the event of a sale or other disposition of all or substantially all of the
assets of such Guarantor) shall be deemed automatically and unconditionally
released and discharged from any of its obligations under the Indenture without
any further action on the part of the Senior Trustee or any Holder of Notes.

 

(b)                                 Upon
the release of the guarantee by a Guarantor (including, for the avoidance of
doubt, the Issuer after it ceases to be the Issuer pursuant to Article 10)
other than the Company under all then outstanding Applicable Debt, at any time
after the suspension of the Extinguished Covenants pursuant to Section 4.18
hereof, the Guarantee of such Guarantor under the Indenture will be released
and discharged in respect of the Notes at such time and no Restricted
Subsidiary thereafter acquired or created will be required to be a Guarantor in
respect of the Notes; provided, that
the foregoing shall not apply to any release of any Guarantor done in
contemplation of, or in connection with, any cessation of the Notes being rated
Investment Grade.  In the event that (i) any
such released Guarantor thereafter guarantees any Applicable Debt (or if any
released guarantee under any Applicable Debt is reinstated or renewed) or (ii) the
Extinguished Covenants cease to be suspended pursuant to Section 4.18
hereof then any such released Guarantor and any other Restricted Subsidiary of
Hovnanian then existing (other than KHL, Inc., the Issuer (for so long as
it remains the Issuer) and K. Hovnanian Poland, sp.zo.o.) will Guarantee the
Notes on the terms and conditions set forth in this Indenture.  For purposes of this clause (b), Applicable
Debt secured by a Lien on such Restricted Subsidiary’s Property or issued by
such Restricted Subsidiary shall be deemed guaranteed by such Restricted
Subsidiary.

 

(c)                                  An
Unrestricted Subsidiary that is a Guarantor shall be deemed automatically and
unconditionally released and discharged from all obligations under its
Guarantee upon notice from the Company to the Senior Trustee to such effect,
without any further action required on the part of the Senior Trustee or any
Holder.

 

Section 6.04.  Execution
and Delivery of Guarantee.  The
execution by each Guarantor of the Indenture (or a supplemental indenture in
the form of Exhibit B) together with an executed guarantee substantially
in the form included in Exhibit A evidences the Guarantee of such
Guarantor, whether or not the

 

72

 

person signing as an officer of the Guarantor still holds that office
at the time of authentication of any Note. 
The delivery of any Note by the Senior Trustee after authentication
constitutes due delivery of the Guarantee on behalf of each Guarantor.

 

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

 

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

 

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

 

Section 6.08.  Subrogation
and Contribution.   Upon making any
payment with respect to any obligation of the Issuer under this Article, the
Guarantor making such payment will be subrogated to the rights of the payee
against the Issuer with respect to such obligation; provided, that the Guarantor may not enforce either any
right of subrogation, or any right to receive payment in the nature of
contribution, or otherwise, from any other Guarantor, with respect to such
payment so long as any amount payable by the Issuer hereunder or under the
Notes remains unpaid.

 

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

 

73

 

payable by the Guarantors hereunder forthwith on demand by the Senior
Trustee or the Holders.

 

Section 6.10.  Guarantors as
“obligors” for Provisions Included in the Indenture Pursuant to the Trust
Indenture Act.  Each
provision included in the Indenture which is required to be included by any of
Sections 310 to 317 of the Trust Indenture Act, inclusive, or is deemed
applicable to the Indenture by virtue of the provisions of the Trust Indenture
Act, and which applies to an “obligor,” as that term is defined under the Trust
Indenture Act, shall apply to each of the Guarantors.

 

ARTICLE 7

THE SENIOR TRUSTEE

 

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

 

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

 

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

 

(a)                    The Senior
Trustee may rely, and will be protected in acting or refraining from acting,
upon any resolution, certificate, statement, instrument, opinion, report,
notice, request, direction, consent, order, bond, debenture, note, other
evidence of indebtedness or other paper or document believed by it to be
genuine and to have been signed or presented by the proper Person.  The Senior Trustee need not investigate any
fact or matter stated in the document, but the Senior Trustee, in its
discretion, may make further inquiry or investigation into such facts or
matters as it sees fit.

 

(b)                   Before the
Senior Trustee acts or refrains from acting, it may require an Officers’
Certificate or an Opinion of Counsel conforming

 

74

 

to Section 11.05 and the Senior Trustee
will not be liable for any action it takes or omits to take in good faith in
reliance on such a certificate or opinion. 
Unless otherwise specifically provided in this Indenture, any demand,
request, direction or notice from the Issuer or the Company, as applicable,
shall be sufficient if signed by an Officer of the Issuer or the Company, as
applicable.

 

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

 

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

 

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

 

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

 

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

 

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

 

75

 

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

 

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

 

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

 

Section 7.05.  Reserved.

 

Section 7.06.  Reports by
Senior Trustee to Holders.  Within
60 days after each May 1, beginning with May 1, 2006, the Senior
Trustee will mail to each Holder, as provided in Trust Indenture Act Section 313(c) a
brief report dated as of such May 1, if required by Trust Indenture Act Section 313(a).

 

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

 

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

 

76

 

connection
with the exercise or performance of any of its powers or duties under the
Indenture and the Notes.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

77

 

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

 

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

 

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

 

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

 

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

 

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

 

78

 

ARTICLE 8

DEFEASANCE AND DISCHARGE

 

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

 

Section 8.02.  Covenant Defeasance.  The Issuer, the
Company and the Guarantors shall, subject to the satisfaction of the conditions
set forth in Section 8.03 hereof, be released from their obligations with
respect to the Notes and the Guarantees under the covenants contained in
Sections 4.06, 4.07, 4.08, 4.09, 4.10, 4.11, 4.12, 4.13, clause (iii) of Section 4.14
and Article 6 (except for Sections 6.03 and 6.10) and each Guarantor’s
obligation under its Guarantee, on and after the date that the conditions set
forth in Section 8.03 are satisfied (hereinafter, “Covenant
Defeasance”), and the Notes shall thereafter be deemed not
outstanding for the purposes of any direction, waiver, consent or declaration
or act of Holders (and the consequences of any thereof) in connection with such
covenants, but shall continue to be deemed outstanding for all other purposes
hereunder (it being understood that the Notes shall not be deemed outstanding
for accounting purposes).  For this
purpose, Covenant Defeasance means that, with respect to the Notes and the
Guarantees, the Issuer, the Company and the Guarantors may omit to comply with
and shall have no liability in respect of any

 

79

 

term, condition or limitation set forth in any such covenant, whether
directly or indirectly, by reason of any reference elsewhere herein to any such
covenant or by reason of any reference in any such covenant to any other
provision herein or in any other document and such omission to comply shall not
constitute a Default or an Event of Default under Section 5.01 hereof,
but, except as specified above, the remainder of this Indenture and the Notes
shall be unaffected thereby.  Subject to
the satisfaction of the conditions set forth in Section 8.03 hereof,
Sections 5.01(iii) (with respect to the covenants so defeased), 5.01(iv),
5.01(v), 5.01(vi) and 5.01(ix) shall not constitute Events of Default
or Defaults hereunder.

 

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

 

In order to
exercise either Legal Defeasance or Covenant Defeasance:

 

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

 

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

 

(c)                                  in
the case of Covenant Defeasance, the Issuer must deliver to the Senior Trustee
an Opinion of Counsel reasonably acceptable to the Senior Trustee confirming
that the Holders of Notes will not recognize income, gain or loss for United
States federal income tax purposes as a result of such Covenant Defeasance, and
such Holders will be subject to United States federal income tax on the same
amounts, in the same manner and at the same times as would have been the case
if such Covenant Defesance had not occurred;

 

80

 

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

 

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

 

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

 

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

 

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

 

The Company
shall pay and indemnify the Senior Trustee against any tax, fee or other charge
imposed on or assessed against the cash or non-callable U.S. Government
Obligations deposited pursuant to Section 8.03 or Section 8.08 hereof
or the principal, premium, if any, interest and Additional Interest, if any,
received in respect thereof other than any such tax, fee or other charge which
by law is for the account of the Holders of Notes.

 

81

 

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

 

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

 

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

 

82

 

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

 

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

 

83

 

ARTICLE 9

AMENDMENTS, SUPPLEMENTS
AND WAIVERS

 

Section 9.01.  Amendments Without Consent of Holders.  The Company, the
Issuer, the Guarantors and the Senior Trustee may amend, supplement or waive
the Indenture or the Notes without notice to or the consent of any Holder:

 

(a)                                  to
convey, transfer, assign, mortgage or pledge to the Senior Trustee as security
for the Notes any property or assets;

 

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

 

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

 

(d)                                 to
confirm and evidence the termination or discharge of any Guarantee of or Lien
securing the Notes when such release, termination or discharge is permitted by
the Indenture;

 

(e)                                  to
cure any ambiguity, defect or inconsistency in the Indenture or the Notes;

 

(f)                                    to
evidence compliance with Section 4.14;

 

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

 

(h)                                 to
evidence and provide for the acceptance of appointment hereunder by a successor
Senior Trustee;

 

84

 

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

 

(j)                                     to
provide for any Guarantee of the Notes, to secure the Notes or to confirm and
evidence the release, termination or discharge of any Guarantee of or Lien
securing the Notes when such release, termination or discharge is permitted by
the Indenture;

 

(k)                                  to
provide for or confirm the issuance of Additional Notes; or

 

(l)                                     to
make any other change that does not adversely affect the legal rights of any
Holder.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

85

 

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

 

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

 

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

 

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

 

Section 9.03.  Effect of
Consent.  (a) After an amendment,
supplement or waiver becomes effective, it will bind every Holder unless it is
of the type requiring the consent of each Holder affected.  If the amendment, supplement or waiver is of
the type requiring the consent of each Holder affected, the amendment,
supplement or waiver will bind each Holder that has consented to it and every
subsequent Holder of a Note that evidences the same debt as the Note of the
consenting Holder.

 

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

 

Section 9.04.  Senior
Trustee’s Rights and Obligations.  The
Senior Trustee is entitled to receive, and will be fully protected in relying
upon, an Opinion of Counsel stating (i) that the execution of any
amendment, supplement or waiver authorized pursuant to this Article is
authorized or permitted by the Indenture and (ii) in the case of an
amendment, supplement or waiver in

 

86

 

connection with Section 9.01(l) that such amendment, supplement or
waiver does not adversely affect the legal rights of any Holder of Notes
affected by such change.  If the Senior
Trustee has received such an Opinion of Counsel, it shall sign the amendment,
supplement or waiver so long as the same does not adversely affect the rights
of the Senior Trustee.  The Senior
Trustee may, but is not obligated to, execute any amendment, supplement or
waiver that affects the Senior Trustee’s own rights, duties or immunities under
the Indenture.

 

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

 

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

 

ARTICLE 10

RELEASE OF ISSUER AND
GUARANTORS

 

Section 10.01.  Release of Issuer.  (a) The Issuer
shall be released from its obligations under this Indenture and the Notes,
without the consent of the Holders, if: (1) the Company or any successor
to the Company has assumed the obligations of the Issuer under this Indenture
and the Notes, by supplemental indenture executed and delivered to the Senior
Trustee and satisfactory in form to the Senior Trustee, (2) the Company
delivers an Opinion of Counsel to the Senior Trustee to the effect that Holders
will not recognize income, gain or loss for United States federal income tax
purposes as a result of such release and such Holders will be subject to United
States federal income tax on the same amounts, in the same manner and at the
same times as would have been the case if such release had not occurred and (3) the
Issuer shall (w) become a Guarantor subject to the provisions of Article 6
and Section 4.11 hereof, (x) execute a Guarantee, (y) execute a
supplemental indenture evidencing its Guarantee and (z) deliver an Opinion of
Counsel to the Senior Trustee to the effect that the supplemental indenture has
been duly authorized, executed and delivered by the Issuer and constitutes a
valid and binding obligation of the Issuer, enforceable against the Issuer in
accordance with its terms (subject to customary exceptions).

 

87

 

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

 

ARTICLE 11

MISCELLANEOUS

 

Section 11.01.  Trust
Indenture Act of 1939.  The
Indenture shall incorporate and be governed by the provisions of the Trust
Indenture Act that are required to be part of and to govern indentures
qualified under the Trust Indenture Act. 
To the extent permitted by applicable law, in the event of any
inconsistency between the terms of the Notes and the terms of the Indenture,
the terms of the Indenture will control.

 

Section 11.02.  Holder
Communications; Holder Actions.  (a) The rights of Holders to
communicate with other Holders with respect to the Indenture or the Notes are
as provided by the Trust Indenture Act, and the Company and the Issuer shall
comply with the requirements of Trust Indenture Act Section 312(a).  Neither the Company, the Issuer nor the
Senior Trustee will be held accountable by reason of any disclosure of
information as to names and addresses of Holders made pursuant to the Trust
Indenture Act.

 

(b)                                 (i)                                     any
request, demand, authorization, direction, notice, consent to amendment,
supplement or waiver or other action provided by this Indenture to be given or
taken by a Holder (an “act”) may
be evidenced by an instrument signed by the Holder delivered to the Senior
Trustee.  The fact and date of the
execution of the instrument, or the authority of the person executing it, may
be proved in any manner that the Senior Trustee deems sufficient.

 

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

 

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

 

(d)                                 The
Issuer may, but is not obligated to, fix a record date (which need not be
within the time limits otherwise prescribed by Trust Indenture Act Section 316(c))
for the purpose of determining the Holders entitled to act with respect to any
amendment or waiver or in any other regard, except that during the continuance
of an Event of Default, only the Senior Trustee may set a record date

 

88

 

as to notices
of Default, any declaration or acceleration or any other remedies or other
consequences of the Event of Default.  If
a record date is fixed, those Persons that were Holders at such record date and
only those Persons will be entitled to act, or to revoke any previous act,
whether or not those Persons continue to be Holders after the record date.  No act will be valid or effective for more
than 90 days after the record date.

 

Section 11.03.  Notices.  (a) Any notice
or communication to the Issuer or the Company will be deemed given if in
writing (i) when delivered in person or (ii) five days after mailing
when mailed by first class mail or (iii) when sent by facsimile
transmission, with transmission confirmed. 
Notices or communications to a Guarantor will be deemed given if given
to the Company.  Any notice to the Senior
Trustee will be effective only upon receipt. 
In each case the notice or communication should be addressed as follows:

 

if to the Issuer or the Company:

 

K. Hovnanian Enterprises, Inc.

10 Highway 35

P.O. Box 500

Red Bank, NJ 07701

Facsimile: (732) 747-7159

Attention:  General Counsel

 

if to the Senior Trustee:

 

Wachovia Bank,
National Association

21 South Street

Morristown, NJ 07960

ATTN: Corporate Trust Administration

(K. Hovnanian Enterprises, Inc. Senior 

Notes due 2016)

Facsimile: (973) 682-4531

 

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

 

(b)                                 Except
as otherwise expressly provided with respect to published notices, any notice
or communication to a Holder will be deemed given when mailed to the Holder at
its address as it appears on the Register by first class mail or, as to any
Global Note registered in the name of DTC or its nominee, as agreed by the
Issuer, the Senior Trustee and DTC. 
Copies of any notice or communication to a Holder, if given by the
Issuer or the Company, will be mailed to the Senior Trustee at the same time.  Defect in mailing a notice or

 

89

 

communication
to any particular Holder will not affect its sufficiency with respect to other
Holders.

 

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

 

Section 11.04.  Certificate
and Opinion as to Conditions Precedent.  Upon
any request or application by the Issuer or the Company to the Senior Trustee
to take any action under the Indenture, the Issuer or the Company will furnish
to the Senior Trustee:

 

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

 

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

 

Section 11.05.  Statements
Required in Certificate or Opinion.  Each
certificate or opinion with respect to compliance with a condition or covenant
provided for in the Indenture must include:

 

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

 

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

 

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

 

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

 

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

 

90

 

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

 

Any
certificate, statement or opinion of an Officer of the Issuer or the Company,
as applicable, or of counsel may be based, insofar as it relates to accounting
matters, upon a certificate or opinion of or representations by an accountant
or firm of accountants in the employ of the Issuer or the Company, as
applicable, unless such Officer or counsel, as the case may be, knows that the
certificate or opinion or representations with respect to the accounting
matters upon which such certificate, statement or opinion may be based as aforesaid
are erroneous, or in the exercise of reasonable care should know that the same
are erroneous.

 

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

 

Section 11.06.  Payment
Date Other Than a Business Day.  If
any payment with respect to a payment of any principal of, premium, if any, or
interest or Additional Interest, if any, on any Note (including any payment to
be made on any date fixed for redemption or purchase of any Note) is due on a
day which is not a Business Day, then the payment need not be made on such
date, but may be made on the next Business Day with the same force and effect
as if made on such date, and no interest will accrue for the intervening
period.

 

Section 11.07.  Governing
Law.  The Indenture, the
Guarantees and the Notes shall be governed by, and construed in accordance
with, the laws of the State of New York.

 

Section 11.08.  No Adverse Interpretation of Other Agreements.  The Indenture may not be
used to interpret another indenture or loan or debt agreement of the Issuer,
the Company or any Subsidiary of the Company, and no such indenture or loan or
debt agreement may be used to interpret the Indenture.

 

Section 11.09.  Successors.  All agreements of the Issuer, the
Company or any Guarantor in the Indenture and the Notes will bind its
successors.  All agreements of the Senior
Trustee in the Indenture will bind its successor.

 

91

 

Section 11.10.  Duplicate
Originals.  The parties may
sign any number of copies of the Indenture. 
Each signed copy shall be an original, but all of them together
represent the same agreement.

 

Section 11.11.  Separability.  To the extent permitted by
applicable law, in case any provision in the Indenture or in the Notes is
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions will not in any way be affected or impaired thereby.

 

Section 11.12.  Table of
Contents and Headings.  The
Table of Contents, Cross-Reference Table and headings of the Articles and
Sections of the Indenture have been inserted for convenience of reference only,
are not to be considered a part of the Indenture and in no way modify or
restrict any of the terms and provisions of the Indenture.

 

Section 11.13.  No
Liability of Directors, Officers, Employees, Partners, Incorporators and
Stockholders.  No recourse
under or upon any obligation, covenant or agreement contained in this
Indenture, or in the Notes, or because of any indebtedness evidenced thereby,
shall be had against any incorporator, as such or against any past, present or
future stockholder, officer, director or employee, as such, of the Issuer, the
Company or the Guarantors or any partner of the Issuer, the Company or the
Guarantors or of any successor, either directly or through the Issuer, the
Company or the Guarantors or any successor, under any rule of law, statute
or constitutional provision or by the enforcement of any assessment or by any
legal or equitable proceeding or otherwise, all such liability being expressly
waived and released by the acceptance of the Notes by the Holders thereof and
as part of the consideration for the issue of the Notes.

 

Section 11.14.  Provisions of Indenture for the Sole Benefit
of Parties and Holders of Notes.  Nothing
in this Indenture or in the Notes, expressed or implied, shall give or be
construed to give to any Person, other than the parties hereto and their
successors and the Holders of Notes, any legal or equitable right, remedy or
claim under this Indenture or under any covenant or provision herein contained,
all such covenants and provisions being for the sole benefit of the parties
hereto and their successors and of the Holders of Notes.

 

92

 

SIGNATURES

 

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

 

	
   

  	
  K. HOVNANIAN ENTERPRISES, INC.,

  as Issuer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ PETER S. REINHART

  	
   

  
	
   

  	
   

  	
  Name: Peter S. Reinhart

  
	
   

  	
   

  	
  Title: Senior Vice-President and

  General Counsel

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  HOVNANIAN ENTERPRISES, INC.,

  as the Company and a Guarantor

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ PETER S. REINHART

  	
   

  
	
   

  	
   

  	
  Name: Peter S. Reinhart

  
	
   

  	
   

  	
  Title: Senior Vice-President and

  General Counsel

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  On behalf of each entity named in

  Schedule A hereto, as a Guarantor

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ PETER S. REINHART

  	
   

  
	
   

  	
   

  	
  Name: Peter S. Reinhart

  
	
   

  	
   

  	
  Title: Authorized Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
  WACHOVIA BANK, NATIONAL

  ASSOCIATION, as Senior Trustee

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/
  STEPHANIE ROCHE

  	
   

  	
   

  
	
   

  	
  Name: Stephanie Roche

  	
   

  
	
   

  	
  Title:Vice President

  	
   

  
						

 

[signature page to the Indenture]

 

93

 

SCHEDULE A

 

GUARANTORS

 

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.

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 HACKETTSTOWN, INC.

K. HOVNANIAN
AT HERSHEY’S MILL, 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.

 

A-1

 

K. HOVNANIAN
AT MARLBORO TOWNSHIP IV, INC.

K. HOVNANIAN
AT METRO DC SOUTH, INC.

K. HOVNANIAN
AT MONROE II, INC.

K. HOVNANIAN
AT MONTCLAIR NJ, INC.

K. HOVNANIAN
AT MONTGOMERY I, 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 CHRISTIANITOS, 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 SKYE ISLE, INC.

K. HOVNANIAN
AT SMITHVILLE, INC.

K. HOVNANIAN
AT SOUTH BRUNSWICK III, INC.

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.

 

A-2

 

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
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.

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
EQUITIES, INC.

K. HOVNANIAN
FORECAST HOMES, INC.

K. HOVNANIAN
HOMES OF NORTH CAROLINA, INC.

K. HOVNANIAN
HOMES OF VIRGINIA, INC.

K. HOVNANIAN
INVESTMENT PROPERTIES OF NEW JERSEY, INC.

K. HOVNANIAN
PA REAL ESTATE, INC.

K. HOVNANIAN
PORT IMPERIAL URBAN RENEWAL, INC.

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

K. HOVNANIAN
PROPERTIES OF NORTH BRUNSWICK V, INC.

K. HOVNANIAN
PROPERTIES OF WALL, INC.

KHC ACQUISITION,
INC.

LANDARAMA,
INC.

M&M AT
LONG BRANCH, INC.

MATZEL &
MUMFORD OF DELAWARE, INC.

MCNJ, INC.

PINE BROOK
COMPANY, INC.

 

A-3

 

REFLECTIONS OF
YOU INTERIORS, INC.

SEABROOK
ACCUMULATION CORPORATION

STONEBROOK
HOMES, INC.

THE MATZEL &
MUMFORD ORGANIZATION, INC.

WASHINGTON
HOMES, INC.

WESTMINSTER
HOMES OF TENNESSEE, INC.

WESTMINSTER
HOMES, INC.

WH LAND I, INC

WH PROPERTIES,
INC.

DULLES
COPPERMINE, L.L.C.

EDISON
CONTRACT SERVICES, L.L.C.

HOVNANIAN LAND
INVESTMENT GROUP, L.L.C.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

 

A-4

 

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

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

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

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

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

K. HOVNANIAN
AT DOVER, L.L.C

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

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

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

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

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

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

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

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

K. HOVNANIAN
AT HAWTHORNE, L.L.C.

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

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

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

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

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

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

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

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

 

A-5

 

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 MANALAPAN III, L.L.C.

K. HOVNANIAN
AT MANSFIELD I, LLC

K. HOVNANIAN
AT MANSFIELD II, LLC

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.

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 MENIFEE, L.L.C.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

 

A-6

 

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

K. HOVNANIAN
AT SHELF COMPANY, 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 SPRINGCO, L.L.C.

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

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

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

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

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

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

K. HOVNANIAN
AT VINELAND, 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.

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

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

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

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

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

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

 

A-7

 

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

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

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

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

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

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

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

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

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

K. HOVNANIAN
COMPANIES, L.L.C.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

K. HOVNANIAN
HOMES OF DELAWARE, L.LC.

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

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

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

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

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

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

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

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

K. HOVNANIAN
SOUTHERN NEW JERSEY, L.L.C.

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

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

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

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

 

A-8

 

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

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

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

K. HOVNANIAN
WINDWARD HOMES, L.LC.

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

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

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

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

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

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

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

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

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

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

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

K. HOVNANIAN’S
FOUR SEASONS, L.L.C.

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

KHIP, LLC

KINGS COURT AT
MONTGOMERY, L.L.C.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

M&M AT
WHEATON URBAN RENEWAL, 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.

 

A-9

 

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

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

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

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

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

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

MMIP, L.L.C.

NORTH MANATEE,
L.L.C.

PADDOCKS,
L.L.C.

PINE AYR,
L.L.C.

RIDGEMORE
UTILITY, L.L.C.

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

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

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

WESTMINSTER
HOMES OF ALABAMA, L.L.C.

WESTMINSTER
HOMES OF MISSISSIPPI, L.L.C.

WOODLAND LAKES
CONDOS AT BOWIE NEWTOWN, LLC

GOODMAN FAMILY
OF BUILDERS, L.P.

K. HOVNANIAN
OF HOUSTON II, L.P.

K. HOVNANIAN
OF HOUSTON, L.P.

M & M
INVESTMENTS, L.P.

 

A-10

 

EXHIBIT A

 

[FACE OF NOTE]

 

K. HOVNANIAN
ENTERPRISES, INC.

 

6.25% Senior
Notes Due 2016

 

	
   

  	
  CUSIP No.:

  
	
   

  	
   

  	
   

  
	
  No.

  	
   

  	
  $

  

 

K. Hovnanian
Enterprises, Inc., a California corporation (the “Issuer,” which term includes any successor under the Indenture
hereinafter referred to), for value received, promises to pay to                               ,
or its registered assigns, the principal sum of                               
DOLLARS ($                   ),
[or such other amount as is provided in a schedule attached hereto](1), on
January 15, 2016.

 

Interest Rate:                         6.25%
per annum.

 

Interest
Payment Dates:  January 15 and July 15,
commencing January 15, 2006.

 

Record
Dates:  January 1 and July 1.

 

Reference is
hereby made to the further provisions of this Note set forth on the reverse
hereof, which will for all purposes have the same effect as if set forth at
this place.

 

(1)  For
Global Notes.

 

A-11

 

IN WITNESS
WHEREOF, the Issuer has caused this Note to be signed manually or by facsimile
by its duly authorized officer.

 

Dated: August    , 2005

 

	
   

  	
  K. HOVNANIAN ENTERPRISES, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  

 

A-12

 

[Form of] Senior Trustee’s Certificate of Authentication

 

This is one of
the 6.25% Senior Notes Due 2016 described in the Indenture referred to in this
Note.

 

 

	
   

  	
  WACHOVIA BANK, NATIONAL

  ASSOCIATION, as Senior Trustee

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Authorized Signatory

  

 

A-13

 

[REVERSE SIDE OF NOTE]

 

K. HOVNANIAN
ENTERPRISES, INC.

 

6.25% Senior
Notes Due 2016

 

Capitalized
terms used herein are used as defined in the Indenture referred to below unless
otherwise indicated.

 

1.                                       Principal and Interest.

 

K. Hovnanian
Enterprises, Inc. (the “Issuer,” which
term includes any successor under the Indenture hereinafter referred to), a
California corporation, promises to pay the principal of this Note on January 15,
2016.

 

The Issuer
promises to pay interest on the principal amount of this Note on each interest
payment date, as set forth on the face of this Note, at the rate of 6.25% per
annum.

 

Interest will
be payable semiannually (to the holders of record of the Notes at the close of
business on the January 1 or July 1 immediately preceding the
interest payment date) on each interest payment date, commencing January 15,
2006.

 

[The Holder of
this Note is entitled to the benefits of the Registration Rights Agreement,
dated August 8, 2005, among the Issuer, the Guarantors party thereto and the
Initial Purchasers named therein (the “Registration
Rights Agreement”). In the event of a Registration Default (as
defined in the Registration Rights Agreement), the Holder shall be entitled to
Additional Interest as specified in the Registration Rights Agreement until the
Registration Default is cured.](2)

 

Interest on
this Note will accrue from the most recent date to which interest has been paid
on this Note or the Note surrendered in exchange for this Note (or, if there is
no existing default in the payment of interest and if this Note is
authenticated between a regular record date and the next interest payment date,
from such interest payment date) or, if no interest has been paid, from August 8,
2005.  Interest will be computed on the
basis of a 360-day year of twelve 30-day months.

 

(2) For
Initial Notes and Initial Additional Notes only.

 

A-14

 

2.                                       Paying Agent and Registrar.

 

Initially,
Wachovia Bank, National Association (the “Senior Trustee”)
will act as Paying Agent and Registrar. 
The Issuer may change or appoint any Paying Agent, Registrar or
co-Registrar without notice to any Holder. 
The Issuer or any of its Subsidiaries may act as Paying Agent, Registrar
or co-Registrar.

 

3.                                       Indenture; Guarantees.

 

This is one of
the Notes issued under an Indenture dated as of August 8, 2005 (as amended
from time to time, the “Indenture”),
among the Issuer, the Guarantors party thereto and the Senior Trustee.  The terms of the Notes include those stated in
the Indenture and those made part of the Indenture by reference to the Trust
Indenture Act.  The Notes are subject to
all such terms, and Holders are referred to the Indenture and the Trust
Indenture Act for a statement of all such terms.  To the extent permitted by applicable law, in
the event of any inconsistency between the terms of this Note and the terms of
the Indenture, the terms of the Indenture will control.

 

The Notes are
general unsecured obligations of the Issuer. 
The Indenture limits the original aggregate principal amount of the
Notes issued thereunder to $300,000,000, but Additional Notes may be issued
pursuant to the Indenture, and the originally issued Notes and all such
Additional Notes vote together for all purposes as a single class.  This Note is guaranteed by the Guarantors as
set forth in the Indenture and the Guarantee endorsed hereon.

 

Reference is
hereby made to the Indenture for a statement of the respective rights, duties
and obligations thereunder of the Guarantors, the Senior Trustee and the
Holders.

 

4.                                       Optional Redemption.

 

The Notes will
be redeemable, in whole, at any time, or in part, from time to time, at the
option of the Issuer upon not less than 30 nor more than 60 days’ notice at a
redemption price equal to the sum of:

 

(a)                                  100%
of the principal amount thereof, plus accrued and unpaid interest thereon to
the redemption date; plus

 

(b)                                 the
Make-Whole Amount.

 

The Senior
Trustee shall have no responsibility in connection with the calculation of such
redemption price.

 

“Make-Whole Amount” means, in connection with any optional
redemption of any Note, the excess, if any, of: 
(a) the aggregate present value as

 

A-15

 

of the date of
such redemption of each dollar of principal being redeemed and the amount of
interest (exclusive of interest accrued to the redemption date) that would have
been payable in respect of such dollar if such prepayment had not been made,
determined by discounting, on a semiannual basis, such principal and interest
at the Treasury Rate (determined on the Business Day preceding the date of such
redemption) plus 0.50%, from the respective dates on which such principal and
interest would have been payable if such payment had not been made; over (b) the
principal amount of the Note being redeemed.

 

“Treasury Rate” means, in connection with the calculation of
any Make-Whole Amount with respect to any Note, the yield to maturity at the
time of computation of United States Treasury securities with a constant maturity,
as compiled by and published in the most recent Federal Reserve Statistical
Release H.15 (519) that has become publicly available at least two business
days prior to the redemption date (or, if such Statistical Release is no longer
published, any publicly available source or similar market data), equal to the
then remaining maturity of the Note being prepaid.  If no maturity exactly corresponds to such
maturity, yields for the published maturities occurring prior to and after such
maturity most closely corresponding to such maturity shall be calculated
pursuant to the immediately preceding sentence and the Treasury Rate shall be
interpolated or extrapolated from such yields on a straight-line basis,
rounding in each of such relevant periods to the nearest month.

 

If less than
all of the Notes are to be redeemed at any time, the Senior Trustee will select
Notes for redemption on a pro rata basis,
by lot or by such other method as the Senior Trustee in its sole discretion
shall deem appropriate and fair.

 

No Notes of
$1,000 in original principal amount or less shall be redeemed in part.  Notices of redemption may not be conditional.

 

If any Note is
to be redeemed in part only, the notice of redemption that relates to that Note
shall state the portion of the principal amount thereof to be redeemed.  A new Note in principal amount equal to the
unredeemed portion of the original Note will be issued in the name of the
Holder thereof upon cancellation of the original Note.  Notes called for redemption become due on the
date fixed for redemption.  On and after
the redemption date, interest ceases to accrue on Notes or portions thereof
called for redemption.

 

5.                                       Mandatory Redemption.

 

There is no
sinking fund for, or mandatory redemption of, the Notes.

 

A-16

 

6.                                      Discharge
and Defeasance.

 

If the Issuer
deposits with the Senior Trustee money and/or U.S. Government Obligations
sufficient to pay the then outstanding principal of, premium, interest and
Additional Interest, if any, and accrued interest on the Notes to redemption or
maturity, as the case may be, the Issuer, the Company and the Guarantors may in
certain circumstances be discharged from the Indenture, the Notes and the
Guarantees or may be discharged from certain of their obligations under certain
provisions of the Indenture.

 

7.                                       Registered Form; Denominations; Transfer; Exchange.

 

The Notes are
in registered form only without coupons in denominations of $1,000 principal
amount and any multiple of $1,000 in excess thereof.  A Holder may register the transfer or
exchange of Notes in accordance with the Indenture.  The Senior Trustee may require a Holder,
among other things, to furnish appropriate endorsements and transfer documents
and to pay any taxes and fees required by law or permitted by the
Indenture.  Pursuant to the Indenture,
there are certain periods during which the Senior Trustee will not be required
to issue, register the transfer of, or exchange any Note or certain portions of
a Note.

 

8.                                       Persons Deemed Owners.

 

The registered
Holder of this Note shall be treated as the owner of it for all purposes.

 

9.                                       Defaults and Remedies.

 

If an Event of
Default occurs and is continuing, the Senior Trustee or the Holders of at least
25% in principal amount of the Notes may declare all the Notes to be due and
payable immediately.  If a bankruptcy or
insolvency default with respect to the Issuer or the Company occurs and is
continuing, the Notes automatically become immediately due and payable.  Holders may not enforce the Indenture or the
Notes except as provided in the Indenture. 
The Senior Trustee may require indemnity satisfactory to it before it
enforces the Indenture or the Notes.  Subject
to certain limitations, Holders of a majority in principal amount of the Notes
then outstanding may direct the Senior Trustee in its exercise of remedies.

 

10.                                 Amendment, Supplement and Waiver.

 

Subject to
certain exceptions, the Indenture, the Notes and the Guarantees may be amended
or supplemented, or future compliance therewith may be waived, with the consent
of the Holders of a majority in principal amount of the outstanding Notes.  Without notice to or the consent of any
Holder, the Issuer, the

 

A-17

 

Company, the
Guarantors and the Senior Trustee may amend or supplement the Indenture, the
Notes or the Guarantees to, among other things, cure any ambiguity, defect or
inconsistency or if such amendment or supplement does not adversely affect the
legal rights of any Holder.

 

11.                                 Senior
Trustee Dealings With Issuer.

 

The Senior
Trustee, in its individual or any other capacity, may become the owner or
pledgee of Notes and may otherwise deal with the Issuer or its affiliates, with
the same rights as if it were not Senior Trustee; however,
if it acquires any conflicting interest (as defined in the Trust Indenture
Act), it must eliminate such conflict, apply to the Commission for permission
to continue or resign.

 

12.                                 No Recourse
Against Others.

 

An
incorporator, and any past, present or future director, officer, partner,
employee or stockholder, as such, of the Issuer, the Company or the Guarantors
shall not have any liability for any obligations of the Issuer, the Company or
the Guarantors under the Notes, the Indenture or the Guarantees or for any
claim based on, in respect of, or by reason of, such obligations or their
creation.  Each Holder by accepting a
Note waives and releases all such liability. 
The waiver and release are part of the consideration for the issue of
the Notes.

 

13.                                 Governing
Law.

 

THIS NOTE
SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE
OF NEW YORK.

 

14.                                 CUSIP
Numbers.

 

Pursuant to a
recommendation promulgated by the Committee on Uniform Note Identification
Procedures, the Issuer has caused CUSIP numbers to be printed on the Notes, and
the Senior Trustee may use CUSIP numbers in notices as a convenience to
Holders.  No representation is made as to
the accuracy of such numbers either as printed on the Notes or as contained in
any notice and reliance may be placed only on the other identification numbers
placed thereon.

 

15.                                 Authentication.

 

This Note is
not valid until the Senior Trustee (or Authenticating Agent) manually signs the
certificate of authentication on the other side of this Note.

 

A-18

 

16.                                 Abbreviations.

 

Customary
abbreviations may be used in the name of a Holder or an assignee, such as:  TEN COM (= tenants in common), TEN ENT (=
tenants by the entireties), JT TEN (= joint tenants with right of survivorship
and not as tenants in common), CUST (= Custodian) and U/G/M/A/ (= Uniform Gifts
to Minors Act).

 

The Issuer
will furnish a copy of the Indenture to any Holder upon written request and
without charge.

 

A-19

 

[FORM OF TRANSFER NOTICE]

 

FOR VALUE RECEIVED the undersigned registered holder hereby sell(s),
assign(s) and transfer(s) unto

 

	
  Insert Social Security or Taxpayer Identification No.

  
	
   

  
	
   

  
	
   

  
	
  Please print or typewrite name and address, including zip code, of
  assignee

  
	
   

  
	
   

  
	
   

  
	
  the within Note and all rights thereunder, hereby irrevocably
  constituting and appointing

  
	
   

  
	
   

  

 

agent to
transfer this Note on the books of the Issuer with full power of substitution
in the premises.

 

 

	
  Dated:

  	
   

  	
   

  	
  Signed:

  	
   

  	
   

  
	
   

  	
  (sign exactly as name
  appears on the other side of this

  Note)

  
	
   

  	
   

  
	
   

  	
   

  
	
  Signature
  Guarantee(3):

  	
   

  	
   

  
							

 

 

(3) Signatures
must be guaranteed by an “eligible guarantor
institution” meeting the requirements of the Registrar, which
requirements include membership or participation in the Note Transfer Agent
Medallion Program (“STAMP”) or
such other “signature guarantee program” as
may be determined by the Registrar in addition to, or in substitution for,
STAMP, all in accordance with the Securities Exchange Act of 1934, as amended.

 

A-20

 

[THE FOLLOWING PROVISION TO BE INCLUDED ON ALL

CERTIFICATES BEARING A RESTRICTED LEGEND]

 

In connection with any transfer of this Note
occurring prior to the date which is the date following the second anniversary
of the original issuance of this Note, the undersigned confirms that such
transfer is made without utilizing any general solicitation or general
advertising in connection with the transfer and further as follows:

 

Check One

 

9                                         (1) This
Note is being transferred to a “qualified institutional buyer” in compliance
with Rule 144A under the Securities Act of 1933, as amended, and
certification in the form of Exhibit F to the Indenture is being furnished
herewith.

 

9                                         (2) This
Note is being transferred to a non-”U.S. Person,” as defined in Rule 902
of Regulation S under the Securities Act in compliance with the exemption from
registration under the Securities Act of 1933, as amended, provided by
Regulation S thereunder, and certification in the form of Exhibit E to the
Indenture is being furnished herewith.

 

or

 

9                                         (3) This
Note is being transferred other than in accordance with (1) or (2) above
and documents are being furnished herewith which comply with the conditions of
transfer set forth in this Note and the Indenture.

 

If none of the
foregoing boxes is checked, the Senior Trustee is not obligated to register
this Note in the name of any Person other than the Holder hereof unless and
until the conditions to any such transfer of registration set forth herein and
in the Indenture have been satisfied.

 

	
  Dated:

  	
   

  	
   

  
	
   

  
	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Transferor

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Signed:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  NOTICE:  The signature to this
  assignment must correspond with the name as written upon the face of the
  within-mentioned instrument in every particular, without alteration or any
  change whatsoever.

  
							

 

A-21

 

	
   

  	
  instrument in every particular, without alteration or any change
  whatsoever.

  
	
   

  	
   

  
	
  Signature
  Guarantee:(4)

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  (To be
  executed by an executive officer)

  	
   

  
					

 

(4) Signatures
must be guaranteed by an “eligible guarantor
institution” meeting the requirements of the Registrar, which
requirements include membership or participation in the Note Transfer Agent
Medallion Program (“STAMP”) or
such other “signature guarantee program” as
may be determined by the Registrar in addition to, or in substitution for,
STAMP, all in accordance with the Securities Exchange Act of 1934, as amended.

 

A-22

 

OPTION OF
HOLDER TO ELECT PURCHASE

 

If you wish to
have all of this Note purchased by the Issuer pursuant to Section 4.10 or Section 4.12
of the Indenture, check the box: 9

 

If you wish to
have a portion of this Note purchased by the Issuer pursuant to Section 4.10
or Section 4.12 of the Indenture, state the amount (in original principal
amount) below:

 

$                              .

 

	
  Date:

  	
   

  	
   

  
	
   

  
	
  Your
  Signature:

  	
   

  	
   

  
	
   

  
	
  (Sign
  exactly as your name appears on the other side of this Note)

  
	
   

  
	
  Signature
  Guarantee:(5)

  	
   

  	
   

  
							

 

(5) Signatures
must be guaranteed by an “eligible guarantor
institution” meeting the requirements of the Senior Trustee, which
requirements include membership or participation in the Note Transfer Agent
Medallion Program (“STAMP”) or
such other “signature guarantee program” as
may be determined by the Senior Trustee in addition to, or in substitution for,
STAMP, all in accordance with the Securities Exchange Act of 1934, as amended.

 

A-23

 

SCHEDULE OF
EXCHANGES OF INTERESTS IN GLOBAL NOTES(6)

 

The following
exchanges of a part of this Global Note for Certificated Notes or an interest
in another Global Note, or exchanges of a part of another Global Note or
Certificated Note for an interest in this Global Note, have been made:

 

	
  Date of Exchange

  	
   

  	
  Amount of

  decrease in

  principal amount

  of this Global Note

  	
   

  	
  Amount of

  increase in

  principal amount

  of this Global Note

  	
   

  	
  Principal amount

  of this Global Note

  following such

  decrease or

  increase

  	
   

  	
  Signature of

  authorized officer

  of Senior Trustee

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

(6) For Global
Notes

 

A-24

 

[FORM OF
NOTATION ON NOTE RELATING TO GUARANTEE]

 

GUARANTEE

 

The
undersigned (the “Guarantors”)
have unconditionally guaranteed, jointly and severally (such guarantee by each
Guarantor being referred to herein as the “Guarantee”)
(i) the due and punctual payment of the principal of and interest and
Additional Interest, if any, on the Issuer’s 6.25% Senior Notes due 2016 (the “Notes”), whether at maturity or on an interest payment date,
by acceleration or otherwise, on the Notes, to the extent lawful, and of all
other obligations of the Issuer to the Holders or the Senior Trustee all in accordance
with the terms set forth in Article 6 of the Indenture and (ii) in
case of any extension of time of payment or renewal of any Notes or any of such
other obligations, that the same will be promptly paid in full when due or
performed in accordance with the terms of the extension or renewal, whether at
stated maturity, by acceleration or otherwise.

 

No past,
present or future stockholder, officer, director, employee, partner or
incorporator, as such, of any of the Guarantors shall have any liability under
the Guarantee evidenced hereby by reason of such person’s status as
stockholder, officer, director, employee, partner or incorporator. Each Holder
of a Note by accepting a Note waives and releases all such liability. This
waiver and release are part of the consideration for the issuance of the
Guarantee.

 

Each Holder of
a Note by accepting a Note agrees that any Guarantor named below shall have no
further liability with respect to its Guarantee if such Guarantor otherwise
ceases to be liable in respect of its Guarantee in accordance with the terms of
the Indenture.

 

The Guarantee
evidenced hereby shall not be valid or obligatory for any purpose until the
certificate of authentication on the Notes upon which the Guarantee is noted
shall have been executed by the Senior Trustee under the Indenture by the
manual signature of one of its authorized officers.

 

This Guarantee
shall be governed by, and construed in accordance with, the laws of the State
of New York.

 

HOVNANIAN
ENTERPRISES, INC.

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.

 

A-25

 

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.

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 HACKETTSTOWN, INC.

K. HOVNANIAN
AT HERSHEY’S MILL, 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.

K. HOVNANIAN
AT MARLBORO TOWNSHIP IV, INC.

K. HOVNANIAN
AT METRO DC SOUTH, INC.

K. HOVNANIAN
AT MONROE II, INC.

K. HOVNANIAN
AT MONTCLAIR NJ, INC.

K. HOVNANIAN
AT MONTGOMERY I, 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.

 

A-26

 

K. HOVNANIAN
AT PERKIOMEN II, INC.

K. HOVNANIAN
AT PLAINSBORO III, INC.

K. HOVNANIAN
AT PRINCETON, INC.

K. HOVNANIAN
AT RANCHO CHRISTIANITOS, 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 SKYE ISLE, INC.

K. HOVNANIAN
AT SMITHVILLE, INC.

K. HOVNANIAN
AT SOUTH BRUNSWICK III, INC.

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.

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.

 

A-27

 

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.

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
EQUITIES, INC.

K. HOVNANIAN
FORECAST HOMES, INC.

K. HOVNANIAN
HOMES OF NORTH CAROLINA, INC.

K. HOVNANIAN
HOMES OF VIRGINIA, INC.

K. HOVNANIAN
INVESTMENT PROPERTIES OF NEW JERSEY, INC.

K. HOVNANIAN
PA REAL ESTATE, INC.

K. HOVNANIAN
PORT IMPERIAL URBAN RENEWAL, INC.

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

K. HOVNANIAN
PROPERTIES OF NORTH BRUNSWICK V, INC.

K. HOVNANIAN
PROPERTIES OF WALL, INC.

KHC
ACQUISITION, INC.

LANDARAMA,
INC.

M&M AT
LONG BRANCH, INC.

MATZEL &
MUMFORD OF DELAWARE, INC.

MCNJ, INC.

PINE BROOK
COMPANY, INC.

REFLECTIONS OF
YOU INTERIORS, INC.

SEABROOK ACCUMULATION
CORPORATION

STONEBROOK
HOMES, INC.

THE MATZEL &
MUMFORD ORGANIZATION, INC.

WASHINGTON
HOMES, INC.

WESTMINSTER
HOMES OF TENNESSEE, INC.

WESTMINSTER
HOMES, INC.

WH LAND I, INC

WH PROPERTIES,
INC.

DULLES
COPPERMINE, L.L.C.

 

A-28

 

EDISON
CONTRACT SERVICES, L.L.C.

HOVNANIAN LAND
INVESTMENT GROUP, L.L.C.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

K. HOVNANIAN
AT DOVER, L.L.C

K. HOVNANIAN
AT EASTLAKE, 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.

 

A-29

 

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

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

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

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

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

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

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

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

K. HOVNANIAN
AT HAWTHORNE, L.L.C.

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

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

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

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

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

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

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

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

K. HOVNANIAN
AT MANSFIELD I, LLC

K. HOVNANIAN
AT MANSFIELD II, LLC

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.

 

A-30

 

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 MENIFEE, L.L.C.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

 

A-31

 

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

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

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

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

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

K. HOVNANIAN
AT SHELF COMPANY, 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 SPRINGCO, L.L.C.

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

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

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

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

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

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

K. HOVNANIAN
AT VINELAND, 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.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

K. HOVNANIAN
COMPANIES, L.L.C.

 

A-32

 

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

K. HOVNANIAN
HOMES OF DELAWARE, L.LC.

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

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

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

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

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

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

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

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

K. HOVNANIAN
SOUTHERN NEW JERSEY, L.L.C.

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

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

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

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

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

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

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

K. HOVNANIAN
WINDWARD HOMES, L.LC.

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

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

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

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

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

 

A-33

 

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

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

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

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

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

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

K. HOVNANIAN’S
FOUR SEASONS, L.L.C.

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

KHIP, LLC

KINGS COURT AT
MONTGOMERY, L.L.C.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

M&M AT
WHEATON URBAN RENEWAL, 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 BOUND BROOK URBAN RENEWAL, L.L.C.

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

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

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

MMIP, L.L.C.

NORTH MANATEE,
L.L.C.

PADDOCKS,
L.L.C.

 

A-34

 

PINE AYR,
L.L.C.

RIDGEMORE
UTILITY, L.L.C.

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

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

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

WESTMINSTER
HOMES OF ALABAMA, L.L.C.

WESTMINSTER
HOMES OF MISSISSIPPI, L.L.C.

WOODLAND LAKES
CONDOS AT BOWIE NEWTOWN, LLC

GOODMAN FAMILY
OF BUILDERS, L.P.

K. HOVNANIAN
OF HOUSTON II, L.P.

K. HOVNANIAN
OF HOUSTON, L.P.

M & M
INVESTMENTS, L.P.

 

 

	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:Authorized Officer

  

 

A-35

 

EXHIBIT B

 

 

SUPPLEMENTAL
INDENTURE

 

dated as of                ,
      

 

among

 

K. HOVNANIAN
ENTERPRISES, INC.

 

HOVNANIAN
ENTERPRISES, INC.

 

The Other
Guarantors Party Hereto

 

and

 

WACHOVIA BANK,
NATIONAL ASSOCIATION

 

as Senior
Trustee

 

 

6.25% Senior
Notes due 2016

 

 

THIS
[          ] SUPPLEMENTAL
INDENTURE (this “[         ] Supplemental Indenture”), entered into as
of                 ,
         , among K. Hovnanian
Enterprises, Inc., a California corporation (the “Issuer”), Hovnanian Enterprises, Inc.
(the “Company”), [list each new
guarantor and its jurisdiction of incorporation] (each an “Undersigned”) and Wachovia Bank, National
Association, as Senior Trustee (the “Senior
Trustee”).

 

RECITALS

 

WHEREAS, the
Issuer, Company, the other Guarantors party thereto and the Senior Trustee
entered into an indenture, dated as of August 8, 2005 (the “Indenture”), relating to the Company’s
6.25% Senior Notes due 2016 (the “Notes”);

 

WHEREAS, as a
condition to the purchase of the Notes by the Holders, the Company agreed
pursuant to the Indenture to cause any newly acquired or created Restricted
Subsidiaries to provide Guarantees.

 

AGREEMENT

 

NOW,
THEREFORE, in consideration of the premises and mutual covenants herein
contained and intending to be legally bound, the parties hereto hereby agree as
follows:

 

SECTION 1.  Capitalized
terms used herein and not otherwise defined herein are used as defined in the
Indenture.

 

SECTION 2.  Each
Undersigned, by its execution of this
[         ] Supplemental
Indenture, agrees to be a Guarantor under the Indenture and to be bound by the
terms of the Indenture applicable to Guarantors, including, but not limited to,
Article 6 thereof.

 

SECTION 3.  This
[         ] Supplemental Indenture
shall be governed by and construed in accordance with the laws of the State of
New York.

 

SECTION 4.  This
[         ] Supplemental Indenture
may be signed in various counterparts which together will constitute one and
the same instrument.

 

SECTION 5.  This
[         ] Supplemental Indenture
is an amendment supplemental to the Indenture and the Indenture and this
[         ] Supplemental Indenture
will henceforth be read together.

 

B-1

 

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

 

	
   

  	
  K. HOVNANIAN ENTERPRISES, INC.,

  as Issuer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  HOVNANIAN ENTERPRISES, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  [GUARANTOR]

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  WACHOVIA BANK, NATIONAL

  ASSOCIATION, as Senior Trustee

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  

 

 

B-2

 

EXHIBIT C

 

RESTRICTED
LEGEND

 

THIS NOTE (OR
ITS PREDECESSOR) HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933,
AS AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY,
MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED WITHIN THE
UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S. PERSONS, EXCEPT AS
SET FORTH IN THE NEXT SENTENCE.  BY ITS
ACQUISITION HEREOF OR OF A BENEFICIAL INTEREST HEREIN, THE HOLDER:

 

(1)                          REPRESENTS
THAT (A) IT IS A “QUALIFIED INSTITUTIONAL BUYER” (AS DEFINED IN RULE 144A
UNDER THE SECURITIES ACT) (A “QIB”), (B) IT
HAS ACQUIRED THIS NOTE IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH REGULATION
S UNDER THE SECURITIES ACT OR (C) IT IS AN INSTITUTIONAL “ACCREDITED
INVESTOR” (AS DEFINED IN RULE 501(a) (1), (2), (3) OR (7) OF
REGULATION D UNDER THE SECURITIES ACT) (AN “IAI”),

 

(2)                          AGREES
THAT IT WILL NOT RESELL OR OTHERWISE TRANSFER THIS NOTE OR ANY BENEFICIAL
INTEREST HEREIN, EXCEPT (A) TO THE ISSUER, HOVNANIAN OR ANY OF ITS
SUBSIDIARIES, (B) TO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS A QIB
PURCHASING FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QIB IN A TRANSACTION
MEETING THE REQUIREMENTS OF RULE 144A, (C) IN AN OFFSHORE TRANSACTION
MEETING THE REQUIREMENTS OF RULE 903 OR 904 OF REGULATION S OF THE SECURITIES
ACT, (D) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144 UNDER THE
SECURITIES ACT, (E) TO AN IAI THAT, PRIOR TO SUCH TRANSFER, FURNISHES THE
TRUSTEE A SIGNED LETTER CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS
RELATING TO THE TRANSFER OF THIS NOTE (THE FORM OF WHICH CAN BE OBTAINED
FROM THE TRUSTEE) AND, IF SUCH TRANSFER IS IN RESPECT OF AN AGGREGATE PRINCIPAL
AMOUNT OF NOTES LESS THAN $250,000, AN OPINION OF COUNSEL ACCEPTABLE TO THE
ISSUER THAT SUCH TRANSFER IS IN COMPLIANCE WITH THE SECURITIES ACT, (F) IN
ACCORDANCE WITH ANOTHER EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT (AND BASED UPON AN OPINION OF COUNSEL ACCEPTABLE TO THE ISSUER)
OR (G) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT AND, IN EACH CASE,
IN ACCORDANCE WITH THE APPLICABLE SECURITIES LAWS OF ANY

 

C-1

 

STATE OF THE
UNITED STATES OR ANY OTHER APPLICABLE JURISDICTION AND

 

(3)                          AGREES
THAT IT WILL DELIVER TO EACH PERSON TO WHOM THIS NOTE OR AN INTEREST HEREIN IS
TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND.

 

AS USED
HEREIN, THE TERMS “OFFSHORE TRANSACTIONS” AND “UNITED STATES” HAVE THE MEANINGS
GIVEN TO THEM BY RULE 902 OF REGULATION S UNDER THE SECURITIES ACT.  THE INDENTURE CONTAINS A PROVISION REQUIRING
THE TRUSTEE TO REFUSE TO REGISTER ANY TRANSFER OF THIS NOTE IN VIOLATION OF THE
FOREGOING.

 

C-2

 

EXHIBIT D

 

DTC LEGEND

 

UNLESS THIS
NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST
COMPANY, A NEW YORK CORPORATION (“DTC”),
TO THE ISSUER OR ANY OF ITS SUBSIDIARIES OR ITS AGENT FOR REGISTRATION OF
TRANSFER, EXCHANGE OR PAYMENT, AND ANY NOTE ISSUED IS REGISTERED IN THE NAME OF
CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO
SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY
TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON
IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS A
BENEFICIAL INTEREST HEREIN.

 

THIS NOTE IS A
GLOBAL NOTE WITHIN THE MEANING OF THE INDENTURE HEREINAFTER REFERRED.  TRANSFERS OF THIS GLOBAL NOTE ARE LIMITED TO
TRANSFERS IN WHOLE, BUT NOT IN PART, BY DTC TO A NOMINEE OF DTC OR BY A NOMINEE
OF DTC TO DTC OR ANOTHER NOMINEE OF DTC OR BY DTC OR ANY SUCH NOMINEE TO A
SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH SUCCESSOR DEPOSITARY AND TRANSFERS OF
PORTIONS OF THIS GLOBAL NOTE ARE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH
THE TRANSFER PROVISIONS OF THE INDENTURE.

 

D-1

 

EXHIBIT E

 

Regulation S
Certificate

 

                        ,
        

 

Wachovia Bank, National Association

21 South Street

Morristown, NJ 07960

Attention: Corporate Trust Administration

 

	
  Re:

  	
   

  	
  K. Hovnanian Enterprises, Inc.

  6.25% Senior Notes due 2016 (the “Notes”)

  Issued under the Indenture (the “Indenture”)
  dated as

  as of August 8, 2005 relating to the Notes

  

 

Dear Sirs:

 

Terms are used
in this Certificate as used in Regulation S (“Regulation S”)
under the Securities Act of 1933, as amended (the “Securities
Act”), except as otherwise stated herein.

 

[CHECK A OR B AS APPLICABLE.]

 

G  A.                               This
Certificate relates to our proposed transfer of $          
principal amount of Notes issued under the Indenture.  We hereby certify as follows:

 

1.                                       The
offer and sale of the Notes was not and will not be made to a person in the
United States (unless such person is excluded from the definition of “U.S.
person” pursuant to Rule 902(k)(2)(vi) or the account held by it for
which it is acting is excluded from the definition of “U.S. person” pursuant to
Rule 902(k)(2)(i) under the circumstances described in Rule 902(g)(3))
and such offer and sale was not and will not be specifically targeted at an
identifiable group of U.S. citizens abroad.

 

2.                                       Unless
the circumstances described in the parenthetical in paragraph 1 above are
applicable, either (a) at the time the buy order was originated, the buyer
was outside the United States or we and any person acting on our behalf
reasonably believed that the buyer was outside the United States or (b) the
transaction was

 

E-1

 

executed in, on or through the facilities of
a designated offshore securities market, and neither we nor any person acting
on our behalf knows that the transaction was pre-arranged with a buyer in the
United States.

 

3.                                       Neither
we, any of our affiliates, nor any person acting on our or their behalf has
made any directed selling efforts in the United States with respect to the
Notes.

 

4.                                       The
proposed transfer of Notes is not part of a plan or scheme to evade the
registration requirements of the Securities Act.

 

5.                                       If
we are a dealer or a person receiving a selling concession, fee or other
remuneration in respect of the Notes, and the proposed transfer takes place
during the Restricted Period (as defined in the Indenture), or we are an
officer or director of the Company or an Initial Purchaser (as defined in the
Indenture), we certify that the proposed transfer is being made in accordance
with the provisions of Rule 904(b) of Regulation S.

 

G  B.                                 This
Certificate relates to our proposed exchange of $           
principal amount of Notes issued under the Indenture for an equal principal
amount of Notes to be held by us.  We
hereby certify as follows:

 

1.                                       At
the time the offer and sale of the Notes was made to us, either (i) we were
not in the United States or (ii) we were excluded from the definition of “U.S.
person” pursuant to Rule 902(k)(2)(vi) or the account held by us for
which we were acting was excluded from the definition of “U.S. person” pursuant
to Rule 902(k)(2)(i) under the circumstances described in Rule 902(g)(3);
and we were not a member of an identifiable group of U.S. citizens abroad.

 

2.                                       Unless
the circumstances described in paragraph 1(ii) above are applicable,
either (a) at the time our buy order was originated, we were outside the
United States or (b) the transaction was executed in, on or through the
facilities of a designated offshore securities market and we did not
pre-arrange the transaction in the United States.

 

E-2

 

3.                                       The
proposed exchange of Notes is not part of a plan or scheme to evade the
registration requirements of the Securities Act.

 

You and the
Issuer are entitled to rely upon this Certificate and are irrevocably
authorized to produce this Certificate or a copy hereof to any interested party
in any administrative or legal proceeding or official inquiry with respect to
the matters covered hereby.

 

 

	
   

  	
  Very truly
  yours,

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  [NAME OF
  SELLER

  (FOR TRANSFERS) OR OWNER (FOR

  EXCHANGES)]

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
  Address:

  
	
   

  	
   

  	
   

  
	
  Date:

  	
   

  	
   

  	
   

  	
   

  
						

 

Upon transfer
of certificated Notes, the Notes would be registered in the name of the new
beneficial owner as follows:

 

 

	
  By:

  	
   

  	
   

  
	
   

  
	
  Date:

  	
   

  	
   

  
	
   

  
	
  Taxpayer ID number:

  	
   

  	
   

  
					

 

E-3

 

EXHIBIT F

 

Rule 144A
Certificate

 

                ,
       

 

Wachovia Bank, National Association

21 South Street

Morristown, NJ 07960

Attention: Corporate Trust Administration

 

	
  Re:

  	
   

  	
  K. Hovnanian Enterprises, Inc.

  6.25% Senior Notes due 2016 (the “Notes”)

  Issued under the Indenture (the “Indenture”)
  dated as

  as of August 8, 2005 relating to the Notes

  

 

Ladies and Gentlemen:

 

This Certificate relates to:

 

[CHECK A OR B AS APPLICABLE.]

 

G  A.                               Our
proposed purchase of $             
principal amount of Notes issued under the Indenture.

 

G  B.                                 Our
proposed transfer or exchange of $           
principal amount of Notes issued under the Indenture for an equal principal
amount of Notes to be held by us.

 

We and, if
applicable, each account for which we are acting, are a qualified institutional
buyer within the meaning of Rule 144A (“Rule 144A”)
under the Securities Act of 1933, as amended (the “Securities
Act”).  If we are acting on
behalf of an account, we exercise sole investment discretion with respect to
such account. We are aware that the transfer of Notes to us, or such exchange,
as applicable, is being made in reliance upon the exemption from the provisions
of Section 5 of the Securities Act provided by Rule 144A.  Prior to the date of this Certificate we have
received such information regarding the Company as we have requested pursuant
to Rule 144A(d)(4) or have determined not to request such
information.

 

You and the
Issuer are entitled to rely upon this Certificate and are irrevocably
authorized to produce this Certificate or a copy hereof to any

 

F-1

 

interested
party in any administrative or legal proceeding or official inquiry with
respect to the matters covered hereby.

 

 

	
   

  	
  Very truly
  yours,

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  [NAME OF PURCHASER (FOR

  TRANSFERS) OR OWNER (FOR

  EXCHANGES)]

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
  Address:

  
	
   

  	
   

  	
   

  
	
  Date:

  	
   

  	
   

  	
   

  	
   

  
						

 

Upon transfer
of certificated Notes, the Notes would be registered in the name of the new
beneficial owner as follows:

 

	
  By:

  	
   

  	
   

  
	
   

  
	
  Date:

  	
   

  	
   

  
	
   

  
	
  Taxpayer ID number:

  	
   

  	
   

  
					

 

F-2

 

EXHIBIT G

 

Institutional
Accredited Investor Certificate

 

Wachovia Bank, National Association

21 South Street

Morristown, NJ 07960

Attention: Corporate Trust Administration

 

	
  Re:

  	
   

  	
  K. Hovnanian Enterprises, Inc.

  6.25% Senior Notes due 2016 (the “Notes”)

  Issued under the Indenture (the “Indenture”)
  dated as

  as of August 8, 2005 relating to the Notes

  

 

Ladies and Gentlemen:

 

This Certificate relates to:

 

[CHECK A, B OR C AS APPLICABLE.]

 

G  A.                               Our
proposed purchase of $        principal
amount of Notes issued under the Indenture.

 

G  B.                                 Our
proposed purchase of $        principal
amount of a beneficial interest in a Global Note

 

G  C.                                 Our
proposed transfer or exchange of $       
principal amount of Notes issued under the Indenture for an equal principal
amount of Notes to be held by us.

 

We hereby
confirm that:

 

1.                                       We
are an institutional “accredited investor” as defined in Rule 501(a)(1),
(2), (3) or (7) of Regulation D under the Securities Act of 1933, as
amended (the “Securities Act”) (an “Institutional Accredited Investor”).

 

2.                                       Any
acquisition of Notes by us will be for our own account or for the account of
one or more other Institutional Accredited Investors as to which we exercise
sole investment discretion.

 

3.                                       We
have such knowledge and experience in financial and business matters that we
are capable of evaluating

 

G-1

 

the merits and risks of an investment in the
Notes and we and any accounts for which we are acting are able to bear the
economic risks of and an entire loss of our or their investment in the Notes.

 

4.                                       We
are not acquiring the Notes or beneficial interest therein with a view to any
distribution thereof in a transaction that would violate the Securities Act or
the securities laws of any State of the United States or any other applicable
jurisdiction; provided, that the
disposition of our property and the property of any accounts for which we are
acting as fiduciary will remain at all times within our and their control.

 

5.                                       We
acknowledge that the Notes have not been registered under the Securities Act
and that the Notes may not be offered or sold within the United States or to or
for the benefit of U.S. persons except as set forth below.

 

6.                                       The
principal amount of Notes to which this Certificate relates is at least equal
to $250,000.

 

We agree for
the benefit of the Issuer and the Guarantors, on our own behalf and on behalf
of each account for which we are acting, that we will not resell or otherwise
transfer this note or any beneficial interest herein except (A) to the
Issuer, the Company or any of its subsidiaries, (B) to a person whom we
reasonably believe is a QIB purchasing for its own account or for the account
of a QIB in a transaction meeting the requirements of Rule 144A, (C) in
an offshore transaction meeting the requirements of Rule 903 or 904 of
Regulation S of the Securities Act, (D) in a transaction meeting the
requirements of Rule 144 under the Securities Act, (E) to an
Institutional Accredited Investor that, prior to such transfer, furnishes the
Senior Trustee a signed letter containing certain representations and
agreements relating to the transfer of the Notes (the form of which can be
obtained from the Senior Trustee) and, if such transfer is in respect of an
aggregate principal amount of Notes less than $250,000, an opinion of counsel
acceptable to the Issuer that such transfer is in compliance with the
Securities Act, (F) in accordance with another exemption form the
registration requirements of the Securities Act (and based upon an opinion of
counsel acceptable to the Issuer) or (G) pursuant to an effective
Registration Statement and, in each case, in accordance with the applicable
securities laws of any state of the United States or any other applicable
jurisdiction.

 

Prior to the
registration of any transfer or exchange, we acknowledge that the Issuer
reserves the right to require the delivery of such legal opinions,

 

G-2

 

certifications
or other evidence as may reasonably be required in order to determine that the
proposed transfer or exchange is being made in compliance with the Securities
Act and applicable state securities laws. 
We acknowledge that no representation is made as to the availability of
any Rule 144 exemption from the registration requirements of the
Securities Act.

 

We understand
that the Senior Trustee will not be required to accept for registration of
transfer or exchange any Notes acquired by us, except upon presentation of
evidence satisfactory to the Issuer and the Senior Trustee that the foregoing
restrictions on transfer have been complied with.  We further agree to deliver to each person
acquiring any of the Notes or any beneficial interest therein from us a notice
advising such person that resales of the Notes are restricted as stated herein.

 

We agree to
notify you promptly in writing if any of our acknowledgments, representations
or agreements herein ceases to be accurate and complete.

 

We represent
to you that we have full power to make the foregoing acknowledgments,
representations and agreements on our own behalf and on behalf of any account
for which we are acting.

 

You and the
Issuer are entitled to rely upon this Certificate and are irrevocably
authorized to produce this Certificate or a copy hereof to any interested party
in any administrative or legal proceeding or official inquiry with respect to
the matters covered hereby. 

 

	
   

  	
  Very truly
  yours,

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  [NAME OF PURCHASER
  (FOR

  TRANSFERS) OR OWNER (FOR

  EXCHANGES)]

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
  Address:

  
	
   

  	
   

  	
   

  
	
  Date:

  	
   

  	
   

  	
   

  	
   

  
						

 

G-3

 

Upon transfer
of certificated Notes, the Notes would be registered in the name of the new beneficial
owner as follows:

 

 

	
  By:

  	
   

  	
   

  
	
   

  	
   

  
	
  Date:

  	
   

  	
   

  
	
   

  	
   

  
	
  Taxpayer ID
  number:

  	
   

  	
   

  
					

 

 

G-4

 

EXHIBIT H

 

[COMPLETE FORM I
OR FORM II AS APPLICABLE.]

 

[FORM I]

 

Certificate
of Beneficial Ownership

 

To:                              Wachovia Bank, National
Association

21 South Street

Morristown, NJ 07960

Attention: Corporate Trust Administration OR

 

[Euroclear Bank S.A./N.V., as operator of the
Euroclear System] OR

 

[Clearstream Banking, société anonyme]

 

	
  Re:

  	
   

  	
  K. Hovnanian Enterprises, Inc.

  6.25% Senior Notes due 2016 (the “Notes”)

  Issued under the Indenture (the “Indenture”)
  dated as

  as of August 8, 2005 relating to the Notes

  

 

Ladies and Gentlemen:

 

We are the
beneficial owner of $     principal amount of Notes issued
under the Indenture and represented by a Regulation S Temporary Global Note (as
defined in the Indenture).

 

 [CHECK
A OR B AS APPLICABLE.]

 

G  A.                               We
are a non-U.S. person (within the meaning of Regulation S under the Securities
Act of 1933, as amended).

 

G  B.                                 We
are a U.S. person (within the meaning of Regulation S under the Securities Act
of 1933, as amended) that purchased the Notes in a transaction that did not
require registration under the Securities Act of 1933, as amended.

 

You and the
Issuer are entitled to rely upon this Certificate and are irrevocably
authorized to produce this Certificate or a copy hereof to any interested party
in any administrative or legal proceeding or official inquiry with respect to
the matters covered hereby.

 

H-1

 

	
   

  	
  Very truly
  yours,

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  [NAME OF
  BENEFICIAL OWNER]

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
  Address:

  
	
   

  	
   

  	
   

  
	
  Date:

  	
   

  	
   

  	
   

  	
   

  
						

 

[FORM II]

 

Certificate
of Beneficial Ownership

 

To:                              Wachovia Bank, National
Association

21 South Street

Morristown, NJ 07960

Attention: Corporate Trust Administration OR

 

	
  Re:

  	
   

  	
  K. Hovnanian Enterprises, Inc.

  6.25% Senior Notes due 2016 (the “Notes”)

  Issued under the Indenture (the “Indenture”)
  dated as

  as of August 8, 2005 relating to the Notes

  

 

Ladies and Gentlemen:

 

This is to certify
that based solely on certifications we have received in writing, by tested
telex or by electronic transmission from member organizations (“Member Organizations”) appearing in our records as persons
being entitled to a portion of the principal amount of Notes represented by a
Regulation S Temporary Global Note issued under the above-referenced Indenture,
that as of the date hereof, $     principal amount of Notes
represented by the Regulation S Temporary Global Note being submitted herewith
for exchange is beneficially owned by persons that are either (i) non-U.S.
persons (within the meaning of Regulation S under the Securities Act of 1933,
as amended) or (ii) U.S. persons that purchased the Notes in a transaction
that did not require registration under the Securities Act of 1933, as amended.

 

We further
certify that (i) we are not submitting herewith for exchange any portion
of such Regulation S Temporary Global Note excepted in such Member Organization
certifications and (ii) as of the date hereof we have not received any

 

H-2

 

notification
from any Member Organization to the effect that the statements made by such
Member Organization with respect to any portion of such Regulation S Temporary
Global Note submitted herewith for exchange are no longer true and cannot be
relied upon as of the date hereof.

 

You and the
Issuer are entitled to rely upon this Certificate and are irrevocably
authorized to produce this Certificate or a copy hereof to any interested party
in any administrative or legal proceeding or official inquiry with respect to
the matters covered hereby.

 

	
   

  	
  Yours
  faithfully,

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  [EUROCLEAR BANK S.A./N.V., as

  operator of the Euroclear System]

  
	
   

  	
   

  
	
   

  	
  OR

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  [CLEARSTREAM BANKING, société

  anonyme]

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
  Address:

  
	
  Date:

  	
   

  	
   

  
						

 

H-3

 

EXHIBIT I

 

THIS NOTE IS A TEMPORARY GLOBAL NOTE. 
PRIOR TO THE EXPIRATION OF THE RESTRICTED PERIOD APPLICABLE HERETO,
BENEFICIAL INTERESTS HEREIN MAY NOT BE HELD BY ANY PERSON OTHER THAN (1) A
NON-U.S. PERSON OR (2) A U.S. PERSON THAT PURCHASED SUCH INTEREST IN A
TRANSACTION EXEMPT FROM REGISTRATION UNDER THE U.S. SECURITIES ACT OF 1933, AS
AMENDED (THE “SECURITIES ACT”).  BENEFICIAL INTERESTS HEREIN ARE NOT
EXCHANGEABLE FOR CERTIFICATED NOTES OTHER THAN A PERMANENT GLOBAL NOTE IN
ACCORDANCE WITH THE TERMS OF THE INDENTURE. TERMS IN THIS LEGEND ARE USED AS
USED IN REGULATION S UNDER THE SECURITIES ACT.

 

I-1Exhibit 4.2

 

SENIOR NOTES A/B EXCHANGE

 

REGISTRATION RIGHTS AGREEMENT

 

 

Dated as of August 8, 2005

 

by and among

 

 

K. Hovnanian Enterprises, Inc.

 

Hovnanian Enterprises, Inc.

 

And Certain of its Subsidiaries

 

 

and

 

 

CITIGROUP GLOBAL MARKETS INC.

BANC OF AMERICA SECURITIES LLC

CREDIT SUISSE FIRST BOSTON LLC

J.P. MORGAN SECURITIES INC.

 

 

This
Registration Rights Agreement (this “Agreement”) is
made and entered into as of August 8, 2005 by and among K. Hovnanian
Enterprises, Inc., a California corporation (the “Company”),
Hovnanian Enterprises, Inc., a Delaware corporation (“Hovnanian”),
and certain subsidiary guarantors of Hovnanian party hereto (together with
Hovnanian, the “Guarantors”) and Citigroup Global
Markets Inc., Banc of America Securities LLC, Credit Suisse First Boston LLC
and J.P. Morgan Securities Inc., as Representatives of the several initial
purchasers listed in Schedule B to the Purchase Agreement (as defined
below) (each an “Initial Purchaser” and,
collectively, the “Initial Purchasers”),
each of whom has agreed to purchase the Company’s 6.25% Series A Senior
Notes due 2016 (the “Senior A Notes”)
pursuant to the Purchase Agreement.

 

This Agreement
is made pursuant to the Purchase Agreement, dated August 1, 2005 (the “Purchase Agreement”), by and among the Company, the
Guarantors party thereto and the Initial Purchasers.  In order to induce the Initial Purchasers to
purchase the Senior A Notes, the Company has agreed to provide the registration
rights set forth in this Agreement.  The
execution and delivery of this Agreement is a condition to the obligations of
the Initial Purchasers set forth in Section 9 of the Purchase
Agreement.  Capitalized terms used herein
and not otherwise defined shall have the meaning assigned to them in the
Indenture, dated August 8, 2005, among the Company, the Guarantors and
Wachovia Bank, National Association, as trustee (the “Senior
Trustee”), relating to the Senior A Notes and the Senior B Notes (as
defined below) (the “Indenture”).

 

The parties
hereby agree as follows:

 

SECTION 1.         DEFINITIONS

 

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

 

Act:  The Securities Act of 1933, as amended.

 

Affiliate:  As defined in Rule 144 of the Act.

 

Broker-Dealer:  Any broker or dealer registered under the
Exchange Act.

 

Certificated
Securities: 
Certificated Notes, as defined in the Indenture.

 

Closing
Date:  The date
hereof.

 

Commission:  The Securities and Exchange Commission.

 

Consummate:  An Exchange Offer shall be deemed “Consummated”
for purposes of this Agreement upon the occurrence of (a) the filing and
effectiveness

 

1

 

under the Act of the Exchange
Offer Registration Statement relating to the Senior B Notes to be issued in the
Exchange Offer, (b) the maintenance of such Exchange Offer Registration
Statement as continuously effective and the keeping of the Exchange Offer open
for a period not less than the period required pursuant to Section 3(b) hereof
and (c) the delivery by the Company to the Senior Trustee under the
Indenture of Senior B Notes in the same aggregate principal amount as the
aggregate principal amount of Senior A Notes tendered by Holders thereof
pursuant to the Exchange Offer.

 

Consummation
Deadline:  As
defined in Section 3(b) hereof.

 

Effectiveness
Deadline:  As
defined in Sections 3(a) or 4(a) hereof, as applicable.

 

Exchange
Act:  The
Securities Exchange Act of 1934, as amended.

 

Exchange
Offer:  The
exchange and issuance by the Company of a principal amount of Senior B Notes
(which shall be registered pursuant to the Exchange Offer Registration
Statement) equal to the outstanding principal amount of Senior A Notes that are
tendered by Holders in connection with such exchange and issuance.

 

Exchange
Offer Registration Statement:  The Registration Statement relating to the
Exchange Offer, including the related Prospectus.

 

Filing
Deadline:  As
defined in Sections 3(a) or 4(a) hereof, as applicable.

 

Holders:  As defined in Section 2 hereof.

 

Participating
Broker-Dealer: 
As defined in Section 3(c) hereof.

 

Prospectus:  The prospectus included in a Registration
Statement at the time such Registration Statement is declared effective, as
amended or supplemented by any prospectus supplement and by all other amendments
thereto, including post-effective amendments, and all material incorporated by
reference into such Prospectus.

 

Recommencement
Date:  As
defined in Section 6(d) hereof.

 

Registration
Default:  As
defined in Section 5 hereof.

 

Registration
Statement:  The
Exchange Offer Registration Statement or the Shelf Registration Statement, as
applicable, and, in each case, including the Prospectus and exhibits included
therein.

 

Regulation
S:  Regulation S
promulgated under the Act.

 

Rule 144:  Rule 144 promulgated under the Act.

 

2

 

Selling
Holders:  As
defined in Section 6(c)(xi).

 

Senior B
Notes:  The
Company’s 6.25% Series B Senior Notes due 2016 to be issued under the
Indenture:  (i) in the Exchange
Offer or (ii) as contemplated by Section 4 hereof.

 

Shelf
Registration Statement:  As defined in Section 4(a) hereof.

 

Shelf
Underwriters: 
As defined in Section 6(c)(xi)(A)(1).

 

Suspension
Notice:  As
defined in Section 6(d) hereof.

 

TIA:  The Trust Indenture Act of 1939 (15 U.S.C. Section 77aaa-77bbbb)
as in effect on the date of the Indenture.

 

Transfer
Restricted Securities: 
Each Senior A Note, until the earliest to occur of (a) the date on
which such Senior A Note is exchanged in the Exchange Offer for a Senior B Note
which is entitled to be resold to the public by the Holder thereof without
complying with the prospectus delivery requirements of the Act, (b) the
date on which such Senior A Note has been disposed of in accordance with a
Shelf Registration Statement (and the purchasers thereof have been issued
Senior B Notes) or (c) the date on which such Senior A Note is distributed
to the public pursuant to Rule 144 or Regulation S under the Act (and
purchasers thereof have been issued Senior B Notes) and each Senior B Note
issued to a Broker-Dealer until the date on which such Senior B Note is
disposed of by such Broker-Dealer pursuant to the “Plan of Distribution”
contemplated by the Exchange Offer Registration Statement (including the
delivery of the Prospectus contained therein).

 

SECTION 2.         HOLDERS

 

A person is
deemed to be a holder of Transfer Restricted Securities (a “Holder”) whenever such person owns Transfer Restricted
Securities.

 

SECTION 3.         REGISTERED
EXCHANGE OFFER

 

(a)           Unless
the Exchange Offer shall not be permitted by applicable federal law (after the
procedures set forth in Section 6(a)(i) below have been complied
with), the Company and the Guarantors shall (i) cause the Exchange Offer
Registration Statement to be filed with the Commission as soon as practicable
after the Closing Date, but in no event later than 90 days after the Closing
Date (such 90th day being the “Filing Deadline”),
(ii) use their reasonable best efforts to cause such Exchange Offer
Registration Statement to become effective at the earliest possible time, but
in no event later than 150 days after the Closing Date (such 150th day being
the “Effectiveness Deadline”), (iii) in
connection with the foregoing, (A) file all pre-effective amendments to
such Exchange Offer Registration Statement as may be necessary in order to
cause it to

 

3

 

become effective, (B) file,
if applicable, a post-effective amendment to such Exchange Offer Registration
Statement pursuant to Rule 430A under the Act and (C) cause all
necessary filings, if any, in connection with the registration and
qualification of the Senior B Notes to be made under the Blue Sky laws of such
jurisdictions as are necessary to permit Consummation of the Exchange Offer, provided, however, that
neither the Company nor any Guarantor shall be required to register or qualify
as a foreign corporation or other entity, as applicable, where it is not now so
qualified or to take any action that would subject it to the service of process
in suits or to taxation, other than as to matters and transactions relating to
the Registration Statement, in any jurisdiction where it is not now so subject;
(iv) upon the effectiveness of such Exchange Offer Registration Statement,
commence and Consummate the Exchange Offer. 
The Exchange Offer shall be on the appropriate form permitting (i) registration
of the Senior B Notes to be offered in exchange for the Senior A Notes that are
Transfer Restricted Securities and (ii) resales of Senior B Notes by
Broker-Dealers that tendered into the Exchange Offer Senior A Notes that such
Broker-Dealer acquired for its own account as a result of market making
activities or other trading activities (other than Senior A Notes acquired
directly from the Company, the Guarantors or any of their Affiliates) as
contemplated by Section 3(c) below.

 

(b)           The
Company and the Guarantors shall use their respective reasonable best efforts
to cause the Exchange Offer Registration Statement to be effective continuously
for the period specified in Section 3(c) below and shall keep the
Exchange Offer open for a period of not less than the minimum period required
under applicable federal and state securities laws to Consummate the Exchange
Offer; provided, however,
that in no event shall such period be less than 20 Business Days.  The Company and the Guarantors shall cause
the Exchange Offer to comply with all applicable federal and state securities
laws.  No securities other than the
Senior B Notes and the guarantees thereof shall be included in the Exchange
Offer Registration Statement.  The
Company and the Guarantors shall use their reasonable best efforts to cause the
Exchange Offer to be Consummated on or prior to 30 Business Days after the
Exchange Offer Registration Statement has become effective, but in no event
later than 40 Business Days thereafter (such 40th day being the “Consummation Deadline”).

 

(c)           The
Company shall include a “Plan of Distribution” section in the Prospectus
contained in the Exchange Offer Registration Statement and indicate therein
that any Broker-Dealer who holds Transfer Restricted Securities that were
acquired for the account of such Broker-Dealer as a result of market-making
activities or other trading activities (other than Senior A Notes acquired
directly from the Company, the Guarantors or any of their Affiliates) (a “Participating Broker-Dealer”) may exchange such Transfer
Restricted Securities pursuant to the Exchange Offer.  Such “Plan of Distribution” section shall
also contain all other information with respect to such sales by such
Participating Broker-Dealers that the Commission may require in order to permit
such sales pursuant thereto, but such “Plan of Distribution” shall not name any
such Participating

 

4

 

Broker-Dealer or disclose the
amount of Transfer Restricted Securities held by any such Participating
Broker-Dealer, except to the extent required by the Commission as a result of a
change in policy, rules or regulations after the date of this
Agreement.  See the Shearman &
Sterling No-Action Letter (available July 2, 1993).

 

Because such
Participating Broker-Dealer may be deemed to be an “underwriter” within the
meaning of the Act and must, therefore, deliver a prospectus meeting the
requirements of the Act in connection with its initial sale of any Senior B
Notes received by such Participating Broker-Dealer in the Exchange Offer, the
Company and Guarantors shall permit the use of the Prospectus contained in the
Exchange Offer Registration Statement by such Participating Broker-Dealer to
satisfy such prospectus delivery requirement. 
In light of the foregoing, if requested by any Participating
Broker-Dealer and to the extent necessary to ensure that the prospectus contained
in the Exchange Offer Registration Statement is available for sales of Senior B
Notes by Broker-Dealers, the Company and the Guarantors agree to use their
respective best efforts to keep the Exchange Offer Registration Statement
continuously effective, supplemented, amended and current as required by and
subject to the provisions of Sections 6(a) and (c) hereof and in
conformity with the requirements of this Agreement, the Act and the policies, rules and
regulations of the Commission as announced from time to time for a period of
180 days from the Consummation Deadline or such shorter period as will
terminate when all Transfer Restricted Securities covered by such Registration
Statement have been sold pursuant thereto. 
The Company and the Guarantors shall provide sufficient copies of the
latest version of such Prospectus to such Broker-Dealers promptly upon request
and in no event later than one Business Day after such request at any time
during such period.

 

SECTION 4.         SHELF
REGISTRATION

 

(a)           Shelf Registration. 
If (i) the Exchange Offer is not permitted by applicable law (after
the Company and the Guarantors have complied with the procedures set forth in Section 6(a)(i) below)
or (ii) if any Holder of Transfer Restricted Securities shall notify the
Company within 20 Business Days following the Consummation Deadline that (A) based
on an opinion of counsel, such Holder was prohibited by law or Commission
policy from participating in the Exchange Offer or (B) such Holder is a
Broker-Dealer and holds Senior A Notes acquired directly from the Company or
any of its Affiliates, then the Company and the Guarantors shall:

 

(x) cause to be filed, on or prior to 30 days after the earlier of (i) the
date on which the Company determines that the Exchange Offer Registration
Statement cannot be filed as a result of clause (a)(i) above and (ii) the
date on which the Company receives the notice specified in clause (a)(ii) above,
(such earlier date, the “Filing Deadline”),
a shelf registration statement pursuant to Rule 415 under the Act (which
may be an amendment to the Exchange Offer Registration Statement) (the “Shelf

 

5

 

Registration Statement”),
relating to all Transfer Restricted Securities, and

 

(y) shall use their respective reasonable best efforts to cause such
Shelf Registration Statement to become effective on or prior to 60 days after
the Filing Deadline for the Shelf Registration Statement (such 60th day being
the “Effectiveness Deadline”).

 

If, after the
Company has filed an Exchange Offer Registration Statement that satisfies the
requirements of Section 3(a) above, the Company is required to file
and make effective a Shelf Registration Statement solely because the Exchange
Offer is not permitted under applicable federal law (i.e., clause (a)(i) above),
then the filing of the Exchange Offer Registration Statement shall be deemed to
satisfy the requirements of clause (x) above; provided
that, in such event, the Company shall remain obligated to meet the
Effectiveness Deadline set forth in clause (y).

 

To the extent
necessary to ensure that the Shelf Registration Statement is available for
sales of Transfer Restricted Securities by the Holders thereof entitled to the
benefit of this Section 4(a) and the other securities required to be
registered therein pursuant to Section 6(b)(ii) hereof, the Company
and the Guarantors shall use their respective reasonable best efforts to keep
any Shelf Registration Statement required by this Section 4(a) continuously
effective, supplemented, amended and current as required by and subject to the
provisions of Sections 6(b) and (c) hereof and in conformity with the
requirements of this Agreement, the Act and the policies, rules and
regulations of the Commission as announced from time to time, for a period of
at least two years (as extended pursuant to Section 6(d)) following the
Closing Date, or such shorter period as will terminate when all Transfer
Restricted Securities covered by such Shelf Registration Statement have been
sold pursuant thereto.

 

(b)           Provision by Holders of Certain Information in Connection with the
Shelf Registration Statement. 
No Holder of Transfer Restricted Securities may include any of its
Transfer Restricted Securities in any Shelf Registration Statement pursuant to
this Agreement unless and until such Holder furnishes to the Company in
writing, within 20 days after receipt of a request therefor, the information
specified in Item 507 or 508 of Regulation S-K, as applicable, of the Act for
use in connection with any Shelf Registration Statement or Prospectus or
preliminary Prospectus included therein. 
No Holder of Transfer Restricted Securities shall be entitled to
additional interest pursuant to Section 5 hereof unless and until such
Holder shall have provided all such information.  Each selling Holder agrees to promptly
furnish additional information required to be disclosed in order to make the
information previously furnished to the Company by such Holder not materially
misleading.

 

6

 

SECTION 5.         ADDITIONAL
INTEREST

 

If (i) any
Registration Statement required by this Agreement is not filed with the
Commission on or prior to the applicable Filing Deadline, (ii) any such
Registration Statement has not been declared effective by the Commission on or
prior to the applicable Effectiveness Deadline, (iii) the Exchange Offer
has not been Consummated on or prior to the Consummation Deadline or (iv) any
Registration Statement required by this Agreement is filed and declared
effective but shall thereafter cease to be effective or fail to be usable for
its intended purpose without being succeeded immediately by a post-effective
amendment to such Registration Statement that cures such failure and that is
itself declared effective within 5 days of filing such post-effective amendment
to such Registration Statement (each such event referred to in clauses (i) through
(iv), a “Registration Default”), then the
Company and the Guarantors hereby jointly and severally agree to pay to each
Holder of Transfer Restricted Securities affected thereby additional interest
in an amount equal to $.05 per week per $1,000 in principal amount of Transfer
Restricted Securities held by such Holder for each week or portion thereof that
the Registration Default continues for the first 90-day period immediately
following the occurrence of such Registration Default.  The amount of additional interest shall
increase by an additional $.05 per week per $1,000 in principal amount of
Transfer Restricted Securities with respect to each subsequent 90-day period
until all Registration Defaults have been cured, up to a maximum amount of
additional interest of $.25 per week per $1,000 in principal amount of Transfer
Restricted Securities; provided  that the Company and the Guarantors shall in no event be
required to pay additional interest for more than one Registration Default at
any given time.  Notwithstanding anything
to the contrary set forth herein, (1) upon the filing of the Exchange
Offer Registration Statement (and/or, if applicable, the Shelf Registration
Statement), in the case of (i) above, (2) upon the effectiveness of
the Exchange Offer Registration Statement (and/or, if applicable, the Shelf
Registration Statement), in the case of (ii) above, (3) upon
Consummation of the Exchange Offer, in the case of (iii) above, or (4) upon
the filing of a post-effective amendment to the Registration Statement or an
additional Registration Statement that causes the Exchange Offer Registration
Statement (and/or, if applicable, the Shelf Registration Statement) to again be
declared effective or made usable in the case of (iv) above, the
additional interest payable with respect to the Transfer Restricted Securities
as a result of such clause (i), (ii), (iii) or (iv), as applicable, shall
cease.

 

All accrued
additional interest shall be paid to the Holders entitled thereto in the manner
provided for the payment of interest in the Indenture on each Interest Payment
Date as more fully set forth in the Indenture and the Notes.  Notwithstanding the fact that any securities
for which additional interest is due cease to be Transfer Restricted
Securities, all obligations of the Company and the Guarantors to pay additional
interest with respect to securities shall survive until

 

7

 

such time as such obligations
with respect to such securities shall have been satisfied in full.

 

SECTION 6.         REGISTRATION
PROCEDURES

 

(a)           Exchange Offer Registration Statement.  In connection with the Exchange Offer, the
Company and the Guarantors shall (x) comply with all applicable provisions of Section 6(c) below,
(y) use their respective reasonable best efforts to effect such exchange and to
permit the resale of Senior B Notes by Broker-Dealers that tendered in the
Exchange Offer Senior A Notes that such Broker-Dealer acquired for its own
account as a result of its market making activities or other trading activities
(other than Senior A Notes acquired directly from the Company, the Guarantors
or any of their Affiliates) being sold in accordance with the intended method
or methods of distribution thereof and (z) comply with all of the following
provisions:

 

(i)  If, following the date hereof there has been announced a
change in Commission policy with respect to exchange offers such as the
Exchange Offer that in the reasonable opinion of counsel to the Company raises
a substantial question as to whether the Exchange Offer is permitted by
applicable federal law, the Company and the Guarantors hereby agree to seek a
no-action letter or other favorable decision from the Commission allowing the
Company and the Guarantors to Consummate an Exchange Offer for Transfer
Restricted Securities.  The Company and
the Guarantors hereby agree to pursue the issuance of such a decision to the
Commission staff level.  In connection
with the foregoing, the Company and the Guarantors hereby agree to take all
such other actions as may be requested by the Commission or otherwise required
in connection with the issuance of such decision, including, without
limitation, (A) participating in telephonic conferences with the
Commission, (B) delivering to the Commission staff an analysis prepared by
counsel to the Company setting forth the legal bases, if any, upon which such
counsel has concluded that such an Exchange Offer should be permitted and (C) diligently
pursuing a resolution (which need not be favorable) by the Commission staff.

 

(ii)  As a condition to its participation in the Exchange Offer,
each Holder of Transfer Restricted Securities (including, without limitation,
any Holder who is a Broker-Dealer) shall furnish, upon the request of the
Company, prior to the Consummation of the Exchange Offer, a written
representation to the Company and the Guarantors (which may be contained in the
letter of transmittal contemplated by the Exchange Offer Registration
Statement) to the effect that (A) it is not an Affiliate of the Company or
the Guarantors, (B) it is not engaged in, does not intend to engage in,
and has no arrangement or understanding with any person to participate in, a distribution
of the Senior B Notes to be issued in the Exchange Offer and (C) it is
acquiring the Senior B Notes in its ordinary course of business.  As a condition to its participation in the
Exchange

 

8

 

Offer each Holder using the Exchange Offer to
participate in a distribution of the Senior B Notes shall acknowledge and agree
that, if the resales are of Senior B Notes obtained by such Holder in exchange
for Senior A Notes acquired directly from the Company, the Guarantors or an
Affiliate thereof, it (1) could not, under Commission policy as in effect
on the date of this Agreement, rely on the position of the Commission
enunciated in the Morgan Stanley and Company Incorporated (available June 5,
1991) and Exxon Capital Holdings Corporation No-Action Letters (available May 13,
1988), as interpreted in the Commission’s letter to Shearman &
Sterling (available July 2, 1993) and similar No-Action Letters
(including, if applicable, any No-Action Letter obtained pursuant to clause (i) above),
and (2) must comply with the registration and prospectus delivery
requirements of the Act in connection with a secondary resale transaction and
that such a secondary resale transaction must be covered by an effective
registration statement containing the selling security holder information
required by Item 507 or 508, as applicable, of Regulation S-K.

 

(iii)  Prior to effectiveness of the Exchange Offer Registration
Statement, the Company and the Guarantors shall provide a supplemental letter
to the Commission (A) stating that the Company and the Guarantors are
registering the Exchange Offer in reliance on the position of the Commission
enunciated in Exxon Capital Holdings Corporation (available May 13, 1988),
Morgan Stanley and Co., Inc. (available June 5, 1991) as interpreted
in the Commission’s letter to Shearman & Sterling dated July 2,
1993, and, if applicable, any no-action letter obtained pursuant to clause (i) above,
(B) including a representation that neither the Company nor any Guarantor
has entered into any arrangement or understanding with any Person to distribute
the Senior B Notes to be received in the Exchange Offer and that, to the best
of the Company’s and each Guarantor’s information and belief, each Holder
participating in the Exchange Offer is acquiring the Senior B Notes in its
ordinary course of business and has no arrangement or understanding with any
Person to participate in the distribution of the Senior B Notes received in the
Exchange Offer and (C) any other undertaking or representation required by
the Commission as set forth in any no-action letter obtained pursuant to clause
(i) above, if applicable.

 

(iv)  If requested by any Participating Broker-Dealer delivering
the Prospectus contained in the Exchange Offer Registration Statement in
connection with its initial sale of any Senior B Notes received by it in the
Exchange Offer, the Company and the Guarantors shall use their best efforts to
furnish to each such Participating Broker-Dealer (i) an opinion of counsel
of the Company and the Guarantors addressed to such Participating Broker-Dealer
covering the matters set forth in Section 6(c)(xi)(A)(2) herein with
such changes as are customary in connection with an Exchange Offer Registration
Statement and (ii) a comfort letter,

 

9

 

addressed to such Participating Broker-Dealer
from the Company’s independent public accountants, in the customary form,
covering the matters set forth in Section 6(c)(xi)(A)(3) herein, with
appropriate date changes.

 

(b)           Shelf Registration Statement.  In connection with the Shelf Registration
Statement, the Company and the Guarantors shall:

 

(i) comply with all the provisions of Section 6(c) below
and use their respective reasonable best efforts to effect such registration to
permit the sale of the Transfer Restricted Securities being sold in accordance
with the intended method or methods of distribution thereof (as indicated in
the information furnished to the Company pursuant to Section 4(b) hereof),
and pursuant thereto the Company and the Guarantors will prepare and file with
the Commission a Registration Statement relating to the registration on any
appropriate form under the Act, which form shall be available for the sale of
the Transfer Restricted Securities in accordance with the intended method or
methods of distribution thereof within the time periods and otherwise in
accordance with the provisions hereof.

 

(ii) issue, upon the request of any Holder or purchaser of Senior
A Notes covered by any Shelf Registration Statement contemplated by this
Agreement, Senior B Notes having an aggregate principal amount equal to the
aggregate principal amount of Senior A Notes sold pursuant to the Shelf
Registration Statement and surrendered to the Company for cancellation; the
Company shall register Senior B Notes on the Shelf Registration Statement for
this purpose and issue the Senior B Notes to the purchaser(s) of securities
subject to the Shelf Registration Statement in the names as such purchaser(s)
shall designate.

 

(c)           General Provisions. 
In connection with any Registration Statement and any related Prospectus
required by this Agreement, the Company and the Guarantors shall:

 

(i)  use their respective reasonable best efforts to keep such Registration
Statement continuously effective and provide all requisite financial statements
for the period specified in Section 3 or 4 of this Agreement, as
applicable.  Upon the occurrence of any
event that would cause any such Registration Statement or the Prospectus
contained therein (A) to contain an untrue statement of material fact or
omit to state any material fact necessary to make the statements therein not
misleading or (B) not to be effective and usable for resale of Transfer
Restricted Securities during the period required by this Agreement, the Company
and the Guarantors shall file promptly an appropriate amendment to such
Registration Statement curing such defect, and, if Commission review is
required, use their respective best efforts to cause such amendment to be
declared effective as soon as practicable.

 

10

 

(ii)  prepare and file with the Commission such amendments and
post-effective amendments to the applicable Registration Statement as may be necessary
to keep such Registration Statement effective for the applicable period set
forth in Section 3 or 4 hereof, as the case may be; cause the Prospectus
to be supplemented by any required Prospectus supplement, and, as so
supplemented, to be filed pursuant to Rule 424 under the Act, and to
comply fully with Rules 424, 430A and 462, as applicable, under the Act in
a timely manner; and comply with the provisions of the Act with respect to the
disposition of all securities covered by such Registration Statement during the
applicable period in accordance with the intended method or methods of
distribution by the sellers thereof set forth in such Registration Statement or
Prospectus;

 

(iii)  in the case of a Shelf Registration Statement or if
requested by a Participating Broker-Dealer, advise each Holder promptly and, if
requested by such Holder, confirm such advice in writing, (A) when the
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 thereto, when the same has become effective, (B) of
any request by the Commission for amendments to the Registration Statement or
amendments or supplements to the Prospectus or for additional information
relating thereto, (C) of the issuance by the Commission of any stop order
suspending the effectiveness of the Registration Statement under the Act or of
the suspension by any state securities commission of the qualification of the
Transfer Restricted Securities for offering or sale in any jurisdiction, or the
initiation of any proceeding for any of the preceding purposes, and (D) of
the existence of any fact or the happening of any event that makes any
statement of a material fact made in the Registration Statement, the
Prospectus, any amendment or supplement thereto or any document incorporated by
reference therein untrue, or that requires the making of any additions to or
changes in the Registration Statement in order to make the statements therein not
misleading, or that requires the making of any additions to or changes in the
Prospectus in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading.  If at any time the Commission shall issue any
stop order suspending the effectiveness of the Registration Statement, or any
state securities commission or other regulatory authority shall issue an order
suspending the qualification or exemption from qualification of the Transfer
Restricted Securities under state securities or Blue Sky laws, the Company and
the Guarantors shall use their respective reasonable best efforts to obtain the
withdrawal or lifting of such order at the earliest possible time;

 

(iv)  subject to Section 6(c)(i), if any fact or event
contemplated by Section 6(c)(iii)(D) above shall exist or have
occurred, prepare a supplement or post-effective amendment to the Registration
Statement or

 

11

 

related Prospectus or any document incorporated
therein by reference or file any other required document so that, as thereafter
delivered to the purchasers of Transfer Restricted Securities, the Prospectus
will not contain an untrue statement of a material fact or omit to state any
material fact necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading;

 

(v)  in the case of a Shelf Registration Statement, furnish to
each Holder, before filing with the Commission, copies of any Shelf Registration
Statement or any Prospectus included therein or any amendments or supplements
to any such Shelf Registration Statement or Prospectus (including all documents
incorporated by reference after the initial filing of such Shelf Registration
Statement), which documents will be subject to the review and comment of such
Holders in connection with such sale, if any, for a period of at least five
Business Days, and the Company will not file any such Shelf Registration
Statement or Prospectus or any amendment or supplement to any such Shelf
Registration Statement or Prospectus (including all such documents incorporated
by reference) to which such Holders shall reasonably object within five
Business Days after the receipt thereof. 
A Holder shall be deemed to have reasonably objected to such filing if
such Shelf Registration Statement, amendment, Prospectus or supplement, as
applicable, as proposed to be filed, contains an untrue statement of a material
fact or omits to state any material fact necessary to make the statements
therein not misleading or fails to comply with the applicable requirements of
the Act;

 

(vi)  in the case of a Shelf Registration Statement, promptly
prior to the filing of any document that is to be incorporated by reference
into a Registration Statement or Prospectus, provide copies of such document,
if any, to each Holder, make the Company’s and the Guarantors’ representatives
available for discussion of such document and other customary due diligence
matters, and include such information in such document prior to the filing
thereof as such Holders may reasonably request;

 

(vii)  in the case of a Shelf Registration Statement, make
available, at reasonable times, for inspection by each Holder and any attorney
or accountant retained by such Holders, all pertinent financial and other
records and pertinent corporate documents of the Company and the Guarantors as
shall be necessary to enable them to exercise any applicable due diligence
responsibilities and cause the Company’s and the Guarantors’ officers,
directors and employees to supply all information reasonably requested by any
such Holder, attorney or accountant in connection with such Registration
Statement or any post-effective amendment thereto subsequent to the filing
thereof and prior to its effectiveness; provided that
if any such information is identified by the Company or any Guarantor as being
confidential or proprietary, each such

 

12

 

Holder, attorney, accountant or any other
person receiving such information shall take all actions as are reasonably
necessary to protect the confidentiality of such information to the extent that
such action is otherwise not inconsistent with, an impairment of or in
derogation of the rights and interests of such Holder;

 

(viii)  if requested by any Holders, promptly include in any
Registration Statement or Prospectus, pursuant to a supplement or
post-effective amendment if necessary, such information as such Holders may
reasonably request to have included therein, including, without limitation,
information relating to the “Plan of Distribution” of the Transfer Restricted
Securities; and make all required filings of such Prospectus supplement or
post-effective amendment as soon as practicable after the Company is notified
of the matters to be included in such Prospectus supplement or post-effective
amendment;

 

(ix)  in the case of a Shelf Registration Statement, furnish to
each Holder, without charge, at least one copy of the Registration Statement,
as first filed with the Commission, and of each amendment thereto, including
all documents incorporated by reference therein and all exhibits (including
exhibits incorporated therein by reference);

 

(x)  in the case of a Shelf
Registration Statement or if requested by a Participating Broker-Dealer,
deliver to each Holder without charge, as many copies of the Prospectus
(including each preliminary prospectus) and any amendment or supplement thereto
as such Person reasonably may request; the Company and the Guarantors hereby
consent to the use (in accordance with law) of the Prospectus and any amendment
or supplement thereto by each selling Holder in connection with the offering
and the sale of the Transfer Restricted Securities covered by the Prospectus or
any amendment or supplement thereto;

 

(xi)  in the case of a Shelf
Registration Statement and upon the request of any Holder of Transfer
Restricted Securities covered thereby and being sold pursuant thereto (the “Selling Holders”), enter into such customary agreements (including
underwriting agreements) and make such customary representations and warranties
and take all such other actions in connection therewith in order to expedite or
facilitate the disposition of the Transfer Restricted Securities pursuant to
any applicable Registration Statement contemplated by this Agreement as may be
reasonably requested by any such Selling Holder in connection with any sale or
resale pursuant to any applicable Registration Statement.  In such connection, the Company and the
Guarantors shall:

 

(A)  upon request of any such Selling Holder, furnish (or in the
case of paragraphs (2) and (3), use their best efforts to cause to be
furnished) to each such Selling Holder, as the case may be:

 

13

 

(1)  a certificate, addressed to such Selling Holders and
underwriters, if any, named in an underwriting agreement entered into pursuant
to this Section 6(c)(xi) (the “Shelf Underwriters”),
signed on behalf of Hovnanian by the Executive Vice President and Chief
Financial Officer, confirming, as of the date thereof, the matters set forth in
Sections 6(v), 6(w) and 9(a) of the Purchase Agreement and such other
similar matters as such Selling Holders and Shelf Underwriters, if any, may
reasonably request;

 

(2)  an opinion of counsel for the Company and the Guarantors,
addressed to such Selling Holders and Shelf Underwriters, if any, which shall
cover matters similar to those set forth in subsections (e) and (f) of
Section 9 of the Purchase Agreement and such other additional matters as
such Selling Holders and Shelf Underwriters, if any, may reasonably request;
and

 

(3)  a comfort letter, addressed to such Selling Holders and Shelf
Underwriters, if any, from the Company’s independent accountants, in the customary
form and covering matters of the type customarily covered in comfort letters
addressed to underwriters in connection with underwritten offerings.

 

(B) deliver such other documents and certificates as may be
reasonably requested by such Selling Holders and Shelf Underwriters, if any, to
evidence compliance with the matters covered in clause (A) above and with
any customary conditions contained in any agreement entered into by the Company
and the Guarantors pursuant to this clause (xi);

 

(xii)  prior to any public
offering of Transfer Restricted Securities, cooperate with the selling Holders
and their counsel in connection with the registration and qualification of the
Transfer Restricted Securities under the securities or Blue Sky laws of such
jurisdictions as the selling Holders may request and do any and all other acts
or things necessary or advisable to enable the disposition in such
jurisdictions of the Transfer Restricted Securities covered by the applicable
Registration Statement; provided, however, that neither the Company nor any Guarantor shall be
required to register or qualify as a foreign corporation or other entity, as
applicable, where it is not now so qualified or to take any action that would
subject it to the service of process in suits or to taxation, other than as to
matters and transactions relating to the Registration Statement, in any
jurisdiction where it is not now so subject;

 

(xiii)  in connection with any
sale of Transfer Restricted Securities pursuant to a Shelf Registration Statement
that will result in such securities no longer being Transfer Restricted
Securities, cooperate with

 

14

 

the Holders to facilitate the timely
preparation and delivery of certificates representing Transfer Restricted
Securities to be sold and not bearing any restrictive legends; and to register
such Transfer Restricted Securities in such denominations and such names as the
selling Holders may request at least two Business Days prior to such sale of
Transfer Restricted Securities;

 

(xiv)  use their respective
reasonable best efforts to cause the disposition of the Transfer Restricted
Securities covered by the Registration Statement to be registered with or
approved by such other governmental agencies or authorities as may be necessary
to enable the seller or sellers thereof to consummate the disposition of such
Transfer Restricted Securities, subject to the proviso contained in clause
(xii) above;

 

(xv)  provide a CUSIP number for
all Transfer Restricted Securities not later than the effective date of a
Registration Statement covering such Transfer Restricted Securities; and
provide the Senior Trustee under the Indenture with printed certificates for
the Transfer Restricted Securities which are in a form eligible for deposit
with the Depository Trust Company;

 

(xvi)  otherwise use their
respective reasonable best efforts to comply with all applicable rules and
regulations of the Commission, and make generally available to its security
holders with regard to any applicable Registration Statement, as soon as
practicable, a consolidated earnings statement meeting the requirements of Rule 158
(which need not be audited) covering a twelve-month period beginning after the
effective date of the Registration Statement (as such term is defined in
paragraph (c) of Rule 158 under the Act);

 

(xvii)  cause the Indenture to be
qualified under the TIA not later than the effective date of the first
Registration Statement required by this Agreement and, in connection therewith,
cooperate with the Senior Trustee and the Holders to effect such changes to the
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 best efforts to
cause the Senior Trustee to execute, all documents that may be required to
effect such changes and all other forms and documents required to be filed with
the Commission to enable such Indenture to be so qualified in a timely manner;
and

 

(xviii)  provide promptly to each
Holder, upon request, each document filed with the Commission pursuant to the
requirements of Section 13 or Section 15(d) of the Exchange Act.

 

15

 

(d)           Restrictions on Holders. 
Each Holder agrees by acquisition of a Transfer Restricted Security
that, upon receipt of the notice referred to in Section 6(c)(iii)(C) or
any notice from the Company of the existence of any fact of the kind described
in Section 6(c)(iii)(D) hereof (in each case, a “Suspension
Notice”), such Holder will forthwith discontinue disposition of
Transfer Restricted Securities pursuant to the applicable Registration
Statement until (i) such Holder has received copies of the supplemented or
amended Prospectus contemplated by Section 6(c)(iv) hereof or (ii) such
Holder is advised in writing by the Company that the use of the Prospectus may
be resumed, and, in each case, has received copies of any additional or
supplemental filings that are incorporated by reference in the Prospectus (in
each case, the “Recommencement Date”).  Each Holder receiving a Suspension Notice
hereby agrees that it will either (i) destroy any Prospectuses, other than
permanent file copies, then in such Holder’s possession which have been
replaced by the Company with more recently dated Prospectuses or (ii) deliver
to the Company (at the Company’s expense) all copies, other than permanent file
copies, then in such Holder’s possession of the Prospectus covering such
Transfer Restricted Securities that was current at the time of receipt of the
Suspension Notice.  The time period
regarding the effectiveness of such Registration Statement set forth in Section 3
or 4 hereof, as applicable, shall be extended by a number of days equal to the
number of days in the period from and including the date of delivery of the
Suspension Notice to the date of delivery of the Recommencement Date.

 

SECTION 7.         REGISTRATION
EXPENSES

 

(a)           All
expenses incident to the Company’s and the Guarantors’ performance of, or
compliance with, this Agreement will be borne by the Company and the
Guarantors, regardless of whether a Registration Statement becomes effective,
including, without limitation: (i) all registration and filing fees and
expenses; (ii) all fees and expenses of compliance with federal securities
and state Blue Sky or securities laws; (iii) all expenses of printing
(including printing certificates for the Senior B Notes to be issued in the
Exchange Offer and printing of Prospectuses), messenger and delivery services
and telephone; (iv) all fees and disbursements of counsel for the Company,
the Guarantors and, in the case of a Shelf Registration Statement, of one
counsel for the Holders of Transfer Restricted Securities, such counsel to be
selected by a majority of the aggregate principal amount of Transfer Restricted
Securities being sold; (v) all application and filing fees in connection
with listing the Senior B Notes on a national securities exchange or automated
quotation system pursuant to the requirements hereof; and (vi) all fees
and disbursements of independent certified public accountants of the Company
and the Guarantors (including the expenses of any special audit and comfort
letters required by or incident to such performance).

 

The Company
will, in any event, bear its and the Guarantors’ internal expenses (including,
without limitation, all salaries and expenses of its officers and employees
performing legal or accounting duties), the expenses of any annual

 

16

 

audit and the fees and expenses
of any Person, including special experts, retained by the Company or the
Guarantors.

 

(b)           In
connection with any Registration Statement required by this Agreement, the
Company and the Guarantors will reimburse the Initial Purchasers and the
Holders of Transfer Restricted Securities who are tendering Senior A Notes in
the Exchange Offer and/or selling or reselling Senior A Notes or Senior B Notes
pursuant to the “Plan of Distribution” contained in the Exchange Offer
Registration Statement or the Shelf Registration Statement, as applicable, for
the reasonable fees and disbursements of not more than one counsel, who shall
be Davis Polk & Wardwell, unless another firm shall be chosen by the
Holders of a majority in principal amount of the Transfer Restricted Securities
for whose benefit such Registration Statement is being prepared.  Notwithstanding the foregoing, such Holders
shall be responsible for any and all underwriting discounts and commissions
and, prior to employing counsel in connection with an Exchange Offer, the
Initial Purchasers will notify the Company and the Company’s counsel and
provide them reasonable opportunity to discuss the need for separate counsel; provided, however, the
Initial Purchasers shall at all times retain the sole right to employ separate
counsel.

 

SECTION 8.         INDEMNIFICATION

 

(a)           The
Company and the Guarantors agree, jointly and severally, to indemnify and hold
harmless each Holder of Transfer Restricted Securities, its partners,
directors, officers, and each person, if any, who controls such Holder within
the meaning of Section 15 of the Securities Act against any losses,
claims, damages or liabilities, joint or several, to which such Holder may
become subject, under the Securities Act or the Exchange Act or otherwise,
insofar as such losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or are based upon any untrue statement or alleged untrue
statement of any material fact contained in a Registration Statement,
preliminary prospectus or Prospectus (or in any amendment or supplement
thereto) or arise out of or are based upon the omission or alleged omission to
state therein a material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances in which they were
made, not misleading, and shall reimburse each Holder of Transfer Restricted
Securities for any legal or other expenses reasonably incurred by such Holder
of Transfer Restricted Securities in connection with investigating or defending
any such loss, claim, damage, liability or action as such expenses are
incurred; provided, however,
that (i) the Company and the Guarantors shall not be liable in any such
case to the extent that any such loss, claim, damage or liability arises out of
or is based upon any untrue statement or alleged untrue statement in or
omission or alleged omission from a Registration Statement, preliminary
prospectus or Prospectus or in any amendment or supplement thereto made in
reliance upon and in conformity with written information furnished to the
Company and the Guarantors by any such Holder of Transfer Restricted Securities
or on behalf of such Holder of Transfer Restricted Securities specifically for
inclusion therein and (ii) with respect to any untrue statement or

 

17

 

omission or alleged untrue
statement or omission made in any preliminary prospectus, the indemnity
agreement contained in this subsection (a) shall not inure to the
benefit of any Holder of Transfer Restricted Securities from whom the person
asserting any such losses, claims, damages or liabilities purchased the
Securities concerned, to the extent that a Prospectus relating to such
Securities was required to be delivered by such Holder of Transfer Restricted
Securities under the Securities Act in connection with such purchase and any
such loss, claim, damage or liability of such Holder of Transfer Restricted
Securities results from the fact that there was not sent or given to such
person, at or prior to the written confirmation of the sale of such Securities
to such person, a copy of the final Prospectus if the Company had previously
furnished copies thereof to such Holder of Transfer Restricted Securities; provided  further, however, that this indemnity agreement will be in addition
to any liability which the Company and the Guarantors may otherwise have to
such Holder of Transfer Restricted Securities and their controlling persons
named above.

 

(b)           Each
Holder of Transfer Restricted Securities agrees, severally and not jointly, to
indemnify and hold harmless the Company, the Guarantors, their respective
directors and officers and each person, if any, who controls the Company or any
Guarantors within the meaning of Section 15 of the Securities Act against
any losses, claims, damages or liabilities to which the Company or the
Guarantors may become subject under the Securities Act or the Exchange Act or
otherwise, insofar as such losses, claims, damages or liabilities (or actions
in respect thereof) arise out of or are based upon any untrue statement or
alleged untrue statement of any material fact contained in a Registration
Statement, preliminary prospectus or Prospectus (or in any amendment or
supplement thereto) or arise out of or are based upon the omission or alleged omission
to state therein a material fact necessary in order to make the statements
therein, in light of the circumstances in which they were made, not misleading,
but in each case only to the extent that such untrue statement or omission or
alleged untrue statement or omission was made in reliance upon and in
conformity with written information furnished to the Company and the Guarantors
by or on behalf of such Holder specifically for inclusion therein; and, shall
reimburse, as incurred, the Company, the Guarantors for any legal or other
expenses reasonably incurred by the Company or the Guarantors in connection
with investigating or defending any such loss, claim, damage, liability or
action.  This indemnity agreement will be
in addition to any liability which such Holder of Transfer Restricted
Securities may otherwise have to the Company and the Guarantors or any of their
controlling persons named above.

 

(c)           Promptly
after receipt by an indemnified party under this Section 8 of notice of
the commencement of any action, such indemnified party will, if a claim in
respect thereof is to be made against the indemnifying party under this Section 8,
notify the indemnifying party of the commencement thereof; but the failure to
notify the indemnifying party shall not relieve the indemnifying party from any
liability that it may have under subsection (a) or (b) above
except to the extent

 

18

 

that it has been materially
prejudiced (through the forfeiture of substantive rights or defenses) by such
failure; and provided further that the failure to notify the indemnifying party
shall not relieve it from any liability that it may have to an indemnified
party otherwise than under subsection (a) or (b) above.  In case any such action is brought against
any indemnified party, and it notifies the indemnifying party of the
commencement thereof, the indemnifying party will be entitled to participate
therein and, to the extent that it may wish, jointly with any other
indemnifying party similarly notified, to assume the defense thereof, with
counsel reasonably satisfactory to such indemnified party (who shall not,
except with the consent of the indemnified party, be counsel to the
indemnifying party), and after notice from the indemnifying party to such
indemnified party of its election so to assume the defense thereof, the
indemnifying party will not be liable to such indemnified party under this Section 8
for any legal or other expenses subsequently incurred by such indemnified party
in connection with the defense thereof, other than reasonable costs of
investigation.  No indemnifying party
shall, without the prior written consent of the indemnified party, effect any
settlement of any pending or threatened action in respect of which any
indemnified party is or could have been a party and indemnity could have been
sought hereunder by such indemnified party unless such settlement (i) includes
an unconditional release of such indemnified party from all liability on any
claims that are the subject matter of such action, and (ii) does not
include a statement as to or an admission of fault, culpability or a failure to
act by or on behalf of any indemnified party.

 

(d)           If
the indemnification provided for in this Section 8 is unavailable or insufficient
to hold harmless an indemnified party under subsections (a) or (b) above,
then each indemnifying party shall contribute to the amount paid or payable by
such indemnified party as a result of the losses, claims, damages or
liabilities referred to in subsection (a) or (b) above (i) in
such proportion as is appropriate to reflect the relative benefits received by
the Company and the Guarantors on the one hand and the Holders of Transfer
Restricted Securities on the other from the sale of the Securities pursuant to
a Registration Statement or the exchange of the Securities pursuant to the
Exchange Offer, or (ii) if the allocation provided by the foregoing clause
(i) above is not permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits referred to in clause (i) above
but also the relative fault of the Company and the Guarantors on the one hand
and the Holders of Transfer Restricted Securities on the other hand in
connection with the statements or omissions that resulted in such losses,
claims, damages or liabilities as well as any other relevant equitable
considerations.  The relative benefits
received by the Company and the Guarantors on the one hand and the Holders on
the other shall be deemed to be in such proportion as is appropriate to reflect
the relative benefits received by the Company and the Guarantors from the
offering of the Transfer Restricted Securities pursuant to the Purchase
Agreement and the securities to be issued in an Exchange Offer or pursuant to a
Shelf Registration Statement, on the one hand, and by the Holders from
receiving Transfer Restricted Securities or securities

 

19

 

registered under the Securities
Act pursuant to an Exchange Offer or a Shelf Registration Statement, on the
other hand.  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 Company or the Guarantors on the one hand or such Holder on the other, and
the parties’ relative intent, knowledge, access to information and opportunity
to correct or prevent such statement or omission.  The amount paid by an indemnified party as a
result of the losses, claims, damages or liabilities referred to in this subsection (d) shall
be deemed to include any legal or other expenses reasonably incurred by such
indemnified party in connection with investigating or defending any action or
claim which is the subject of this subsection (d).  Notwithstanding any other provision of this Section 8(d),
the Holders of the Securities shall not be required to contribute any amount in
excess of the amount by which the total proceeds received by such Holders from
the sale of the Transfer Restricted Securities pursuant to a Registration
Statement exceeds the amount of damages which such Holders have otherwise been
required to pay 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.  For purposes of this paragraph (d), each
person, if any, who controls such indemnified party within the meaning of the
Securities Act or the Exchange Act shall have the same rights to contribution as
such indemnified party and each person, if any, who controls the Company or the
Guarantors within the meaning of the Securities Act or the Exchange Act shall
have the same rights to contribution as the Company and the Guarantors.

 

(e)           The
agreements contained in this Section 8 shall survive the sale of the
Transfer Restricted Securities pursuant to a Shelf Registration Statement or
the exchange of the Securities pursuant to an Exchange Offer and shall remain
in full force and effect, regardless of any termination or cancellation of this
Agreement or any investigation made by or on behalf of any indemnified party.

 

SECTION 9.         MISCELLANEOUS

 

(a)           Remedies.  The Company
and the Guarantors acknowledge and agree that any failure by the Company and/or
the Guarantors to comply with their respective obligations under Sections 3 and
4 hereof may result in material irreparable injury to the Initial Purchasers or
the Holders for which there is no adequate remedy at law, that it will not be
possible to measure damages for such injuries precisely and that, in the event
of any such failure, the Initial Purchasers or any Holder may obtain such
relief as may be required to specifically enforce the Company’s and the
Guarantor’s obligations under Sections 3 and 4 hereof.  To the extent permitted by applicable law, the
Company and the Guarantors further agree to waive the defense in any action for
specific performance that a remedy at law would be adequate.

 

20

 

(b)           No Inconsistent Agreements. 
Neither the Company nor any Guarantor will, on or after the date of this
Agreement, enter into any agreement with respect to its securities that is
inconsistent with the rights granted to the Holders 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
Company’s and the Guarantors’ securities under any agreement in effect on the
date hereof.

 

(c)           Amendments and Waivers.  The provisions of this Agreement may not be
amended, modified or supplemented, and waivers or consents to or departures
from the provisions hereof may not be given unless (i) in the case of Section 5
hereof and this Section 9(c)(i), the Company has obtained the written
consent of Holders of all outstanding Transfer Restricted Securities and (ii) in
the case of all other provisions hereof, the Company has obtained the written
consent of Holders of a majority of the outstanding principal amount of
Transfer Restricted Securities (excluding Transfer Restricted Securities held
by the Company or a Guarantor or their Affiliates).  Notwithstanding the foregoing, a waiver or
consent to a departure from the provisions hereof that relates exclusively to
the rights of Holders whose Transfer Restricted Securities are being tendered
pursuant to the Exchange Offer and that does not affect directly or indirectly
the rights of other Holders whose Transfer Restricted Securities are not being
tendered pursuant to such Exchange Offer may be given by the Holders of a
majority of the outstanding principal amount of Transfer Restricted Securities
subject to such Exchange Offer.

 

(d)           Third Party Beneficiary. 
The Holders shall be third party beneficiaries to the agreements made
hereunder between the Company and the Guarantors, on the one hand, and the
Initial Purchasers, on the other hand, and shall have the right to enforce such
agreements directly to the extent they may deem such enforcement necessary or
advisable to protect their rights or the rights of Holders hereunder.

 

(e)           Notices.  All notices
and other communications provided for or permitted hereunder shall be made in
writing by hand-delivery, first-class mail (registered or certified, return
receipt requested), telex, telecopier, or air courier guaranteeing overnight
delivery:

 

(i)            if to a Holder, at the
address set forth on the records of the Registrar under the Indenture, with a
copy to the Registrar under the Indenture; and

 

(ii)           if to the Company or
the Guarantors:

 

c/o Hovnanian
Enterprises, Inc.

10 Highway 35

P.O. Box
500

Red Bank, NJ
07701

 

21

 

Telecopier
No.: 732-747-6835

Attention:
General Counsel

 

with a copy
to:

 

Simpson
Thacher & Bartlett LLP

425 Lexington
Ave.

New York, NY
10017

 

Telecopier
No.: 212-455-2502

Attention:
Vincent Pagano Jr., Esq.

 

All such
notices and communications shall be deemed to have been duly given:  at the time delivered by hand, if personally
delivered; five Business Days after being deposited in the mail, postage
prepaid, if mailed; when receipt acknowledged, if telecopied; and on the next
business day, if timely delivered to an air courier guaranteeing overnight
delivery.

 

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

 

(f)            Successors and Assigns. 
This Agreement shall inure to the benefit of and be binding upon the
successors, assigns and transferees of each of the parties, including, without
limitation, and without the need for an express assignment, subsequent Holders;
provided, that nothing herein shall be
deemed to permit any assignment, transfer or other disposition of Transfer
Restricted Securities in violation of the terms hereof or of the Purchase
Agreement or the Indenture.  If any
transferee of any Holder shall acquire Transfer Restricted Securities in any
manner, whether by operation of law or otherwise, such Transfer Restricted
Securities shall be held subject to all of the terms of this Agreement, and, by
taking and holding such Transfer Restricted Securities, such Person shall be
conclusively deemed to have agreed to be bound by and to perform all of the
terms and provisions of this Agreement, including the restrictions on resale
set forth in this Agreement and, if applicable, the Purchase Agreement, and
such Person shall be entitled to receive the benefits hereof.

 

(g)           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.

 

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

 

22

 

(i)            Governing Law.  THIS
AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF NEW YORK.

 

(j)            Severability.  To the
extent permitted by applicable law, in the event that any one or more of the
provisions contained herein or the application thereof in any circumstance, is
held invalid, illegal or unenforceable, the validity, legality and enforceability
of any such provision in every other respect and of the remaining provisions
contained herein shall not be affected or impaired thereby.

 

(k)           Entire Agreement. 
This Agreement is intended by the parties as a final expression of their
agreement and intended to be a complete and exclusive statement of the
agreement and understanding of the parties hereto in respect of the subject
matter contained herein.  There are no
restrictions, promises, warranties or undertakings other than those set forth
or referred to herein with respect to the registration rights granted with
respect to the Transfer Restricted Securities. 
This Agreement supersedes all prior agreements and understandings
between the parties with respect to such subject matter.

 

23

 

IN WITNESS
WHEREOF, the parties have executed this Agreement as of the date first written
above.

 

	
  K. HOVNANIAN ENTERPRISES, INC.

  
	
   

  
	
   

  
	
  By:

  	
   /s/ PETER S. REINHART

  	
   

  
	
   

  	
  Name: Peter S. Reinhart

  
	
   

  	
  Title: Senior Vice- President and General Counsel

  
	
   

  
	
   

  
	
  HOVNANIAN ENTERPRISES, INC.

  
	
   

  
	
   

  
	
  By:

  	
   /s/ PETER S. REINHART

  	
   

  
	
   

  	
  Name: Peter S. Reinhart

  
	
   

  	
  Title: Senior Vice-President and General Counsel

  
	
   

  
	
   

  
	
  On behalf of each entity named in

  
	
  Schedule A hereto

  
	
   

  
	
   

  
	
  By:

  	
   /s/ PETER S. REINHART

  	
   

  
	
   

  	
  Name: Peter S. Reinhart

  
	
   

  	
  Title: Senior Vice President and General Counsel

  

 

24

 

	
  Citigroup Global Markets Inc.

  
	
  Banc of America Securities LLC

  
	
  Credit Suisse First Boston LLC

  
	
  J.P. Morgan Securities Inc.,

  
	
  as Representatives of the several Initial Purchasers

  
	
  listed in Schedule B of the Purchase Agreement

  
	
   

  
	
  By: Citigroup Global Markets Inc.

  
	
   

  
	
   

  
	
  By:

  	
   /s/ BRIAN D. BEDNARSKI

  	
   

  
	
   

  	
  Name: Brian D. Bednarski

  
	
   

  	
  Title: Director

  

 

25

 

SCHEDULE A

 

GUARANTORS

 

HOVNANIAN
ENTERPRISES, INC.

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.

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 HACKETTSTOWN, INC.

K. HOVNANIAN
AT HERSHEY’S MILL, 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.

 

26

 

K. HOVNANIAN
AT MANALAPAN, INC.

K. HOVNANIAN
AT MARLBORO II, INC.

K. HOVNANIAN
AT MARLBORO TOWNSHIP IV, INC.

K. HOVNANIAN
AT METRO DC SOUTH, INC.

K. HOVNANIAN
AT MONROE II, INC.

K. HOVNANIAN
AT MONTCLAIR NJ, INC.

K. HOVNANIAN
AT MONTGOMERY I, 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 CHRISTIANITOS, 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 SKYE ISLE, INC.

K. HOVNANIAN
AT SMITHVILLE, INC.

K. HOVNANIAN
AT SOUTH BRUNSWICK III, INC.

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.

 

27

 

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
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.

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
EQUITIES, INC.

K. HOVNANIAN
FORECAST HOMES, INC.

K. HOVNANIAN
HOMES OF NORTH CAROLINA, INC.

K. HOVNANIAN
HOMES OF VIRGINIA, INC.

K. HOVNANIAN
INVESTMENT PROPERTIES OF NEW JERSEY, INC.

K. HOVNANIAN
PA REAL ESTATE, INC.

K. HOVNANIAN
PORT IMPERIAL URBAN RENEWAL, INC.

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

K. HOVNANIAN
PROPERTIES OF NORTH BRUNSWICK V, INC.

K. HOVNANIAN
PROPERTIES OF WALL, INC.

KHC
ACQUISITION, INC.

LANDARAMA,
INC.

M&M AT
LONG BRANCH, INC.

MATZEL &
MUMFORD OF DELAWARE, INC.

MCNJ, INC.

PINE BROOK
COMPANY, INC.

REFLECTIONS OF
YOU INTERIORS, INC.

SEABROOK
ACCUMULATION CORPORATION

STONEBROOK
HOMES, INC.

 

28

 

THE MATZEL &
MUMFORD ORGANIZATION, INC.

WASHINGTON
HOMES, INC.

WESTMINSTER
HOMES OF TENNESSEE, INC.

WESTMINSTER
HOMES, INC.

WH LAND I, INC

WH PROPERTIES,
INC.

DULLES
COPPERMINE, L.L.C.

EDISON
CONTRACT SERVICES, L.L.C.

HOVNANIAN LAND
INVESTMENT GROUP, L.L.C.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

K. HOVNANIAN
AT CURRIES WOODS, L.L.C.

K. HOVNANIAN
AT DENVILLE, L.L.C.

K. HOVNANIAN
AT DEPTFORD TOWNSHIP, L.L.C.

K. HOVNANIAN AT
DOVER, L.L.C

 

29

 

K. HOVNANIAN
AT EASTLAKE, 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 EGG HARBOR TOWNSHIP II, L.L.C.

K. HOVNANIAN
AT ENCINITAS RANCH, L.L.C.

K. HOVNANIAN
AT FIRST HOMES, 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 GASLAMP SQUARE, L.L.C.

K. HOVNANIAN
AT GREAT NOTCH, L.L.C.

K. HOVNANIAN
AT GUTTENBERG, L.L.C.

K. HOVNANIAN
AT HACKETTSTOWN II, L.L.C.

K. HOVNANIAN
AT HAMBURG, L.L.C.

K. HOVNANIAN
AT HAMBURG CONTRACTORS, L.L.C.

K. HOVNANIAN
AT HAWTHORNE, L.L.C.

K. HOVNANIAN
AT HIGHLAND SHORES, L.L.C

K. HOVNANIAN
AT HIGHWATER, 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 CO., L.L.C.

K. HOVNANIAN
AT KING FARM, L.L.C.

K. HOVNANIAN
AT LA COSTA, L.L.C.

K. HOVNANIAN
AT LA HABRA KNOLLS, L.L.C.

K. HOVNANIAN
AT LAFAYETTE ESTATES, L.L.C.

K. HOVNANIAN
AT LAKE RIDGE CROSSING, L.L.C.

K. HOVNANIAN
AT LAKE TERRAPIN, 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 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 MANALAPAN III, L.L.C.

K. HOVNANIAN
AT MANSFIELD I, LLC

K. HOVNANIAN
AT MANSFIELD II, LLC

K. HOVNANIAN
AT MANSFIELD III, L.L.C.

 

30

 

K. HOVNANIAN
AT MARLBORO TOWNSHIP IX, L.L.C.

K. HOVNANIAN
AT MARLBORO TOWNSHIP V, L.L.C.

K. HOVNANIAN
AT MARLBORO TOWNSHIP VIII, L.L.C.

K. HOVNANIAN
AT MARLBORO VI, L.L.C.

K. HOVNANIAN
AT MARLBORO VII, L.L.C.

K. HOVNANIAN
AT MENDHAM TOWNSHIP, L.L.C.

K. HOVNANIAN
AT MENIFEE, L.L.C.

K. HOVNANIAN
AT MENIFEE VALLEY CONDUMINIUMS, L.L.C.

K. HOVNANIAN
AT MIDDLE TOWNSHIP, L.L.C.

K. HOVNANIAN
AT MIDDLETOWN II, L.L.C.

K. HOVNANIAN
AT MIDDLETOWN, L.L.C.

K. HOVNANIAN
AT MILLVILLE I, L.L.C.

K. HOVNANIAN
AT MILLVILLE II, L.L.C.

K. HOVNANIAN
AT MILLVILLE III, L.L.C.

K. HOVNANIAN
AT MONROE III, L.L.C.

K. HOVNANIAN
AT MONROE IV, L.L.C.

K. HOVNANIAN
AT MONTVALE, L.L.C.

K. HOVNANIAN
AT MOSAIC, L.L.C.

K. HOVNANIAN
AT MT. OLIVE TOWNSHIP, L.L.C.

K. HOVNANIAN
AT NEW WINDSOR, L.L.C.

K. HOVNANIAN
AT NORTH BERGEN, L.L.C.

K. HOVNANIAN
AT NORTH BRUNSWICK VI, L.L.C.

K. HOVNANIAN
AT NORTH CALDWELL II, L.L.C.

K. HOVNANIAN
AT NORTH CALDWELL, L.L.C.

K. HOVNANIAN
AT NORTH HALEDON, L.L.C.

K. HOVNANIAN
AT NORTH WILDWOOD, L.L.C.

K. HOVNANIAN
AT NORTHAMPTON, L.L.C.

K. HOVNANIAN
AT NORTHFIELD, L.L.C.

K. HOVNANIAN
AT OLD BRIDGE, L.L.C.

K. HOVNANIAN
AT OLDE ORCHARD, L.L.C.

K. HOVNANIAN
AT OSTER HOMES, L.L.C.

K. HOVNANIAN
AT PACIFIC BLUFFS, L.L.C.

K. HOVNANIAN
AT PARAMUS, L.L.C.

K. HOVNANIAN
AT PARK LANE, L.L.C.

K. HOVNANIAN
AT PARSIPPANY-TROY HILLS, L.L.C.

K. HOVNANIAN
AT PHILADELPHIA III, L.L.C.

K. HOVNANIAN
AT PHILADELPHIA IV, L.L.C.

K. HOVNANIAN
AT PITTSGROVE, L.L.C.

K. HOVNANIAN
AT PRADO, L.L.C.

K. HOVNANIAN
AT RANCHO SANTA MARGARITA, L.L.C.

K. HOVNANIAN
AT RANDOLPH I, L.L.C.

K. HOVNANIAN
AT RAPHO, L.L.C.

K. HOVNANIAN
AT READINGTON II, L.L.C.

K. HOVNANIAN
AT RED BANK, L.L.C.

K. HOVNANIAN
AT RED BANK I, L.L.C.

K. HOVNANIAN
AT RIVERBEND, L.L.C.

 

31

 

K. HOVNANIAN
AT RODERUCK. L.L.C.

K. HOVNANIAN
AT ROSEMARY LANTANA, L.L.C.

K. HOVNANIAN
AT ROWLAND HEIGHTS, L.L.C.

K. HOVNANIAN
AT SAYREVILLE, L.L.C.

K. HOVNANIAN
AT SCOTCH PLAINS, L.L.C.

K. HOVNANIAN
AT SHELF COMPANY, 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 SPRINGCO, L.L.C.

K. HOVNANIAN
AT SPRINGFIELD, L.L.C.

K. HOVNANIAN
AT SUNSETS, L.L.C.

K. HOVNANIAN
AT TEANECK, 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 THE THOMPSON RANCH, L.L.C.

K. HOVNANIAN
AT TOWNGATE, L.L.C.

K. HOVNANIAN
AT TRAIL RIDGE, 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 UPPER UWCHLAN, L.L.C.

K. HOVNANIAN
AT UPPER UWCHLAN II, L.L.C.

K. HOVNANIAN
AT VINELAND, 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.

K. HOVNANIAN
AT WAYNE VIII, L.L.C.

K. HOVNANIAN
AT WAYNE IX, L.L.C.

K. HOVNANIAN
AT WEST BRADFORD, L.L.C.

K. HOVNANIAN
AT WEST MILFORD, L.L.C.

K. HOVNANIAN
AT WEST WINDSOR, L.L.C.

K. HOVNANIAN
AT WILLOW BROOK, L.L.C.

K. HOVNANIAN
AT WINCHESTER, L.L.C.

K. HOVNANIAN
AT WOODHILL ESTATES, L.L.C.

K. HOVNANIAN
AT WOOLWICH I, L.L.C.

K. HOVNANIAN
AT YONKERS I, L.L.C.

K. HOVNANIAN
AT YONKERS II, L.L.C.

K. HOVNANIAN
AT YONKERS III, L.L.C.

K. HOVNANIAN
CAMBRIDGE HOMES, L.L.C.

K. HOVNANIAN
CENTRAL ACQUISITIONS, L.L.C.

K. HOVNANIAN
COMPANIES OF METRO D.C. NORTH, L.L.C.

K. HOVNANIAN
COMPANIES, L.L.C.

K. HOVNANIAN
EASTERN PENNSYLVANIA, L.L.C.

K. HOVNANIAN
FOUR SEASONS AT GOLD HILL, L.L.C.

 

32

 

K. HOVNANIAN
FOUR SEASONS AT HISTORIC VIRGINIA, L.L.C.

K. HOVNANIAN
GREAT WESTERN BUILDING COMPANY, L.L.C.

K. HOVNANIAN
GREAT WESTERN HOMES, L.L.C.

K. HOVNANIAN
HOLDINGS NJ, L.L.C.

K. HOVNANIAN
HOMES AT CAMERON STATION, L.L.C.

K. HOVNANIAN
HOMES AT CAMP SPRINGS, L.L.C.

K. HOVNANIAN
HOMES AT FAIRWOOD, L.L.C.

K. HOVNANIAN
HOMES AT FOREST RUN, L.L.C.

K. HOVNANIAN
HOMES AT LAUREL HIGHLANDS, L.L.C.

K. HOVNANIAN
HOMES AT MAXWELL PLACE, L.L.C.

K. HOVNANIAN
HOMES AT RENAISSANCE PLAZA, L.L.C.

K. HOVNANIAN
HOMES AT RUSSET, L.L.C.

K. HOVNANIAN
HOMES OF D.C., L.L.C.

K. HOVNANIAN
HOMES OF DELAWARE, L.LC.

K. HOVNANIAN
HOMES OF MARYLAND, L.L.C.

K. HOVNANIAN
HOMES OF MINNESOTA, L.L.C.

K. HOVNANIAN
HOMES OF PENNSYLVANIA, L.L.C.

K. HOVNANIAN
HOMES OF SOUTH CAROLINA, L.L.C.

K. HOVNANIAN
HOMES OF WEST VIRGINIA, 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
OHIO REALTY, L.L.C.

K. HOVNANIAN
PENNSYLVANIA ACQUISITIONS, L.L.C.

K. HOVNANIAN
SHORE ACQUISITIONS, L.L.C.

K. HOVNANIAN
SOUTH JERSEY ACQUISITION, L.L.C.

K. HOVNANIAN
SOUTHERN NEW JERSEY, L.L.C.

K. HOVNANIAN
SUMMIT HOLDINGS, L.L.C.

K. HOVNANIAN
SUMMIT HOMES, L.L.C.

K. HOVNANIAN
SUMMIT HOMES OF MICHIGAN, L.L.C.

K. HOVNANIAN
HOMES OF PENNSYLVANIA, L.L.C.

K. HOVNANIAN
SUMMIT HOMES OF WEST VIRGINIA, L.L.C.

K. HOVNANIAN
T&C INVESTMENT, L.L.C.

K. HOVNANIAN
T&C MANAGEMENT CO., L.L.C.

K. HOVNANIAN
WINDWARD HOMES, L.LC.

K. HOVNANIAN’S
FOUR SEASONS AT ASHBURN VILLAGE, L.L.C.

K. HOVNANIAN’S
FOUR SEASONS AT BAKERSFIELD, L.L.C.

K. HOVNANIAN’S
FOUR SEASONS AT DULLES DISCOVERY CONDOMINIUM, L.L.C.

K. HOVNANIAN’S
FOUR SEASONS AT DULLES DISCOVERY, L.L.C.

K. HOVNANIAN’S
FOUR SEASONS AT HEMET, L.L.C.

K. HOVNANIAN’S
FOUR SEASONS AT KENT ISLAND, L.L.C.

K. HOVNANIAN’S
FOUR SEASONS AT KENT ISLAND CONDOMINIUMS, L.L.C.

K. HOVNANIAN’S
FOUR SEASONS AT MENIFEE VALLE, L.L.C.

K. HOVNANIAN’S
FOUR SEASONS AT PALM SPRINGS, L.L.C.

K. HOVNANIAN’S
FOUR SEASONS AT ST. MARGARETS LANDING, L.L.C.

 

33

 

K. HOVNANIAN’S
FOUR SEASONS AT VINT HILL, L.L.C.

K. HOVNANIAN’S
FOUR SEASONS, L.L.C.

K. HOVNANIAN’S
PRIVATE HOME PORTFOLIO, L.L.C.

KHIP, LLC

KINGS COURT AT
MONTGOMERY, L.L.C.

M&M AT
APPLE RIDGE, L.L.C.

M&M AT
BROOKHILL, L.L.C.

M&M AT
CHESTERFIELD, L.L.C.

M&M AT
EAST MILL, L.L.C.

M&M AT
HERITAGE WOODS, L.L.C.

M&M AT
KENSINGTON WOODS, L.L.C.

M&M AT
MORRISTOWN, L.L.C.

M&M AT
ROBERT MORRIS, L.L.C.

M&M AT
SHERIDAN, L.L.C.

M&M AT
SPARTA, L.L.C.

M&M AT
SPINNAKER POINTE, L.L.C.

M&M AT
SPRUCE HOLLOW, L.L.C.

M&M AT
SPRUCE MEADOWS, L.L.C.

M&M AT
SPRUCE RUN, L.L.C.

M&M AT
TAMARACK HOLLOW, L.L.C.

M&M AT THE
HIGHLANDS, L.L.C.

M&M AT
WEST ORANGE, L.L.C.

M&M AT
WHEATON URBAN RENEWAL, 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 BOUND BROOK URBAN RENEWAL, L.L.C.

MATZEL &
MUMFORD AT SOUTH BRUNSWICK, L.L.C.

MATZEL &
MUMFORD AT WOODLAND CREST, L.L.C.

MIDWEST
BUILDING PRODUCTS & CONTRACTOR SERVICES, L.L.C

MMIP, L.L.C.

NORTH MANATEE,
L.L.C.

PADDOCKS,
L.L.C.

PINE AYR,
L.L.C.

RIDGEMORE
UTILITY, L.L.C.

K. HOVNANIAN
HOMES AT MAXWELL PLACE, L.L.C.

THE LANDINGS
AT SPINNAKER POINTE, L.L.C.

WASHINGTON
HOMES AT COLUMBIA TOWN CENTER, L.L.C.

WESTMINSTER
HOMES OF ALABAMA, L.L.C.

WESTMINSTER
HOMES OF MISSISSIPPI, L.L.C.

WOODLAND LAKES
CONDOS AT BOWIE NEWTOWN, LLC

GOODMAN FAMILY
OF BUILDERS, L.P.

K. HOVNANIAN
OF HOUSTON II, L.P.

 

34

 

K. HOVNANIAN
OF HOUSTON, L.P.

M & M INVESTMENTS,
L.P.

 

35

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