Document:

EXHIBIT 4.2

 

	
 
    	
 
    	
 
    

 

 

K. HOVNANIAN ENTERPRISES, INC.,
 as Issuer

 

HOVNANIAN ENTERPRISES, INC.
 and
 the other Guarantors party hereto

 

and

 

WILMINGTON TRUST, NATIONAL ASSOCIATION,
 as Trustee and Collateral Agent

 

_____________________________

 

Indenture

 

Dated as of October 2, 2012

 

_____________________________

 

9.125% Senior Secured Second Lien Notes Due 2020

 

	
 
    	
 
    	
 
    

 

 

 

TABLE OF CONTENTS

 

 

	
 
    	
PAGE
    
	
RECITALS
    
	
 
    
	
ARTICLE 1
    
	
DEFINITIONS AND INCORPORATION BY   REFERENCE
    
	
 
    	
 
    
	
Section 1.01. Definitions
    	
1
    
	
Section 1.02. Rules of   Construction
    	
35
    
	
 
    	
 
    
	
ARTICLE 2
    
	
THE NOTES
    
	
 
    	
 
    
	
Section 2.01. Form,   Dating and Denominations; Legends
    	
35
    
	
Section 2.02. Execution   and Authentication; Additional Notes
    	
36
    
	
Section 2.03. Registrar,   Paying Agent and Authenticating Agent; Paying Agent to Hold Money in Trust
    	
37
    
	
Section 2.04. Replacement Notes
    	
38
    
	
Section 2.05. Outstanding   Notes
    	
38
    
	
Section 2.06. Temporary Notes
    	
39
    
	
Section 2.07. Cancellation
    	
39
    
	
Section 2.08. CUSIP   and ISIN Numbers
    	
39
    
	
Section 2.09. Registration,   Transfer and Exchange
    	
40
    
	
Section 2.10. Restrictions   on Transfer and Exchange
    	
43
    
	
Section 2.11. Regulation S Temporary   Global Notes
    	
45
    
	
 
    	
 
    
	
ARTICLE 3
    
	
REDEMPTION; OFFER TO PURCHASE
    
	
 
    	
 
    
	
Section 3.01. Optional   Redemption
    	
46
    
	
Section 3.02. Redemption with   Proceeds of Equity Offering
    	
47
    
	
Section 3.03. Sinking Fund;   Mandatory Redemption
    	
47
    
	
Section 3.04. Method and Effect of   Redemption
    	
48
    
	
Section 3.05. Offer to Purchase
    	
49
    
	
 
    	
 
    
	
ARTICLE 4
    
	
COVENANTS
    
	
 
    	
 
    
	
Section 4.01. Payment   of Notes
    	
51
    
	
Section 4.02. Maintenance   of Office or Agency
    	
52
    
	
Section 4.03. Existence
    	
52
    
	
Section 4.04. Payment   of Taxes
    	
52
    
	
Section 4.05. [Reserved]
    	
52
    

 

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Section 4.06. Limitations   on Indebtedness
    	
53
    
	
Section 4.07. Limitations   on Restricted Payments
    	
54
    
	
Section 4.08. Limitations   on Liens
    	
59
    
	
Section 4.09. Limitations on Restrictions Affecting   Restricted Subsidiaries
    	
59
    
	
Section 4.10. Limitations on Dispositions of Assets
    	
61
    
	
Section 4.11. Guarantees by   Restricted Subsidiaries
    	
63
    
	
Section 4.12. Repurchase of Notes upon a Change of   Control
    	
64
    
	
Section 4.13. Limitations on   Transactions with Affiliates
    	
64
    
	
Section 4.14. Limitations on Mergers, Consolidations and   Sales of Assets
    	
66
    
	
Section 4.15. Reports   to Holders of Notes
    	
67
    
	
Section 4.16. [Reserved]
    	
68
    
	
Section 4.17. Notice   of Other Defaults
    	
68
    
	
Section 4.18. Collateral Requirement;   Further Assurances; Costs
    	
68
    
	
Section 4.19. Limitation of   Applicability of Certain Covenants if Notes Rated Investment Grade
    	
71
    
	
 
    	
 
    
	
ARTICLE 5
    
	
REMEDIES
    
	
 
    	
 
    
	
Section 5.01. Events   of Default
    	
72
    
	
Section 5.02. Other   Remedies
    	
76
    
	
Section 5.03. Waiver   of Defaults by Majority of Holders
    	
76
    
	
Section 5.04.   Direction of Proceedings
    	
76
    
	
Section 5.05. Application   of Moneys Collected by Trustee
    	
76
    
	
Section 5.06.   Proceedings by Holders
    	
77
    
	
Section 5.07.   Proceedings by Trustee
    	
78
    
	
Section 5.08. Remedies   Cumulative and Continuing
    	
78
    
	
Section 5.09. Undertaking   to Pay Costs
    	
79
    
	
Section 5.10.   Notice of Defaults
    	
79
    
	
Section 5.11. Waiver   of Stay, Extension or Usury Laws
    	
80
    
	
Section 5.12. Trustee   May File Proof of Claim
    	
80
    
	
Section 5.13. Payment of Notes on   Default; Suit Therefor
    	
80
    
	
 
    	
 
    
	
ARTICLE 6
    
	
GUARANTEES; RELEASE OF GUARANTOR
    
	
 
    	
 
    
	
Section 6.01. Guarantee
    	
82
    
	
Section 6.02.   Obligations of each Guarantor Unconditional
    	
83
    
	
Section 6.03. Release   of a Guarantor
    	
84
    
	
Section 6.04. Execution   and Delivery of Guarantee
    	
84
    
	
Section 6.05. Limitation   on Guarantor Liability
    	
84
    
	
Section 6.06. Article 6   not to Prevent Events of Default
    	
85
    
	
Section 6.07. Waiver   by the Guarantors
    	
85
    
	
Section 6.08. Subrogation   and Contribution
    	
85
    
	
Section 6.09. Stay   of Acceleration
    	
85
    

 

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ARTICLE 7
    
	
THE TRUSTEE
    
	
 
    	
 
    
	
Section 7.01. General
    	
85
    
	
Section 7.02. Certain Rights of the Trustee
    	
86
    
	
Section 7.03. Individual Rights of the Trustee
    	
88
    
	
Section 7.04. Trustee’s   Disclaimer
    	
88
    
	
Section 7.05. Reserved
    	
88
    
	
Section 7.06. Reports   by Trustee to Holders
    	
88
    
	
Section 7.07. Compensation   and Indemnity
    	
88
    
	
Section 7.08. Replacement   of Trustee
    	
89
    
	
Section 7.09. Successor   Trustee by Merger
    	
90
    
	
Section 7.10. Eligibility
    	
91
    
	
Section 7.11. Money   Held in Trust
    	
91
    
	
 
    	
 
    
	
ARTICLE 8
    
	
DEFEASANCE AND DISCHARGE
    
	
 
    	
 
    
	
Section 8.01. Legal Defeasance and   Discharge
    	
91
    
	
Section 8.02. Covenant Defeasance
    	
91
    
	
Section 8.03. Conditions to Legal or   Covenant Defeasance
    	
92
    
	
Section 8.04. Deposited Money and   Government Securities to be Held in Trust; Other Miscellaneous Provisions
    	
93
    
	
Section 8.05. Repayment to Issuer
    	
94
    
	
Section 8.06. Reinstatement
    	
94
    
	
Section 8.07. Survival
    	
95
    
	
Section 8.08. Satisfaction and   Discharge of Indenture
    	
95
    
	
 
    	
 
    
	
ARTICLE 9
    
	
AMENDMENTS, SUPPLEMENTS AND WAIVERS
    
	
 
    	
 
    
	
Section 9.01. Amendments Without   Consent of Holders
    	
96
    
	
Section 9.02. Amendments   with Consent of Holders
    	
98
    
	
Section 9.03. Effect   of Consent
    	
99
    
	
Section 9.04. Trustee’s   Rights and Obligations
    	
99
    
	
 
    	
 
    
	
ARTICLE 10
    
	
[RESERVED]
    
	
 
    
	
ARTICLE 11
    
	
COLLATERAL AND SECURITY
    
	
 
    	
 
    
	
Section 11.01. Security Documents
    	
100
    
	
Section 11.02. Collateral Agent
    	
100
    
	
Section 11.03. Authorization of   Actions to be Taken
    	
102
    

 

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Section 11.04. Release of   Second-Priority Liens
    	
103
    
	
Section 11.05. Filing, Recording and   Opinions
    	
104
    
	
 
    	
 
    
	
ARTICLE 12
    
	
RELEASE OF ISSUER AND GUARANTORS
    
	
 
    	
 
    
	
Section 12.01. Release of Issuer
    	
105
    
	
 
    	
 
    
	
ARTICLE 13
    
	
MISCELLANEOUS
    
	
 
    	
 
    
	
Section 13.01. [Reserved]
    	
105
    
	
Section 13.02. Holder   Actions
    	
105
    
	
Section 13.03. Notices
    	
106
    
	
Section 13.04. Certificate   and Opinion as to Conditions Precedent
    	
107
    
	
Section 13.05. Statements   Required in Certificate or Opinion
    	
107
    
	
Section 13.06. Payment   Date Other Than a Business Day
    	
108
    
	
Section 13.07. Governing   Law
    	
108
    
	
Section 13.08. No Adverse Interpretation of Other   Agreements
    	
108
    
	
Section 13.09. Successors
    	
108
    
	
Section 13.10. Duplicate   Originals
    	
109
    
	
Section 13.11. Separability
    	
109
    
	
Section 13.12. Table   of Contents and Headings
    	
109
    
	
Section 13.13. No   Liability of Directors, Officers, Employees, Partners, Incorporators and   Stockholders
    	
109
    
	
Section 13.14. Provisions of   Indenture for the Sole Benefit of Parties and Holders of Notes
    	
109
    

 

iv

 

EXHIBITS

 

	
EXHIBIT A
    	
Form of   Note and Guarantee
    
	
EXHIBIT B
    	
Form of   Supplemental Indenture
    
	
EXHIBIT C
    	
Restricted   Legend
    
	
EXHIBIT D
    	
DTC   Legend
    
	
EXHIBIT E
    	
Regulation   S Certificate
    
	
EXHIBIT F
    	
Rule 144A   Certificate
    
	
EXHIBIT G
    	
Institutional   Accredited Investor Certificate
    
	
EXHIBIT H
    	
Certificate   of Beneficial Ownership
    
	
EXHIBIT I
    	
Regulation   S Temporary Global Note Legend
    
	
EXHIBIT J
    	
Unrestricted   Subsidiaries
    

 

v

 

INDENTURE, dated as of October 2, 2012, 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 WILMINGTON TRUST, NATIONAL ASSOCIATION, a national banking association, as Trustee (the “Trustee”) and as Collateral Agent (the “Collateral Agent”).

 

RECITALS

 

The Issuer has duly authorized the execution and delivery of this Indenture to provide for the issuance on the Issue Date of $220,000,000 aggregate principal amount of the Issuer’s 9.125% Senior Secured Second Lien Notes Due 2020 and, if and when issued, any Additional Notes (together, the “Notes”).  All things necessary to make this 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 Trustee, the valid obligations of the Issuer as hereinafter provided.

 

In addition, the Guarantors party hereto have duly authorized the execution and delivery of this Indenture as guarantors of the Notes.  All things necessary to make this 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 Trustee, the valid obligation of such Guarantor as hereinafter provided.

 

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

 

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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 Notes” means any notes of the Issuer issued under this Indenture in addition to the Initial Notes having the same terms in all respects as the Initial Notes, except that interest may accrue on the Additional Notes from their date of issuance, and any notes issued in replacement therefor.

 

“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, 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

 

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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 $10.0 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), sales subject to repurchase options, dedications and other donations to governmental authorities, leases and sales and leasebacks of (i) homes, improved land and unimproved land and (ii) real estate (including related amenities and improvements),

 

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

 

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

 

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

 

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

 

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

 

(h)   any Restricted Payment or Permitted Investment.

 

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

 

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

 

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

 

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

 

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

 

“Capital Stock” means, with respect to any Person, any and all shares, interests, participations or other equivalents (however designated) of or in such Person’s capital stock or other equity interests, and options, rights or warrants to purchase such capital stock or other equity interests, whether now outstanding or issued after the Issue Date, including, without limitation, all Disqualified Stock and Preferred Stock, but excluding any debt security that is convertible into, or exchangeable for, Capital 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, time deposits, eurodollar time deposits, overnight bank deposits or bankers’ acceptances with maturities of one year or less from the date of acquisition, in each case with any domestic commercial bank having capital and surplus in excess of $500.0 million;

 

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(d)           marketable general obligations issued by any state of the United States of America or any political subdivision of any such state or any public instrumentality thereof maturing within one year from the date of acquisition and, at the time of acquisition, having a credit rating of at least “A” or the equivalent thereof by S&P or Moody’s, or carrying an equivalent rating by a nationally recognized Rating Agency, if both of the two named Rating Agencies cease publishing ratings of investments;

 

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

 

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

 

(g)           investments in investment companies or money market funds substantially all of the assets of which consist of securities described in the foregoing clauses (a) through (f) of this definition.

 

“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;

 

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

 

(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) of this definition shall not constitute a Change of Control.

 

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

 

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

 

“Collateral Agent” means the party named as such in the preamble of this Indenture and any successor acting in such capacity.

 

“Collateral Ratio” has the meaning ascribed to it in Section 4.07(b)(iii)(C).

 

“Collateralized Debt” means (i)(a) the aggregate principal amount of all outstanding Indebtedness and all letters of credit secured by Liens on the Collateral and (b) all outstanding Indebtedness incurred pursuant to clause (l)(ii) of the definition of “Permitted Indebtedness” (for purposes of such clause (l) only, notwithstanding the exclusion at the end of this definition), plus (ii) the aggregate amount of all unfunded commitments under all revolving credit facilities or revolving lines of credit secured by Liens on the Collateral, plus (iii) without duplication, the aggregate principal amount of Indebtedness that at the time of determination would be permitted to be incurred under this Indenture and secured by Liens on the Collateral pursuant to clause (i) of the definition of “Permitted Liens,” but excluding any such principal amount of potential Indebtedness to the extent any outstanding debt instrument of the Company or the Issuer would prohibit the incurrence of a Lien in respect thereof at such time, but in each case, excluding Indebtedness, letters of credit and unfunded commitments secured by Liens on the Collateral that rank junior to the Liens on the Collateral securing the Notes.

 

“Commission” means the Securities and Exchange Commission.

 

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

 

6

 

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

 

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

 

(a)           income taxes,

 

(b)           Consolidated Interest Expense,

 

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

 

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

 

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

 

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

 

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

 

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(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 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 the immediately preceding clause (a), 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.

 

8

 

“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 clause (a) of this definition, 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,

 

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

 

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

 

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

 

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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) of this definition shall not be applicable.

 

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

 

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

 

“Corporate Trust Office” means the office of the Trustee at which the corporate trust business of the Trustee is principally administered, which at the date of this Indenture is located at Rodney Square North, 1100 North Market Street, Wilmington, DE 19890-1600.

 

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

 

“Credit Facilities” means, with respect to the Company, the Issuer or any of its Restricted Subsidiaries, one or more debt facilities or other financing arrangements (including, without limitation, commercial paper facilities or indentures) providing for revolving credit loans, term loans, letters of credit or other long-term indebtedness, including any notes, mortgages, guarantees, collateral documents, instruments and agreements executed in connection therewith, and any amendments, supplements, modifications, extensions, renewals, restatements or refundings thereof and any indentures or credit facilities or commercial paper facilities that exchange, replace, refund, refinance, extend, renew, restate, amend, supplement or modify any part of the loans, notes, other credit facilities or commitments thereunder, including any such exchanged, replacement, refunding, refinancing, extended, renewed, restated, amended, supplemented or modified facility or indenture that increases the amount permitted to be borrowed thereunder or alters the maturity thereof (provided that such increase in borrowings is permitted under Section 4.06(a) hereof) or adds Restricted Subsidiaries as additional borrowers or guarantors thereunder and whether by the same or any other agent, lender or group of lenders.

 

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“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.  For the avoidance of doubt, any Permitted Convertible Indebtedness Call Transaction will not constitute a Currency Agreement.

 

“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 ascribed to it in the definition of “Unrestricted Subsidiary.”

 

“Disqualified Stock” means any Capital Stock that, by its terms (or by the terms of any security into which it is convertible or for which it is exchangeable), or upon the happening of any event, (a) matures or is mandatorily redeemable, pursuant to a sinking fund obligation or otherwise, or is redeemable at the option of the holder thereof, in whole or in part, on or prior to the final maturity date of the Notes or (b) is convertible into or exchangeable or exercisable for (whether at the option of the issuer or the holder thereof) (i) debt securities or (ii) any Capital Stock referred to in (a) above, in each case, at any time prior to the final maturity date of the Notes; provided, however, that any Capital Stock that would not constitute Disqualified Stock but for provisions thereof giving holders thereof (or the holders of any security into or for which such Capital Stock is convertible, exchangeable or exercisable) the right to require the Company to repurchase or redeem such Capital Stock upon the occurrence of a change in control or asset disposition occurring prior to the final maturity date of the Notes shall not constitute Disqualified Stock if the change in control or asset disposition provision applicable to such Capital Stock are no more favorable to such holders than the provisions of Section 4.10 or Section 4.12 hereof (as applicable) and such Capital Stock specifically provides that the Company will not repurchase or redeem any such Capital Stock pursuant to such provisions prior to the Company’s repurchase of the Notes as are required pursuant to the provisions of Section 4.10 or Section 4.12 hereof (as applicable).

 

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

 

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

 

“Equity Offering” means any public or private sale, after the Issue Date, of Qualified Stock of the Company, other than (i) an Excluded Contribution, (ii)

 

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public offerings registered on Form S-4 or S-8 or any successor form thereto or (iii) any issuance pursuant to employee benefit plans or otherwise in compensation to officers, directors or employees.

 

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

 

“Event of Default” has the meaning ascribed to it in Section 5.01 hereof.

 

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

 

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

 

“Excluded Property” means (a) any pledges of stock of the Issuer, any Guarantor or of K. Hovnanian JV Holdings, L.L.C. to the extent that Rule 3-16 of Regulation S-X under the Securities Act requires or would require (or is replaced with another rule or regulation, or any other law, rule or regulation is adopted, that would require) the filing with the Commission of separate financial statements of the Issuer, such Guarantor or of K. Hovnanian JV Holdings, L.L.C. that are not otherwise required to be filed, but only to the extent necessary to not be subject to such requirement, (b) up to $50.0 million of assets received in connection with Asset Dispositions and asset swaps or exchanges as permitted by clause (c) of the definition of “Permitted Investment,” (c) personal property where the cost of obtaining a security interest or perfection thereof exceeds its benefits (as reasonably determined by the Company’s Board of Directors in a board resolution delivered to the Collateral Agent), (d) property subject to a Lien securing Indebtedness incurred for the purpose of financing the acquisition thereof (plus any construction or improvements thereon and any licenses, permits, authorizations, consent forms or contracts related to the acquisition, development, use or improvement thereof) to the extent the terms of such Indebtedness prohibit the incurrence of any other Liens thereon, (e) real property located outside the United States, (f) Unentitled Land, (g) property that is leased or held for the purpose of leasing to unaffiliated third parties, (h) equity interests in Unrestricted Subsidiaries, except for K. Hovnanian JV Holdings, L.L.C., and subject to future grants under the terms of this Indenture, (i) any property in a community under development with a dollar amount of investment as of the most recent month-end (as determined in accordance with GAAP) of less than $2.0 million or with less than 10 lots remaining, (j) any assets or property excluded from the Collateral pursuant to clause (ii) of the proviso of Article 2 of the Security Agreement and (k) up to $25.0 million of cash or cash equivalents that are pledged to secure

 

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obligations permitted to be secured pursuant to clause (d) of the definition of “Permitted Liens” if, after the use of commercially reasonable efforts by the Company to obtain a Lien on such cash or cash equivalents for the benefit of the Holders of the Notes, the holders of the obligations secured by such cash and cash equivalents do not consent to the granting of such Liens.

 

“Existing Debt” has the meaning ascribed to it in the definition of “Refinancing Indebtedness”.

 

“Existing Secured Notes Indenture” means the Indenture dated as of October 20, 2009 as supplemented by the First Supplemental Indenture dated as of May 4, 2011 under which the Issuer’s 105/8% Senior Secured Notes due 2016 were issued.

 

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

 

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

 

“First-Priority Lien Obligations” means (1) the First Lien Notes and the First Lien Guarantees thereof and (2) all other Indebtedness secured by Liens on the Collateral that are senior or equal in priority to the Liens on the Collateral securing the First Lien Notes and, in each case, all Obligations in respect thereof.

 

“First Lien Collateral Agent” means the First Lien Trustee acting as the collateral agent for the holders of the First Lien Notse under the security documents related thereto and any successor acting in such capacity.

 

“First Lien Guarantors” means (a) initially, the Company and each of the other guarantors signatory to the First Lien Indenture and (b) each of the Company’s subsidiaries that becomes a guarantor of the First Lien Notes pursuant to the provisions of the First Lien Indenture, and their successors, in each case until released from its respective guarantee pursuant to the First Lien Indenture.

 

“First Lien Guarantees” means the guarantee of the First Lien Notes by each First Lien Guarantor under the First Lien Indenture.

 

“First Lien Indenture” means the indenture, dated as of October 2, 2012, by and among the Issuer, the Company, each of the other First Lien Guarantors,

 

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the First Lien Trustee and the First Lien Collateral Agent under which the First Lien Notes were issued.

 

“First Lien Notes” means the 7.25% Senior Secured First Lien Notes due 2020 of the Issuer and issued under the First Lien Indenture.

 

“First Lien Trustee” means Wilmington Trust, National Association acting as the trustee for the holders of the First Lien Notes under the First Lien Indenture and any successor acting in such capacity.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

“Indebtedness” of any Person means, without duplication,

 

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

 

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unamortized discount to be accounted for as Interest Expense in accordance with GAAP, and (iii) in the case of clause (d) of this definition, 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.

 

For the avoidance of doubt, obligations of any Person under a Permitted Bond Hedge Transaction or a Permitted Warrant Transaction shall be deemed not to constitute Indebtedness.

 

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

 

“Initial Notes” means the Notes of the Issuer issued under this Indenture on the Issue Date and any Notes issued in replacement therefor.

 

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

 

“Intercreditor Agreement” means the Intercreditor Agreement dated as of the Issue Date among the Collateral Agent, the Mortgage Tax Collateral Agent, the First Lien Collateral Agent, the Trustee, the First Lien Trustee, the Issuer, the Company and each other Guarantor named therein, as applicable, as such agreement may be amended, restated, supplemented or otherwise modified from time to time.

 

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

 

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

 

“Interest Payment Date” means each May 15 and November 15 of each year, commencing May 15, 2013.

 

“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 Indebtedness permitted to be incurred under this Indenture.  For the avoidance of doubt, any Permitted Convertible Indebtedness Call Transaction will not constitute an Interest Protection Agreement.

 

“Investment Grade” means, with respect to a debt rating of the Notes, a rating of Baa3 (or the equivalent) or higher by Moody’s together with a rating of BBB- (or the equivalent) 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 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 October 2, 2012.

 

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

 

“Junior-Priority Lien Obligations” means all Indebtedness secured by junior Liens on the Collateral as permitted by clause (i) of the definition of “Permitted Liens” and all Obligations in respect thereof.

 

“L/C Collateral” means cash and cash equivalents that secure obligations permitted to be secured pursuant to clause (d) of the definition of “Permitted Liens”.

 

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

 

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“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” has the meaning ascribed to it in Section 3.01 hereof.

 

“Marketable Securities” means (a) equity securities that are listed on the New York Stock Exchange, the NYSE MKT or The Nasdaq Stock Market and (b) debt securities that are rated by a nationally recognized rating agency, listed on the New York Stock Exchange or the NYSE MKT 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.

 

“Mortgage Tax Collateral Agent” means Wilmington Trust, National Association in its capacity as Mortgage Tax Collateral Agent with respect to Liens granted on real property located in certain states identified pursuant to the terms of the Intercreditor Agreement and any successor thereto.

 

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

 

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

 

“Non-Recourse Indebtedness” with respect to any Person means Indebtedness of such Person for which (a) the sole legal recourse for collection of principal and interest on such Indebtedness is against the specific property identified in the instruments evidencing or securing such Indebtedness and such property was acquired with the proceeds of such Indebtedness or such Indebtedness was incurred within 180 days after the acquisition of such property or completion of such construction or improvement 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 it in the Recitals hereof.

 

“Obligations” means with respect to any Indebtedness, all obligations (whether in existence on the Issue Date or arising afterwards, absolute or contingent, direct or indirect) for or in respect of principal (when due, upon acceleration, upon redemption, upon mandatory repayment or repurchase pursuant to a mandatory offer to purchase, or otherwise), premium, interest, penalties, fees, indemnification, reimbursement and other amounts payable and liabilities with respect to such Indebtedness, including all interest accrued or accruing after the commencement of any bankruptcy, insolvency or reorganization or similar case or proceeding at the contract rate (including, without limitation, any contract rate applicable upon default) specified in the relevant documentation, whether or not the claim for such interest is allowed as a claim in such case or proceeding.

 

“offer” has the meaning ascribed to it in Section 3.05(a) hereof.

 

“Offer to Purchase” has the meaning ascribed to it in Section 3.05 hereof.

 

“Offering Circular” means the Issuer’s Confidential Offering Circular dated September 19, 2012.

 

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

 

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

 

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

 

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

 

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

 

“Permitted Bond Hedge”  means any call or capped call option (or substantively equivalent derivative transaction) on the Company’s Capital Stock purchased by the Company, the Issuer or any Restricted Subsidiary in connection with the issuance of any Permitted Convertible Indebtedness; provided that the purchase price for such Permitted Bond Hedge, less the proceeds received by the Company, the Issuer or the Restricted Subsidiaries from the sale of any related Permitted Warrant, does not exceed the net proceeds received by the Company, the Issuer or the Restricted Subsidiaries from the sale of such Permitted Convertible Indebtedness issued in connection with the Permitted Bond Hedge.

 

“Permitted Convertible Indebtedness” means Indebtedness of the Company, the Issuer or any Restricted Subsidiary permitted to be incurred under the terms of this Indenture that is either (a) convertible or exchangeable into Capital Stock of the Company (and cash in lieu of fractional shares) and/or cash (in an amount determined by reference to the price of such Capital Stock) or (b) sold as units with call options, warrants or rights to purchase (or substantially equivalent derivative transactions) that are exercisable for Capital Stock of the Company and/or cash (in an amount determined by reference to the price of such Capital Stock). For the avoidance of doubt, the Units and the senior unsecured exchange notes which are a component of such Units, shall be Permitted Convertible Indebtedness.

 

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“Permitted Convertible Indebtedness Call Transaction” means any Permitted Bond Hedge and any Permitted Warrant.

 

“Permitted Hovnanian Holders” means, collectively, Ara K. Hovnanian, the members of his immediate family and the members of the immediate family of the late Kevork S. Hovnanian, 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 the Notes (and Guarantees thereof), other than Additional Notes, and under the First Lien Notes (and the First Lien Guarantees), other than Additional Notes (as defined in the First Lien Indenture);

 

(b)                                 Indebtedness of the Company, the Issuer or any Guarantor that is (A) secured by Liens permitted by clause (i) of the definition of “Permitted Liens”, in an aggregate principal amount at any one time outstanding that, after giving effect to the incurrence of such Indebtedness, does not result in outstanding secured Indebtedness in excess of the amount permitted by the proviso in clause (i)(b)(ii) of the definition of “Permitted Liens” (without regard to the priorities of Liens set forth in such clause (i)(b)(ii) of the definition of “Permitted Liens”) and (B) scheduled to mature on or after the maturity date of the Notes (except with respect to Indebtedness incurred pursuant to this clause (b) under Credit Facilities, which may be scheduled to mature on or prior to the maturity date of the Notes; provided that such earlier maturity Indebtedness, together with any Refinancing Indebtedness permitted by the proviso of paragraph (b) of the definition thereof then outstanding, does not exceed $150.0 million in aggregate principal amount);

 

(c)                                  Indebtedness outstanding on the Issue Date, excluding Indebtedness constituting Permitted Indebtedness pursuant to clauses (d), (e), (f), (h) or (j) of this definition, which shall instead be incurred under such clauses;

 

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

 

(e)                                  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)

 

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hereof at the time the Restricted Subsidiary in question ceases to be a Restricted Subsidiary;

 

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

 

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

 

(h)                                 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;

 

(i)                                     Indebtedness secured only by office buildings owned or occupied by the Company or any Restricted Subsidiary, which Indebtedness does not exceed $10.0 million aggregate principal amount outstanding at any one time;

 

(j)                                    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;

 

(k)                                 Indebtedness of the Company or any Restricted Subsidiary which, together with all other Indebtedness under this clause (k), does not exceed $150.0 million aggregate principal amount outstanding at any one time;

 

(l)                                   Indebtedness of the Issuer or any Guarantor incurred under Credit Facilities that constitute revolving credit loans, term loans, letters of credit or similar lines of credit in an amount not exceeding at any time outstanding (i) $75.0 million plus (ii) an aggregate principal amount such that, on a pro forma basis after giving effect to the incurrence of such Indebtedness, the Collateral Ratio is at least 175%; and

 

(m)                           Indebtedness under the Units.

 

“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

 

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

 

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

 

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

 

(f)                                   any loan or advance to an executive officer, director or employee of the Company or any Restricted Subsidiary made in the ordinary course of business or in accordance with past practice; provided, however, that any such loan or advance exceeding $1.0 million shall have been approved by the Board of Directors of the Company or a committee thereof consisting of disinterested members;

 

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

 

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

 

(i)                                     Investments in an aggregate amount outstanding not to exceed $10.0 million;

 

(j)                                    Guarantees issued in accordance with Section 4.06 hereof;

 

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(k)                                 Investments in existence on the Issue Date not otherwise constituting Permitted Investments pursuant to clause (b) above; and

 

(l)                                     Permitted Bond Hedges which constitute Investments.

 

“Permitted Liens” means

 

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

 

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

 

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

 

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

 

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

 

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

 

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(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 (i) or (j) of the definition of “Permitted Indebtedness”;

 

(i)                                     Liens on the Collateral and other assets not constituting Collateral pursuant to clause (a) of the definition of “Excluded Property” securing:

 

(a)(i) the First Lien Notes (other than Additional Notes (as defined in the First Lien Indenture)), the First Lien Guarantees thereof and other Obligations under the First Lien Indenture and the security documents in respect thereof and any obligations owing to the First Lien Trustee or the First Lien Collateral Agent under the First Lien Indenture or the security documents in respect thereof, (ii) other Indebtedness otherwise permitted to be incurred under this Indenture (and all Obligations in respect thereof), provided that the Indebtedness so secured pursuant to this clause (a)(ii), when taken together with any Indebtedness secured pursuant to this clause (a) (other than pursuant to clauses (a)(iii) and (v) below), in each case, outstanding at the time such other Indebtedness is incurred and so secured, does not exceed $577.0 million, (iii) Indebtedness permitted to be incurred under this Indenture so long as on a pro forma basis after giving effect to the incurrence of such Indebtedness, the Collateral Ratio is at least 175%, (iv) any Refinancing Indebtedness (including pursuant to Credit Facilities) in respect of Indebtedness incurred and secured pursuant to clauses (a)(i), (a)(ii) and (a)(iii), and (v) Indebtedness incurred pursuant to clause (l) of the definition of “Permitted Indebtedness” (and Obligations in respect thereof), provided that the Liens securing any Indebtedness (or Obligations in respect thereof) incurred pursuant to this clause (a) may rank senior, equal or junior to the Liens securing the Notes;

 

(b)(i) the Notes (other than Additional Notes), the Guarantees thereof and other Obligations under this Indenture and the Security Documents in respect thereof and any obligations owing to the Trustee or the Collateral Agent under this Indenture or the Security Documents in respect thereof, (ii) other Indebtedness otherwise permitted to be incurred under this Indenture (and all Obligations in respect thereof), provided that the Indebtedness so secured pursuant to this clause (b)(ii), when taken together with any Indebtedness secured pursuant to clause (a)(other than clauses (a)(iii) and (v) thereof) and this clause (b) outstanding at the time such other Indebtedness is incurred and so secured, does not exceed an amount equal to (x) $577.0 million plus (y) $220.0 million and (iii) any Refinancing Indebtedness (including pursuant to Credit Facilities) in respect of Indebtedness incurred and secured pursuant to clauses (b)(i) and (b)(ii); provided that the Liens securing any Indebtedness (or Obligations in respect thereof)

 

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incurred pursuant to this clause (b) shall rank equally with or junior to the Liens securing the Notes; and

 

(c) any other Indebtedness permitted to be incurred under this Indenture (and all Obligations in respect thereof); provided that the Liens securing Indebtedness referred to in this clause (c) rank junior to the Liens on the Collateral securing the Notes pursuant to an intercreditor agreement that is substantially similar to the Intercreditor Agreement (with the Notes being treated as senior priority obligations thereunder);

 

(j)                                    Liens securing Non-Recourse Indebtedness of the Company, the Issuer or any Restricted Subsidiary; provided, that such Liens apply only to (i) the property financed, constructed or improved out of the net proceeds of such Non-Recourse Indebtedness within 180 days after the incurrence of such Non-Recourse Indebtedness, or (ii) licenses, permits, authorizations, consent forms or contracts related to the acquisition, development, use or improvement of such property;

 

(k)                                 Liens securing Purchase Money Indebtedness; provided, that such Liens apply only to (i) the property financed, constructed or improved with the proceeds of such Purchase Money Indebtedness within 180 days after the incurrence of such Purchase Money Indebtedness, or (ii) licenses, permits, authorizations, consent forms or contracts related to the acquisition, development, use or improvement of such property;

 

(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 180 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 this 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,

 

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accounts or money of the Company, the Issuer or a Restricted Subsidiary with or held by such lender or lenders or its Affiliates;

 

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

 

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

 

(s)                                   Liens securing Refinancing Indebtedness; provided, that such Liens extend only to the assets securing the Indebtedness being refinanced and except as permitted by clause (i) of this definition, have the same or junior priority as the initial Liens; provided  further that where Refinancing Indebtedness is expressly provided for in such clause (i), that no Liens may be incurred under this clause (s) in respect of Refinancing Indebtedness incurred to refinance Indebtedness that is secured by Liens incurred under clause (i) of this definition;

 

(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 into or consolidated with the Company or the Subsidiary or acquired by the Company or its Subsidiaries;

 

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

 

(w)                               Liens existing on the Issue Date (other than Liens securing Obligations under the Notes and the First Lien Notes) and any extensions, renewals or replacements thereof;

 

(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; and

 

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(y)                                 other Liens securing obligations not to exceed $25.0 million at any one time outstanding.

 

“Permitted Warrant”  means any call option on, warrant or right to purchase (or substantively equivalent derivative transaction) the Company’s Capital Stock sold by the Company, the Issuer or any Restricted Subsidiary substantially concurrently with any purchase by the Company, the Issuer or any Restricted Subsidiary of a related Permitted Bond Hedge.

 

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

 

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

 

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

 

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

 

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

 

“Purchase Money Indebtedness” means Indebtedness of the Company, the Issuer or any Restricted Subsidiary incurred for the purpose of financing all or any part of the purchase price, or the cost of construction or improvement, of any property to be used in the ordinary course of business by the Company, the Issuer and the Restricted Subsidiaries; provided, however, that (a) the aggregate principal amount of such Indebtedness shall not exceed such purchase price or cost and (b) such Indebtedness shall be incurred no later than 180 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.

 

“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.

 

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

 

“Record Date” for the interest payable on any Interest Payment Date means the May 1 or November 1 (whether or not a Business Day) immediately 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 (other than Non-Recourse Indebtedness and Permitted Indebtedness described under clauses (d) through (k) and (l)(i) of the definition thereof), but only to the extent that:

 

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

 

(b)                                 the Refinancing Indebtedness is scheduled to mature either (x) no earlier than the Indebtedness being refunded, refinanced or extended or (y) after the maturity date of the Notes (unless the Refinancing Indebtedness is in respect of Existing Debt and is secured by Liens on the Collateral, in which case the Refinancing Indebtedness must be scheduled to mature after the maturity date of the Notes), provided that up to a total of $150.0 million at any one time outstanding of Indebtedness under Credit Facilities incurred pursuant to clause (b) or clause (l) under the definition of “Permitted Indebtedness,” plus any Refinancing Indebtedness that refinances the First-Priority Lien Obligations (which Refinancing Indebtedness will be secured on a first-lien priority basis by Liens on the Collateral) pursuant to Credit Facilities, may be scheduled to mature on or prior to 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

 

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the Indebtedness being refunded, refinanced or extended (plus all accrued interest thereon and the amount of any premiums (including tender premiums) and fees and expenses incurred in connection with the refinancing thereof);

 

provided, that for purposes of determining the principal amount outstanding under clause (b) of “Permitted Indebtedness” and clause (i) of “Permitted Liens,” the principal amount referred to in such clauses shall be calculated excluding any principal amount that was incurred in respect of amounts set forth in the parenthetical in clause (d) of this definition and such principal amount shall nonetheless be permitted under such clauses.

 

“Register” has the meaning ascribed to it in Section 2.09 hereof.

 

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

 

“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 a Regulation S Global Note that bears the Regulation S Temporary Global Note Legend.

 

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

 

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

 

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

 

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

 

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

 

“Restricted Payment” means any of the following:

 

(a)                                 the declaration or payment of any dividend or any other distribution on Capital Stock of the Company, the Issuer or any Restricted Subsidiary or any payment made to the direct or indirect holders (in their

 

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

 

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

 

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

 

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

 

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

 

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

 

“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, transferred or exchanged 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.

 

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“Second-Priority Lien Obligations” means (1) the Notes and the Guarantees thereof and (2) all other Indebtedness secured by Liens on the Collateral that are equal in priority to the Liens on the Collateral securing the Notes, and, in each case, all Obligations in respect thereof.

 

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

 

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

 

“Security Agreement” means the Second Lien Security Agreement, dated as of October 2, 2012, among the Issuer, the Company and each of the signatories listed on Schedule A thereto, in favor of the Collateral Agent for the benefit of itself, the Trustee and the Holders, as amended, restated or supplemented from time to time.

 

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

 

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

 

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

 

“Subordinated Indebtedness” means Indebtedness subordinated in right of payment to the Notes pursuant to a written agreement.

 

“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.

 

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

 

“Treasury Rate” has the meaning ascribed to it in Section 3.01 hereof.

 

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

 

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“Trust Indenture Act” or “TIA” 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.

 

“Unentitled Land” means land owned by the Issuer or a Guarantor which has not been granted preliminary approvals ((i) in New Jersey, as defined in the Municipal Land Use Law (N.J.S.A. 40:55D-1 et seq.) and (ii) for states other than New Jersey, a point in time equivalent thereto) for residential development.

 

“Units” means the 6.00% Exchangeable Note Units of the Issuer and the Company issued on the Issue Date composed of a senior unsecured exchangeable note of the Issuer and guaranteed by the applicable Guarantors and a senior unsecured amortizing note of the Issuer and guaranteed by the applicable Guarantors.

 

“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 this Indenture, in the case of Non-Recourse Indebtedness, to the extent such recourse or liability is for the matters discussed in the last sentence of the definition of “Non-Recourse Indebtedness,” or to the extent such Indebtedness is a guarantee by such Subsidiary of Indebtedness of the Company, the Issuer or a Restricted Subsidiary and (b) no holder of any Indebtedness of such Subsidiary shall have a right to declare a default on such Indebtedness or cause the payment thereof to be accelerated or payable prior to its stated maturity as a result of a default on any Indebtedness of the Company, the Issuer or any Restricted Subsidiary. As of the Issue Date, the Unrestricted Subsidiaries will be the Subsidiaries of the Company named in Exhibit J hereto.

 

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

 

33

 

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

 

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

 

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

 

“$” means U.S. dollars.

 

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

 

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

 

(b)                       “herein,” “hereof” and other words of similar import refer to this 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 this Indenture unless otherwise indicated;

 

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

 

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

 

ARTICLE 2
  THE NOTES

 

Section 2.01.  Form, Dating and Denominations; Legends.  (a) The Notes and the Trustee’s certificate of authentication shall 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 this 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 shall be dated the date of its authentication.  The Notes shall be issuable in denominations of $2,000 in principal amount and any multiple of $1,000 in excess thereof.

 

(b)  (i) Except as otherwise provided in clause (c) of this Section 2.01, Section 2.09(b)(iv), Section 2.10(b)(iii), or Section 2.10(c), each Initial Note or Additional Note shall bear the Restricted Legend.

 

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

 

(iii)                               Initial Notes and Additional Notes offered and sold in reliance on any exception under the Securities Act other than Regulation S and Rule 144A shall be issued, and upon the request of the Issuer to the

 

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Trustee, Initial Notes and Additional Notes offered and sold in reliance on Rule 144A may be issued, in the form of Certificated Notes.

 

(iv)                              Each Regulation S Temporary Global Note shall bear the Regulation S Temporary Global Note Legend.

 

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

 

(c)                        If the Issuer determines (upon the advice of counsel and after consideration of other certifications and evidence as the Issuer may reasonably require) that a Note is eligible for resale pursuant to Rule 144 under the Securities Act (or a successor provision) without being subject to any conditions as provided in such Rule and that the Restricted Legend is no longer necessary or appropriate in order to ensure that subsequent transfers of the Note (or a beneficial interest therein) are effected in compliance with the Securities Act, then, the Issuer may instruct the Trustee to cancel the Note and issue to the Holder thereof (or to its transferee) a new Note of like tenor and amount, registered in the name of the Holder thereof (or its transferee), that does not bear the Restricted Legend, and the Trustee shall 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 this Indenture and such legend.

 

Section 2.02.  Execution and Authentication; 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.

 

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

 

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

 

(i)                                     Initial Notes for original issue in the aggregate principal amount not to exceed $220,000,000, and

 

36

 

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

 

after the following conditions have been met:

 

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

 

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

 

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

 

(3)                            in the case of 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 Trustee may reasonably request.

 

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

 

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

 

(b)                       The Issuer shall require each Paying Agent other than the Trustee to agree in writing that the Paying Agent shall hold in trust for the benefit of the Holders or the Trustee all money held by the Paying Agent for the payment of

 

37

 

principal of, premium, if any, and interest, if any, on, the Notes and shall promptly notify the Trustee of any default by the Issuer in making any such payment.  The Issuer at any time may require a Paying Agent to pay all money held by it to the Trustee and account for any funds disbursed, and the Trustee may at any time during the continuance of any payment default, upon written request to a Paying Agent, require the Paying Agent to pay all money held by it to the Trustee and to account for any funds disbursed.  Upon doing so, the Paying Agent shall have no further liability for the money so paid over to the Trustee.

 

(c)                        The Company initially appoints the Trustee as Registrar and Paying Agent with respect to the Notes.

 

Section 2.04.  Replacement Notes.  If a mutilated Note is surrendered to the Trustee or if a Holder claims that its Note has been lost, destroyed or wrongfully taken, the Issuer shall issue and the Trustee shall 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 this Indenture.  If required by the Trustee or the Issuer, an indemnity must be furnished that is sufficient in the judgment of both the Trustee and the Issuer to protect the Issuer and the Trustee from any loss they may suffer if a Note is replaced.  The Issuer and the Trustee may charge the Holder for the expenses of the Issuer and the Trustee in replacing a Note.  In case the mutilated, lost, destroyed or wrongfully taken Note has become or is about to become due and payable, the Issuer in its discretion may pay the Note instead of issuing a replacement Note.

 

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

 

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

 

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

 

38

 

hereunder, Notes owned by the Issuer or any Affiliate of the Issuer shall be disregarded and deemed not to be outstanding (it being understood that in determining whether the Trustee is protected in relying upon any such request, demand, authorization, direction, notice, consent, waiver or other action, only Notes which a Responsible Officer of the Trustee knows to be so owned shall be so disregarded).  Notes so owned which have been pledged in good faith may be regarded as outstanding if the pledgee establishes to the satisfaction of the Trustee the pledgee’s right so to act with respect to such Notes and that the pledgee is not the Issuer or any Affiliate of the Issuer.

 

Section 2.06.  Temporary Notes.  Until definitive Notes are ready for delivery, the Issuer may prepare and the Trustee shall authenticate temporary Notes.  Temporary Notes shall 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 shall cause definitive Notes to be prepared without unreasonable delay.  After the preparation of definitive Notes, the temporary Notes shall be exchangeable for definitive Notes upon surrender of the temporary Notes at the office or agency of the Issuer designated for the purpose pursuant to Section 4.02 without charge to the Holder.  Upon surrender for cancellation of any temporary Notes, the Issuer shall execute and the Trustee shall authenticate and deliver in exchange therefor a like principal amount of definitive Notes of authorized denominations.  Until so exchanged, the temporary Notes shall be entitled to the same benefits under this Indenture as definitive Notes.

 

Section 2.07.  Cancellation.  The Issuer at any time may deliver to the Trustee for cancellation any Notes previously authenticated and delivered hereunder which the Issuer may have acquired in any manner whatsoever, and may deliver to the Trustee for cancellation any Notes previously authenticated hereunder which the Issuer has not issued and sold.  Any Registrar or the Paying Agent shall forward to the Trustee any Notes surrendered to it for transfer, exchange or payment.  The Trustee shall 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 Trustee for cancellation.

 

Section 2.08.  CUSIP and ISIN Numbers.  The Issuer in issuing the Notes may use “CUSIP” and “ISIN” numbers, and the Trustee shall 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 shall promptly notify the Trustee in writing of any change in the CUSIP or ISIN

 

39

 

numbers.  Any Additional Notes that are not fungible with the Initial Notes for United States federal income tax purposes shall be issued with CUSIP and ISIN numbers different from the CUSIP and ISIN numbers assigned to the Initial Notes of such series.

 

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

 

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

 

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

 

(iii)                               Agent Members shall have no rights under this Indenture with respect to any Global Note held on their behalf by the Depositary, and the Depositary may be treated by the Issuer, the Trustee and any agent of the Issuer or the Trustee as the absolute owner and Holder of such Global Note for all purposes whatsoever.  Notwithstanding the foregoing, the Depositary or its nominee may grant proxies and otherwise authorize any Person (including any Agent Member and any Person that holds a beneficial interest in a Global Note through an Agent Member) to take any action which a Holder is entitled to take under this Indenture or the Notes, and nothing herein shall 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.  None of the Issuer, the Trustee, any Paying Agent or the Registrar will have any responsibility or liability for any aspect of the records relating to or payments made on account of beneficial ownership interests of a Note in global form or for maintaining, supervising or reviewing any records relating to such beneficial ownership interests.  The Trustee may rely and shall be fully protected in relying upon information furnished by the Depositary with respect to its members, participants and any beneficial owners.

 

40

 

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

 

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

 

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

 

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

 

(ii)                                  the Trustee shall not be required (x) to issue or 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

 

41

 

purchased, or (z) if a redemption or a purchase pursuant to an Offer to Purchase is to occur after a Record Date but on or before the corresponding Interest Payment Date, to register the transfer of or exchange any Note on or after the Record Date and before the date of redemption or purchase.  Prior to the registration of any transfer, the Issuer, the Trustee and their agents shall 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 shall not be affected by notice to the contrary.

 

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

 

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

 

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

 

(ii)                                  Global Note to Certificated Note.  If a beneficial interest in a Global Note is transferred or exchanged for a Certificated Note, the Trustee shall (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.

 

42

 

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

 

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

 

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

 

(b)                       Subject to paragraph (c) of this Section, 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)
    

 

43

 

	
A
    	
 
    	
B
    	
 
    	
C
    
	
Regulation   S Global Note
    	
 
    	
Certificated   Note
    	
 
    	
(v)
    
	
Certificated   Note
    	
 
    	
Rule 144A   Global Note
    	
 
    	
(iv)
    
	
Certificated   Note
    	
 
    	
Regulation   S Global Note
    	
 
    	
(ii)
    
	
Certificated   Note
    	
 
    	
Certificated   Note
    	
 
    	
(iii)
    

 

(i)            No certification is required.

 

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

 

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

 

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

 

(v)           If the requested transfer involves a beneficial interest in a Regulation S Temporary Global Note, the Person requesting the registration of transfer must deliver or cause to be delivered to the Trustee (x) a duly completed Rule 144A Certificate or (y) a duly completed Institutional Accredited Investor Certificate and/or an opinion of counsel and such other certifications and evidence as the Issuer or the Trustee may reasonably require in order to determine that the proposed transfer is being made in compliance with the Securities Act and any applicable securities laws of any state of the United States. If the requested transfer or exchange involves a beneficial interest in a Permanent Regulation S Global Note, no

 

44

 

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

 

(c)                        No certification is required in connection with any transfer or exchange of any Note (or a beneficial interest therein) after such Note is eligible for resale pursuant to Rule 144 under the Securities Act (or a successor provision) without being subject to any conditions as provided in such Rule; provided, that the Issuer has provided the Trustee with a certificate to that effect, and the Issuer or the Trustee may require from any Person requesting a transfer or exchange in reliance upon this clause an opinion of counsel and any other reasonable certifications and evidence in order to support such certificate

 

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

 

(d)                       The Trustee shall retain copies of all certificates, opinions and other documents received in connection with the registration of transfer or exchange of a Note (or a beneficial interest therein), and the Issuer shall have the right to inspect and make copies thereof at any reasonable time upon written notice to the Trustee.  Neither the Company nor the Trustee shall have an obligation or duty to monitor, determine or inquire as to compliance with any restrictions on transfer imposed under this Indenture or under applicable law with respect to any transfer of any interest in any Note (including any transfers between or among Depositary participants, members or beneficial owners in any Global Note) other than to require delivery of such certificates and other documentation or evidence as are expressly required by the terms of this Indenture and to examine the same to determine compliance as to form with the express requirements hereof.

 

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

 

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

 

45

 

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

 

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

 

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

 

ARTICLE 3
  REDEMPTION; OFFER TO PURCHASE

 

Section 3.01.  Optional Redemption.  (a)  The Issuer may, at its option, redeem the Notes, in whole, at any time, or in part, from time to time, prior to November 15, 2015, at a redemption price equal to the sum of:

 

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

 

(ii) the Make-Whole Amount.

 

The term “Make-Whole Amount” shall mean, in connection with any optional redemption of any Note, the excess, if any, of:

 

(i) the present value at such redemption date of (i) the redemption price of the Note, at November 15, 2015 (such redemption price being set forth in the table appearing in Section 3.01(b) hereof) plus (ii) all required interest payments due on the Note through November 15, 2015 (excluding accrued but unpaid interest), computed using a discount rate equal to the Treasury Rate as of such redemption date plus 50 basis points; over

 

(ii) the principal amount of the Note being redeemed.

 

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“Treasury Rate” means, in connection with the calculation of any Make-Whole Amount with respect to any Note, as calculated by the Company, 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), most nearly equal to the period from the redemption date to November 15, 2015; provided, however, that if the period from the redemption date to November 15, 2015 is not equal to the constant maturity of a United States Treasury security for which a weekly average yield is given, the Treasury Rate shall be obtained by linear interpolation (calculated to the nearest one-twelfth of a year) from the weekly average yields of United States Treasury securities for which such yields are given, except that if the period from the redemption date to November 15, 2015 is less than one year, the weekly average yield on actually traded United States Treasury securities adjusted to a constant maturity of one year will be used.

 

(b)                       At any time and from time to time on or after November 15, 2015, the Issuer may redeem the Notes, in whole or in part, at a redemption price equal to the percentage of principal amount set forth below plus accrued and unpaid interest thereon, if any, to the applicable redemption date.

 

	
Period Commencing
    	
 
    	
Percentage
    	
 
    
	
November 15, 2015 
    	
 
    	
106.844
    	
%
    
	
November 15, 2016 
    	
 
    	
104.563
    	
%
    
	
November 15, 2017 
    	
 
    	
102.281
    	
%
    
	
November 15, 2018 and thereafter 
    	
 
    	
100.000
    	
%
    

 

Section 3.02.  Redemption with Proceeds of Equity Offering.  At any time and from time to time prior to November 15, 2015, the Issuer may redeem Notes with the net cash proceeds received by the Issuer from any Equity Offering at a redemption price equal to 109.125% of the principal amount plus accrued and unpaid interest to the redemption date, in an aggregate principal amount for all such redemptions not to exceed 35% of the original aggregate principal amount of the Notes (including Additional Notes), provided that:

 

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

 

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

 

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

 

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Section 3.04.  Method and Effect of Redemption.  (a) If the Issuer elects to redeem Notes, it must notify the Trustee of the redemption date and the principal amount of Notes to be redeemed by delivering an Officers’ Certificate at least 45 days before the redemption date (unless a shorter period is satisfactory to the Trustee).  If fewer than all of the Notes are being redeemed, the Notes to be redeemed shall be selected in accordance with applicable DTC procedures (subject to compliance with the rules of any securities exchange on which the Notes of such series may be listed).  Notes shall be redeemed in denominations of $2,000 principal amount or any multiple of $1,000 in excess thereof.  The Trustee will notify the Issuer promptly of the Notes or portions of Notes to be called for redemption.  Notice of redemption must be sent by the Issuer or, at the Issuer’s request, by the Trustee in the name and at the expense of the Issuer to Holders whose Notes are to be redeemed at least 30 days but not more than 60 days before the redemption date.  Notices of any redemption may be given prior to the completion thereof, and may, at the Issuer’s discretion, be subject to one or more conditions precedent, including, but not limited to, completion of a related Equity Offering.

 

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

 

(i)            the redemption date;

 

(ii)           the redemption price, including the portion thereof representing any accrued 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 shall become due and payable on Notes called for redemption, and interest on Notes called for redemption shall 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 redemption date, upon surrender of such Note, new Notes equal in principal amount to the unredeemed portion shall 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.

 

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(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 shall cease to accrue interest.  Upon surrender of any Note redeemed in part, the Holder shall receive a new Note equal in principal amount to the unredeemed portion of the surrendered Note.

 

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

 

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

 

(i)            the provision of this 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 this Indenture) (the “purchase amount”);

 

(iii)          the purchase price, including the portion thereof representing accrued 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;

 

(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.

 

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

 

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

 

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

 

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

 

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

 

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

 

(xiii)        if any Note is purchased in part, new Notes equal in principal amount to the unpurchased portion of the Note shall 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.

 

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(c)        Prior to the purchase date, the Issuer shall accept tendered Notes for purchase as required by the Offer to Purchase and deliver to the Trustee all Notes so accepted together with an Officers’ Certificate specifying which Notes have been accepted for purchase.  On the purchase date, the purchase price shall become due and payable on each Note accepted for purchase, and interest on Notes purchased shall cease to accrue on and after the purchase date.  The Trustee shall 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 shall comply with Rule 14e-1 under the Exchange Act and all other applicable laws in making any Offer to Purchase, and the above procedures shall 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 on the Notes on the dates and in the manner provided in the Notes and this Indenture.  Not later than 9:00 A.M. (New York City time) on the due date of any principal of, premium, if any, or interest on, any Notes, or any redemption or purchase price of the Notes, the Issuer shall deposit with the Trustee (or Paying Agent) money in immediately available funds sufficient to pay such amounts; provided, that if the Issuer or any Affiliate of the Issuer is acting as Paying Agent, it shall, 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 this Indenture.  In each case, the Issuer shall promptly notify the Trustee of its compliance with this paragraph.

 

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

 

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the Issuer shall 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 shall 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 this Indenture may be served.  The Issuer and the Company hereby initially designate the Corporate Trust Office of the Trustee as such office of the Issuer and the Company.  The Issuer shall give prompt written notice to the Trustee of the location, and any change in the location, of such office or agency.  If at any time the Issuer and the Company fail to maintain any such required office or agency or fail to furnish the Trustee with the address thereof, such presentations, surrenders, notices and demands may be made or served to the Trustee.

 

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 shall give prompt written notice to the Trustee of any such designation or rescission and of any change in the location of any such other office or agency.

 

Section 4.03.  Existence.  The Company and the Issuer shall 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.  The Company shall pay or discharge, and cause each of its Subsidiaries to pay or discharge before the same become delinquent all material taxes, assessments and governmental charges levied or imposed upon the Company or any Subsidiary or its income or profits or property, other than any such tax, assessment or charge the amount, applicability or validity of which is being contested in good faith by appropriate proceedings.

 

Section 4.05.  [Reserved].

 

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

 

(b)        Notwithstanding the foregoing, the provisions of this 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,

 

(v)           any guarantee of Indebtedness incurred under Credit Facilities in compliance with this Indenture, and

 

(vi)          any guarantee by the Issuer, the Company or any Guarantor of Indebtedness that is permitted to be incurred in compliance with this Indenture; provided that in the event such Indebtedness that is being guaranteed is subordinated in right of payment to the Notes or a Guarantee, as the case may be, then the related guarantee shall be subordinated in right of payment to the Notes or such Guarantee, as the case may be.

 

(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.

 

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(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.

 

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

 

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

 

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

 

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

 

(A)          50% of the Consolidated Net Income of the Company on a cumulative basis during the period (taken as one accounting period) from and including November 1, 2012 and ending on the last day of the Company’s fiscal quarter immediately preceding the date of such Restricted Payment (or in the event such Consolidated Net Income shall be a deficit, minus 100% of such deficit), plus

 

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

 

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

 

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

 

(b)        Clauses (i) (except in the case of clauses (iii)(B), (iii)(C), (iv) and (v) below), (ii) and (iii) of Section 4.07(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 this Indenture;

 

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

 

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

 

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

 

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

 

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

 

(C)          the purchase, repayment, redemption, repurchase, defeasance or other acquisition, cancellation or retirement for value of Subordinated Indebtedness of the Issuer, the Company or any Restricted Subsidiary or the making of Restricted Investments in joint ventures (after giving effect to all subsequent reductions in the amount of any Restricted Investment in a joint venture made pursuant to this clause (C) as a result of the repayment or disposition thereof for cash, not to exceed the amount of such Restricted Investment previously made pursuant to this clause (C)), in an aggregate amount not to exceed $150.0 million; provided that, on a pro forma basis after giving effect to any such Restricted Payment, the aggregate fair market value of the Collateral (as determined in good faith by the Company’s chief financial officer) is equal to at least 175% of the aggregate principal amount of Collateralized Debt (such ratio as calculated, the “Collateral Ratio”) as of such date (or, in the case of a 

 

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Restricted Investment in a joint venture, on the date the Company determines to make such Investment, so long as the Investment is completed within 120 days of such determination date), such fair market value to be determined, with respect to real property Collateral, by reference to book value pursuant to GAAP;

 

(iv)          the payment of dividends on Preferred Stock and Disqualified Stock up to an aggregate amount of $10.0 million in any fiscal year; provided that immediately after giving effect to any declaration of such dividend, the Company could incur at least $1.00 of Indebtedness pursuant to Section 4.06(a);

 

(v)           the purchase, redemption or other acquisition, cancellation or retirement for value of Capital Stock, or options, warrants, equity appreciation rights or other rights to purchase or acquire Capital Stock, of the Company or any Subsidiary held by officers or employees or former officers or employees of the Company or any Subsidiary (or their estates or beneficiaries under their estates) not to exceed $10.0 million in the aggregate since the Issue Date;

 

(vi)          the making of cash payments in connection with any conversion or exchange of Permitted Convertible Indebtedness in an aggregate amount since the date of the indenture therefor not to exceed the sum of (a) the principal amount of such Permitted Convertible Indebtedness plus (b) any payments received by the Company, the Issuer or any Restricted Subsidiaries pursuant to the exercise, settlement or termination of any related Permitted Bond Hedge;

 

(vii)         any payments in connection with (including, without limitation, the purchase of) a Permitted Bond Hedge and the settlement of any related Permitted Warrant (A) by delivery of shares of the Company’s Capital Stock upon net share settlement of such Permitted Warrant or (B) by (x) set-off of such Permitted Warrant against the related Permitted Bond Hedge and (y) payment of an amount due upon termination of such Permitted Warrant in Capital Stock or using cash received upon the exercise, settlement or termination of a Permitted Bond Hedge upon any early termination thereof;

 

(viii)        the purchase, repayment, repurchase, redemption, defeasance or other acquisition, cancellation or retirement for value of any Subordinated Indebtedness (A) at a purchase price not greater than 101% of the principal amount of such Subordinated Indebtedness in the event of a Change of Control in accordance with provisions similar to Section 4.12 hereof or (B) at a purchase price not greater than 100% of the principal amount thereof in accordance with provisions similar to Section 4.10 

 

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hereof; provided that, prior to or simultaneously with such purchase, repayment, repurchase, redemption, defeasance or other acquisition, cancellation, or retirement, the Company, the Issuer or any Restricted Subsidiary has made the Change of Control offer pursuant to Section 4.12 hereof or Offer to Purchase pursuant to Section 4.10 hereof, as applicable, with respect to the Notes and has completed such repurchase or redemption of all Notes validly tendered for payment in connection with such Change of Control offer or Offer to Purchase;

 

(ix)          any payment of cash by the Company, the Issuer or any of the Restricted Subsidiaries in respect of fractional shares of the Company’s Capital Stock upon the exercise, conversion or exchange of any stock options, warrants or other rights to purchase Capital Stock or other convertible or exchangeable securities; and

 

(x)           other Restricted Payments in an aggregate amount, when taken together with all other Restricted Payments made pursuant to this clause (x) not to exceed $25.0 million (after giving effect to all subsequent reductions in the amount of Restricted Investments made pursuant to this clause (x) in the form of cash not to exceed the amount of such Restricted Investment previously made pursuant to this clause (x));

 

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

 

(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 Section 4.07(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, NYSE MKT or Nasdaq Stock 

 

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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 $10.0 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.

 

Any restricted payments that were treated as made pursuant to the provisions of the Existing Secured Notes Indenture under the provision of such indenture that is substantially identical to paragraph (iii)(B)(2) of Section 4.07(b) and made prior to the Issue Date shall be treated as Restricted Payments made under paragraph (iii)(B)(2) of Section 4.07(b) under this Indenture (and subsequent reductions in any Restricted Investments made with such restricted payments shall be given effect as well).

 

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

 

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

 

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

 

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

 

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

 

except for:

 

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

 

(ii)           contractual encumbrances or restrictions in effect at or entered into on the Issue Date and any amendments, modifications, restatements, renewals, supplements, refundings, replacements or 

 

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refinancings thereof; provided, that such amendments, modifications, restatements, renewals, supplements, refundings, replacements or refinancings are not materially more restrictive, taken as a whole, with respect to such dividend and other payment restrictions than those contained in such contractual encumbrances or restrictions, as in effect at or entered into on the Issue Date,

 

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

 

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

 

(v)           any Permitted Lien, or any other agreement restricting the sale or other disposition of property, securing Indebtedness permitted by this 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 this Indenture,

 

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

 

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

 

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

 

(x)           purchase money obligations that impose restrictions on the property so acquired of the nature described in clause (c) of this Section 4.09,

 

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(xi)          Liens permitted under this 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 this Section 4.09 imposed by any amendments, modifications, restatements, renewals, supplements, refundings, replacements or refinancings of the contracts, instruments or obligations referred to in clauses (i) through (xiv) of this Section 4.09; 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, not materially more restrictive with respect to such dividend and other payment restrictions than those contained in the dividend or other payment restrictions prior to such amendment, modification, restatement, renewal, supplement, refunding, replacement or refinancing.

 

Section 4.10.  Limitations on Dispositions of Assets.  (a) The Company and the Issuer will not, and will not cause or permit any Restricted Subsidiary to, make any Asset Disposition unless: (x) the Company (or the Issuer 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 the Issuer or such Restricted Subsidiary, as the case may be) is in the form of cash, Cash Equivalents and Marketable Securities (which must be pledged as Collateral if the assets disposed of constituted Collateral).

 

(b)           The amount of (i) any Indebtedness (other than any Subordinated Indebtedness) of the Company or the Issuer 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 (including Capital Stock of any Person that will be a Restricted Subsidiary following receipt thereof) received that are used or useful in a Real Estate Business (provided that (except as permitted by clause (c) under the definition of “Permitted Investment”) to the extent that the assets 

 

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disposed of in such Asset Disposition were Collateral, such property or assets are pledged as Collateral under the Security Documents substantially simultaneously with such sale, with the Lien on such Collateral securing the Notes being of the same priority with respect to the Notes as the Lien on the assets disposed of), shall be deemed to be consideration required by clause (y) of Section 4.10(a) for purposes of determining the percentage of such consideration received by the Company or the Restricted Subsidiaries.

 

(c)           The Net Cash Proceeds of an Asset Disposition shall, within one year, at the Company’s election, (1) be used by the Company, the Issuer or a Restricted Subsidiary to invest in assets (including Capital Stock of any Person that is or will be a Restricted Subsidiary following investment therein) used or useful in a Real Estate Business (provided that (except as permitted by clause (c) under the definition of “Permitted Investment”) to the extent that the assets disposed of in such Asset Disposition were Collateral, such assets are pledged as Collateral under the Security Documents with the Lien on such Collateral securing the Notes being of the same priority with respect to the Notes as the Lien on the assets disposed of), (2) be used to permanently prepay or permanently repay any (i) Indebtedness which had been secured by the assets sold in the relevant Asset Disposition, to the extent the assets sold were not Collateral, or (ii) Indebtedness of a Restricted Subsidiary that is not a Guarantor, to the extent the assets sold were not Collateral or (iii) Indebtedness constituting First-Priority Lien Obligations (or cash collateralize letters of credit that constitute First-Priority Lien Obligations) or (3) be applied to make an Offer to Purchase the Notes and, if the Company or a Restricted Subsidiary elects or is required to do so, to repay, purchase or redeem any other Indebtedness secured by parity Liens on Collateral and, if the Company or a Restricted Subsidiary elects or is required to do so and the assets disposed of were not Collateral, repay, purchase or redeem any unsubordinated Indebtedness (on a pro rata basis if the amount available for such repayment, purchase, redemption or cash collateralization is less than the aggregate amount of (x) the principal amount of the Notes tendered in such Offer to Purchase, (y) the lesser of the principal amount, or accreted value, of such other Indebtedness secured by ratable Liens tendered or to be repaid, redeemed, repurchased or cash collateralized and (z) the lesser of the principal amount, or accreted value, of such unsubordinated Indebtedness tendered or to be repaid, repurchased or redeemed, 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, repayment or redemption; provided that pending any such application under this Section 4.10(c), Net Cash Proceeds may be used to temporarily reduce Indebtedness or otherwise be invested in any manner not prohibited by this Indenture; provided further that in the case of clause (1), a binding commitment to invest in assets shall be treated as a permitted application of the Net Cash Proceeds from the date of such commitment so long as the Company, the Issuer or a Restricted Subsidiary enters into such commitment with 

 

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the good faith expectation that such Net Cash Proceeds will be applied to satisfy such commitment within 180 days of such commitment (an “Acceptable Commitment”) and such Net Cash Proceeds are actually applied in such manner within the later of one year from the consummation of the Asset Disposition and 180 days from the date of the Acceptable Commitment, and in the event any Acceptable Commitment is later cancelled or terminated for any reason before the Net Cash Proceeds is applied in connection therewith, the Company, the Issuer or such Restricted Subsidiary enters into another Acceptable Commitment (a “Second Commitment”) within 180 days of such cancellation or termination and such Net Cash Proceeds are actually applied in such manner within 180 days from the date of the Second Commitment, it being understood that if a Second Commitment is later cancelled or terminated for any reason before such Net Cash Proceeds is applied, then such Net Cash Proceeds shall be applied in accordance with clauses (2) or (3) above. Upon completion of an Offer to Purchase, the amount of Net Cash Proceeds will be reset at zero.

 

(d)           Notwithstanding the foregoing, (A) the Company will not be required to apply such Net Cash Proceeds in accordance with clauses (2) or (3) of Section 4.10(c) 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 prepayments or repayments shall have been made and no Offer to Purchase shall have been made, exceed $25.0 million and (B) in connection with an Asset Disposition, the Company and the Restricted Subsidiaries will not be required to comply with the requirements of clause (y) of Section 4.10(a) to the extent that the non-cash consideration received in connection with such Asset Disposition, together with the sum of all non-cash consideration received in connection with all prior Asset Dispositions that has not yet been converted into cash, Cash Equivalents or Marketable Securities, does not exceed $25.0 million; provided, however, that when any non-cash consideration is converted into cash, Cash Equivalents or Marketable Securities, such cash shall constitute Net Cash Proceeds and be subject to Section 4.10(c).

 

(e)           To the extent that the aggregate amount of Indebtedness validly tendered and not properly withdrawn pursuant to an Offer to Purchase is less than the Net Cash Proceeds, the Company, the Issuer and the Restricted Subsidiaries may use any remaining Net Cash Proceeds for general corporate purposes, subject to the other covenants hereunder.

 

Section 4.11.  Guarantees by Restricted Subsidiaries.  Each existing Restricted Subsidiary (other than the Issuer (for so long as it remains the Issuer)) will be a Guarantor. The Company is permitted to cause any Unrestricted Subsidiary to be a Guarantor.  If the Issuer, the Company or any of its Restricted Subsidiaries acquires or creates a Restricted Subsidiary after the Issue Date, such Restricted Subsidiary shall execute a guarantee substantially in the form included

 

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in Exhibit A, execute a supplemental indenture in the form of Exhibit B, and deliver an Opinion of Counsel to the Trustee to the effect that the supplemental indenture has been duly authorized, executed and delivered by the new Restricted Subsidiary and constitutes a valid and binding obligation of the new Restricted Subsidiary, enforceable against the new Restricted Subsidiary in accordance with its terms (subject to customary exceptions).

 

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

 

(b)           On or before the thirtieth day after any Change of Control, the Issuer is obligated to mail, or cause to be mailed, to all Holders of record of Notes and the Trustee, a notice regarding the Change of Control and the repurchase right. The notice shall state the Repurchase Date, the date by which the repurchase right must be exercised, the price for the Notes and the procedure which the Holder must follow to exercise such right.  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 the Exchange Act and Rule 14e-1 thereunder, if applicable, if the Issuer is required to give a notice of a right of repurchase as a result of a Change of Control.

 

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

 

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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 $10.0 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 $20.0 million, the Company shall have (x) obtained the approval of a majority of the Board of Directors of the Company and (y) delivered to the Trustee an opinion of a qualified independent financial advisor to the effect that such Affiliate Transaction is fair to the Company, the Issuer or such Restricted Subsidiary, as the case may be, from a financial point of view.

 

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

 

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

 

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

 

(iii)          any Restricted Payment otherwise permitted under Section 4.07 hereof or any Permitted Investment (other than a Permitted Investment referred to in clause (b) of the definition thereof, except as permitted by clause (iv) below),

 

(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)),

 

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

 

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

 

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

 

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

 

Section 4.15.  Reports to Holders of Notes.   (a)  The Company shall file with the Commission the annual reports and the information, documents and other reports required to be filed pursuant to Section 13 or 15(d) of the Exchange Act. The Company shall file with the Trustee and deliver to each Holder of record of Notes such reports, information and documents within 15 days after it files them with the Commission.  In the event that the Company is no longer subject to these periodic reporting requirements of the Exchange Act, it will nonetheless continue to file reports with the Commission and the Trustee and deliver 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)           The posting of the reports, information and documents referred to above on the Company’s website or one maintained on its behalf for such purpose shall be deemed to satisfy the Company’s delivery obligations to the Trustee and the Holders.  In addition, availability of the foregoing materials on the Commission’s EDGAR service shall be deemed to satisfy the Company’s delivery obligations to the Trustee and the Holders.  The Trustee shall have no obligation to monitor whether the Company posts such reports, information and documents on its website or the Commission’s EDGAR service.

 

(c)           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.

 

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

 

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Section 4.16.  [Reserved]

 

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

 

Section 4.18.  Collateral Requirement; Further Assurances; Costs.

 

(a)           On the Issue Date, the Issuer and each Guarantor shall grant Liens on all their property (other than Excluded Property) and take all appropriate steps to cause such Liens to be perfected second-priority liens (subject to Permitted Liens), including through recordation of mortgages, entry into control agreements, filing of UCC-1 financing statements or otherwise, pursuant to, and to the extent required by, the Security Documents to be entered into on the Issue Date and this Indenture.  For the avoidance of doubt, the requirements of this Section 4.18(a) are subject to Section 4.18(d) below.

 

(b)           If the Issuer or any of the Guarantors at any time grants, assumes, perfects or becomes subject to any Lien upon any of its property (other than Excluded Property of the type referred to in clause (a) of the definition thereof) then owned or thereafter acquired as security for any First-Priority Lien Obligation or other Second-Priority Lien Obligation that in each case is subject to the Intercreditor Agreement, the Issuer will, or will cause such Guarantor to, as promptly as practical (subject to Section 4.18(d) below):

 

(i)            grant a second-priority Lien on such property to the Collateral Agent for the benefit of the Holders and, to the extent such grant would require the execution and delivery of a Security Document, the Issuer or such Guarantor shall execute and deliver a Security Document on substantially the same terms as the agreement or instrument executed and delivered to secure such other First-Priority Lien Obligations or Second-Priority Lien Obligations (but, in the case of First-Priority Lien Obligations, subject to changes to make such new Security Document consistent with the Security Documents delivered on the Issue Date in respect of the Second-Priority Lien Obligations compared to those for the First-Priority Lien Obligations);

 

(ii)           cause the Lien granted in such Security Document to be duly perfected as a second-priority lien in any manner permitted by law to the same extent as the Liens granted for the benefit of such other 

 

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First-Priority Lien Obligations or Second-Priority Lien Obligations are perfected; and

 

(iii)          instruct the Collateral Agent to take all action necessary in connection with the foregoing provisions of this Section 4.18(b), including as necessary under the Security Documents and determining whether Collateral constitutes Mortgage Tax Collateral (as defined in the Intercreditor Agreement) for purposes of the Intercreditor Agreement.

 

(c)           If the Issuer or any Guarantor at any time after the Issue Date acquires any new property (other than Excluded Property) that is not automatically subject to a Lien under the Security Documents, or a non-Guarantor Restricted Subsidiary becomes a Guarantor, the Issuer will, or will cause such Guarantor, subject to the requirements of the Security Documents, to as soon as practical after such property’s acquisition or it no longer being Excluded Property (subject to Section 4.18(d) below):

 

(i)            grant a second-priority Lien on such property (or, in the case of a new Guarantor, all of its assets except Excluded Property) to the Collateral Agent for the benefit of the Holders (and, to the extent such grant would require the execution and delivery of a Security Document, the Issuer or such Guarantor shall execute and deliver a Security Document on substantially the same terms as the Security Documents executed and delivered on the Issue Date);

 

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

 

(iii)          instruct the Collateral Agent to take all action necessary in connection with the foregoing provisions of this Section 4.18(c) including as necessary under the Security Documents and determining whether Collateral constitutes Mortgage Tax Collateral (as defined in the Intercreditor Agreement) for purposes of the Intercreditor Agreement.

 

The Issuer or such Guarantor shall deliver an Opinion of Counsel to the Trustee in respect of any Lien grant referred to in this Section 4.18(c) by a new Guarantor or with respect to real property, addressing customary matters (and containing customary exceptions) consistent with the Opinion of Counsel delivered on the Issue Date in respect of such matters; provided, that, an Opinion of Counsel shall not be required with respect to any mortgage or similar instrument for real property located in a jurisdiction for which an Opinion of Counsel has been previously delivered to the Trustee pursuant to this Indenture.

 

(d)           Notwithstanding anything to the contrary set forth in this Section 4.18 or elsewhere in this Indenture or any Security Document:

 

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(i)            any mortgages, deeds of trust or similar instruments (and any related Security Documents) required to be granted pursuant to this Indenture or the Security Documents with respect to real property owned by the Issuer or a Guarantor on the Issue Date shall be granted, together with Opinions of Counsel delivered to the Trustee in respect of the enforceability and validity of such mortgages, deeds of trust and similar instruments, addressing customary matters (and containing customary exceptions), using reasonable best efforts following the Issue Date, but in no event later than (A) 180 days following the Issue Date with respect to real property to be pledged as Collateral with an aggregate book value of at least 75% of the aggregate book value of such real property owned on the Issue Date and (B) in any event, 270 days after the Issue Date with respect to all real property owned on the Issue Date to be pledged as Collateral;

 

(ii)           any control, intercreditor or similar agreements or other Security Documents with respect to L/C Collateral (other than Excluded Property) and any deposit, checking and securities accounts required to be provided pursuant to this Indenture or the Security Documents on the Issue Date shall be provided as soon as commercially reasonable following the Issue Date, but in no event later than 90 days following the Issue Date;

 

(iii)          in the event that Rule 3-16 of Regulation S-X under the Securities Act requires or would require (or is replaced with another rule or regulation, or any other law, rule or regulation is adopted, which would require) the filing with the Commission of separate financial statements of the Issuer, a Guarantor or of K. Hovnanian JV Holdings, L.L.C. that are not otherwise required to be filed, then the capital stock or other securities of such Person need not be pledged pursuant to this Section 4.18 and shall automatically be deemed released and to not be and to not have been part of the Collateral, but only to the extent necessary to not be subject to such requirement. In such event, the Security Documents may be amended or modified, without the consent of any Holder of Notes, to the extent necessary to evidence the release of Liens securing the Notes and the Guarantees on the shares of capital stock or other securities that are so deemed to no longer constitute part of the Collateral;

 

(iv)          any control, intercreditor or similar agreements or other Security Documents required pursuant to this Indenture or the Security Documents with respect to L/C Collateral (other than Excluded Property) may provide that the Collateral Agent for the benefit of the Holders has a security interest in such Collateral that is junior to both the lien granted to the holders of the obligations secured by such L/C Collateral and the First-Priority Lien Obligations;

 

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(v)                                 in the case of personal property, the Issuer and the Guarantors will not be required to take any steps to perfect liens on personal property outside the United States; and

 

(vi)                              in the case of real property Collateral, the Issuer and the Guarantors will not be required to provide title insurance policies in respect thereof.

 

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

 

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

 

Section 4.19.  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 this Indenture described under this Article 4 (except for Section 4.08, Section 4.10 (to the extent the property disposed of constitutes Collateral), Section 4.12, Section 4.14 (other than clause (iii) of the first paragraph thereof), Section 4.15 and Section 4.18) will be suspended (such suspended covenants, the “Suspended Covenants”) and cease to have any further effect from and after the first date when the Notes are rated Investment Grade (the “Suspension Date”); 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 Suspended Covenants shall be reinstated.

 

(b)                       Following the achievement of such Investment Grade ratings, no Restricted Subsidiary thereafter acquired or created will be required to be a Guarantor unless it thereafter guarantees any Applicable Debt or the Notes cease to be rated Investment Grade.

 

(c)                        With respect to Restricted Payments made after any reinstatement referred to in Section 4.19(a), the amount of Restricted Payments made after the 

 

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Issue Date will be calculated as though Section 4.07 had been in effect during the entire period after such date. Accordingly, Restricted Payments made after the Suspension Date will reduce the amount available to be made as Restricted Payments under Section 4.07(a).

 

(d)                       Notwithstanding clauses (a), (c) and (c) of this Section 4.19, in the event of any reinstatement of the obligation to comply with the Suspended Covenants referred to in Section 4.19(a), no action taken or omitted to be taken by the Company or any of its Subsidiaries prior to such reinstatement, or action taken by the Company or any of its Subsidiaries at any time pursuant to a contractual obligation arising prior to such reinstatement (not entered into in contemplation of such reinstatement) shall give rise to a Default or Event of Default under this Indenture upon reinstatement.

 

(e)                        The Issuer shall promptly notify the Trustee of any suspension or reinstatement of the Suspended Covenants and in the absence of such notice, the Trustee shall be entitled to presume that no such suspension or reinstatement has occurred.

 

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 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 this 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 $25.0 million or more, individually or in the aggregate, and such acceleration does not 

 

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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 $25.0 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 $25.0 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

 

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

 

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

 

(ix)                              any Guarantee of a Guarantor that 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 this Indenture and the Guarantee); or

 

(x)                                 the Liens created by the Security Documents shall at any time not constitute valid and perfected Liens on any material portion of the Collateral intended to be covered thereby (to the extent perfection by filing, registration, recordation or possession is required by this Indenture or the Security Documents) other than in accordance with the terms of the relevant Security Document and this Indenture and other than the satisfaction in full of all Obligations under this Indenture or the release or amendment of any such Lien in accordance with the terms of this Indenture or the Security Documents, or, except for expiration in accordance with its terms or amendment, modification, waiver, termination or release in accordance with the terms of this Indenture and the relevant Security Document, any of the Security Documents shall for whatever reason be terminated or cease to be in full force and effect, if in either case, such default continues for 30 days after notice, or the enforceability thereof shall be contested by the Issuer or any Guarantor.

 

A Default as described in subclause (iii) of this Section 5.01 will not be deemed an Event of Default until the Trustee notifies the Company, or the Holders of at least 25 percent in principal amount of the then outstanding Notes notify the Company and the Trustee, of the Default and (except in the case of a Default with respect to Section 4.12 and 4.14 hereof) the Company does not cure the Default within 60 days after receipt of the notice. The notice must specify the Default, demand that it be remedied and state that the notice is a “Notice of Default.” If such a Default is cured within such time period, it ceases to be a Default.

 

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) of this Section 5.01), shall have occurred and be continuing under this Indenture, the Trustee by notice to the Company, or the Holders of at least 25 percent in principal amount of the Notes then outstanding by notice to the Company and the Trustee, may declare all Notes to be due and payable immediately.  Upon such declaration of 

 

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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) of this Section 5.01 occurs, such an amount will ipso facto become and be immediately due and payable without any declaration, notice or other act on the part of the Trustee and the Company or any Holder.  This provision, however, is subject to the condition that, if at any time after the unpaid principal amount (or such specified amount) of the Notes shall have been so declared due and payable and before any judgment or decree for the payment of the moneys due shall have been obtained or entered as hereinafter provided, the Issuer shall pay or shall deposit with the Trustee a sum sufficient to pay all matured installments of interest, 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, if any, to the extent that payment of such interest is enforceable under applicable law and on such principal at the rate borne by the Notes to the date of such payment or deposit) and the reasonable compensation, disbursements, expenses and advances of the Trustee and all other amounts due the Trustee under Section 7.07, and any and all defaults under this Indenture, other than the nonpayment of such portion of the principal amount of and accrued interest, if any, on Notes which shall have become due by acceleration, shall have been cured or shall have been waived in accordance with Section 5.03 or provision deemed by the Trustee to be adequate shall have been made therefor, then and in every such case the Holders of a majority in aggregate principal amount of the Notes then outstanding, by written notice to the Issuer and to the Trustee, may rescind and annul such declaration and its consequences; but no such rescission and annulment shall extend to or shall affect any subsequent default, or shall impair any right consequent thereon.  Notwithstanding the previous sentence, no waiver shall be effective against any Holder for any Event of Default or event which with notice or lapse of time or both would be an Event of Default with respect to any covenant or provision which cannot be modified or amended without the consent of the Holder of each outstanding Note affected thereby, unless all such affected Holders agree, in writing, to waive such Event of Default or other event.

 

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

 

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

 

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Officer of the Trustee by the Issuer, a Paying Agent or any Holder and such notice references the Notes and this Indenture.

 

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

 

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

 

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

 

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

 

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FIRST: To the payment of costs and expenses of collection and reasonable compensation to the Trustee (including in its role as Collateral Agent under the Security Documents), its agents, attorneys and counsel, and all other expenses and liabilities incurred, and all advances made, by the Trustee pursuant to Section 7.07 except as a result of its negligence or bad faith;

 

SECOND: If the principal of the Notes shall not have become due and be unpaid, to the payment of interest, if any, on the Notes, in the order of the maturity of the installments of such interest, if any, with interest (to the extent that such interest has been collected by the Trustee) upon the overdue installments of 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 or interest, if any, with interest on the overdue principal and (to the extent that such interest has been collected by the Trustee) upon overdue installments of interest, 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, if any, without preference or priority of principal over interest, if any, or of interest, if any, over principal, or of any installment of interest, if any, over any other installment of interest, if any, ratably to the aggregate of such principal and accrued and unpaid 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 

 

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

 

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

 

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

 

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given by this Article 5 or by law to the Trustee or to the Holders may be exercised from time to time, and as often as shall be deemed expedient, by the Trustee or by the Holders.

 

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

 

Section 5.10.  Notice of Defaults.  (a) The Company is required to deliver to the Trustee an annual statement regarding compliance with this 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 Trustee prompt written notice of the occurrence of any Default or Event of Default.

 

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

 

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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, if any, on the Notes as contemplated herein, wherever enacted, now or at any time hereafter in force, or that may affect the covenants or the performance of this Indenture.  The Company, the Issuer and each Guarantor hereby expressly waives, to the extent that it may lawfully do so, all benefit or advantage of any such law and covenants that it will not hinder, delay or impede the execution of any power herein granted to the Trustee, but will suffer and permit the execution of every such power as though no such law had been enacted.

 

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

 

Section 5.13.  Payment of Notes on Default; Suit Therefor.  The Issuer covenants that (a) if default shall be made in the payment of any installment of interest 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

 

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the Trustee, the Issuer will pay to the Trustee, for the benefit of the Holders, the whole amount that then shall have become due and payable on all such Notes for principal, and premium, if any, or interest, 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, if any, at the rate borne by the Notes; and, in addition thereto, such further amount as shall be sufficient to cover the costs and expenses of collection, including a reasonable compensation to the Trustee, its agent, attorneys and counsel, and any expenses or liabilities incurred by the Trustee hereunder other than through its negligence or bad faith.

 

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

 

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

 

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the extent that such payment of reasonable compensation, expenses and counsel fees and expenses out of the estate in any such proceedings shall be denied for any reason, payment of the same shall be secured by a lien on, and shall be paid out of, any and all distributions, dividends, moneys, securities and other property which the Holders of Notes may be entitled to receive in such proceedings, whether in liquidation or under any plan of reorganization or arrangement or otherwise.

 

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

 

ARTICLE 6
  GUARANTEES; RELEASE OF GUARANTOR

 

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

 

If the Issuer fails to make any payment when due of any amount so guaranteed for whatever reason, each Guarantor shall be obligated, jointly and severally with each other Guarantor, to pay the same immediately.  Each Guarantor hereby agrees that its obligations hereunder shall be continuing, absolute and unconditional, irrespective of, and shall be unaffected by, the validity, regularity or enforceability of the Notes, this Indenture, the absence of any action to enforce the same, any waiver or consent by any Holder or the Trustee with respect to any provisions hereof or thereof, the recovery of any judgment against the Issuer, any action to enforce the same or any other 

 

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

 

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

 

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

 

Upon any distribution of assets of a Guarantor referred to in this Article 6, the Trustee, subject to the provisions of Article 7, and the Holders shall be entitled to rely upon any order or decree made by any court of competent jurisdiction in which such dissolution, winding up, liquidation or reorganization proceedings are pending, or a certificate of the liquidating trustee or agent or other person making any distribution to the Trustee or to such Holders for the purpose of ascertaining 

 

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the persons entitled to participate in such distribution, the holders of other indebtedness of such Guarantor, the amount thereof or payable thereon, the amount or amounts paid or distributed thereon and all other facts pertinent thereto or to this Article 6.

 

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

 

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

 

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

 

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

 

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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, 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 shall 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.

 

Each Guarantor that makes a payment under its Guarantee shall be entitled, upon payment in full of all guaranteed obligations under this Indenture, to seek and receive contribution from and against each other Guarantor in an amount equal to such other Guarantor’s pro rata portion of such payment based on the respective net assets of all the Guarantors at the time of such payment determined in accordance with GAAP.

 

Section 6.09.  Stay of Acceleration.  If acceleration of the time for payment of any amount payable by the Issuer under this 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 this Indenture are nonetheless payable by the Guarantors hereunder forthwith on demand by the Trustee or the Holders.

 

ARTICLE 7
  THE TRUSTEE

 

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

 

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affecting the liability of, or affording protection to, the Trustee is subject to this Article.

 

(b)                       Except during the continuance of an Event of Default, the Trustee need perform only those duties that are specifically set forth in this Indenture and no others, and no implied covenants or obligations shall be read into this Indenture against the Trustee and the permissive rights of the Trustee set forth herein shall not be construed as duties.  In case an Event of Default has occurred and is continuing, the Trustee shall exercise those rights and powers vested in it by this Indenture, and use the same degree of care and skill in their exercise as a prudent man would exercise or use under the circumstances in the conduct of his own affairs.

 

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

 

(a)                                 The Trustee may rely, and shall 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 Trustee need not investigate any fact or matter stated in the document, but the Trustee, in its discretion, may make further inquiry or investigation into such facts or matters as it sees fit.

 

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

 

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

 

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

 

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

 

(f)                                   The Trustee may consult with counsel, and the written advice of such counsel or any Opinion of Counsel shall 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 this Indenture shall require the Trustee to expend or risk its own funds or otherwise incur any financial liability in the performance of its duties hereunder, or in the exercise of its rights or powers, unless it receives indemnity satisfactory to it against any loss, liability or expense.

 

(h)                                 The Trustee may request that the Company (on behalf of itself and the Issuer) deliver an Officers’ Certificate setting forth the name of the individuals and/or titles of Officers authorized at such time to take specific actions pursuant to this Indenture, which Officers’ Certificate may be signed by any person authorized to sign an Officers’ Certificate, including any person specified as so authorized in any such Officers’ Certificate previously delivered and not superseded.

 

(i)                                     In no event shall the Trustee be liable, directly or indirectly, for any special, indirect or consequential damages, even if the Trustee has been advised of the possibility of such damages.

 

(j)                                    The rights, privileges, protections, immunities and benefits given to the Trustee, including, without limitation, its right to be indemnified, are extended to, and shall be enforceable by, the Trustee in each of its capacities hereunder, and to each agent, custodian and other Person employed to act hereunder.

 

(k)                                 In no event shall the Trustee be responsible or liable for any failure or delay in the performance of its obligations hereunder arising out of or caused by, directly or indirectly, forces beyond its control, including, without limitation, strikes, work stoppages, accidents, acts of war or terrorism, civil or military disturbances, nuclear or natural catastrophes or acts of God, and, except in the case of failures or delays due to the Trustee’s negligence or bad faith, interruptions, loss or malfunctions of utilities, communications or computer (software and 

 

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hardware) services, it being understood that the Trustee shall use reasonable best efforts which are consistent with accepted practices in the banking industry to resume performance as soon as practicable under the circumstances.

 

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

 

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

 

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

 

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

 

Section 7.05.  Reserved.

 

Section 7.06.  Reports by Trustee to Holders.  To the extent this Indenture becomes qualified under the Trust Indenture Act, within 60 days after each May 1, beginning with the first May 1 after this Indenture so becomes qualified under the Trust Indenture Act, the Trustee shall 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 shall pay the Trustee compensation as agreed upon in writing for its services.  The 

 

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compensation of the Trustee is not limited by any law on compensation of a trustee of an express trust.  The Company shall reimburse the Trustee upon request for all reasonable out-of-pocket expenses, disbursements and advances incurred or made by the Trustee, including the reasonable compensation and expenses of the Trustee’s agents and counsel.

 

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

 

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

 

(d)                       When the Trustee incurs expenses or renders services after an Event of Default specified in Section 5.01(vii) or Section 5.01(viii) hereof occurs, the expenses and the compensation for the services (including the fees and expenses of its agents and counsel) are intended, to the extent permitted by law, to constitute expenses of administration under any Bankruptcy Law.

 

(e)                        The Company’s obligations and the Trustee’s rights under this Section 7.07 shall survive the resignation or removal of the Trustee and the termination of this Indenture.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

ARTICLE 8
  DEFEASANCE AND DISCHARGE

 

Section 8.01.  Legal Defeasance and Discharge.  The Issuer, the Company and the Guarantors shall, subject to the satisfaction of the conditions set forth in Section 8.03 hereof, be deemed to have been discharged from their respective obligations with respect to the Notes, the Guarantees and under the Security Documents and cause the release of all Liens on the Collateral granted under the Security Documents, on the date the conditions set forth below are satisfied (hereinafter, “Legal Defeasance”).  For this purpose, Legal Defeasance means that the Issuer shall be deemed to have paid and discharged the entire Indebtedness represented by the Notes, which shall thereafter be deemed to be outstanding only for the purposes of Section 8.04 hereof and the other Sections of this Indenture referred to in clauses (a) through (f) of this Section 8.01, and the Issuer, the Company and the Guarantors shall be deemed to have satisfied all of their respective obligations under the Notes, the Guarantees, this Indenture and the Security Documents (and the Trustee, on demand of and at the expense of the Issuer, shall execute proper instruments delivered to it by the Issuer acknowledging the same), except for 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, if any, on the Notes when such payments are due from the trust referred to below; (b) the Issuer’s obligations with respect to the Notes concerning mutilated, destroyed, lost or stolen Notes and the maintenance of an office or agency for payment and money for security payments held in trust; (c) the rights, powers, trusts, duties and immunities of the Trustee, and the Issuer’s and the Guarantors’ obligations in connection therewith; (d) the Legal Defeasance provisions of Article 8 of this Indenture; (e) the rights of registration of transfer and exchange of the Notes; and (f) the rights of Holders that are beneficiaries with respect to property so deposited with the Trustee payable to all or any of them.

 

Section 8.02.  Covenant Defeasance.  The Issuer, the Company and the Guarantors shall, subject to the satisfaction of the conditions set forth in Section 8.03

 

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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 and 4.13, clause (iii) of Section 4.14, Section 4.15, Section 4.18 and Article 6 (except for Section 6.03 and Section 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, the Liens on the Collateral granted under the Security Documents shall be released (hereinafter, “Covenant Defeasance”), and the Notes shall thereafter be deemed not outstanding for the purposes of any direction, waiver, consent or declaration or act of Holders (and the consequences of any thereof) in connection with such covenants, but shall continue to be deemed outstanding for all other purposes hereunder (it being understood that the Notes shall not be deemed outstanding for accounting purposes).  For this purpose, Covenant Defeasance means that, with respect to the Notes and the Guarantees, the Issuer, the Company and the Guarantors may omit to comply with and shall have no liability in respect of any term, condition or limitation set forth in any such covenant, whether directly or indirectly, by reason of any reference elsewhere herein to any such covenant or by reason of any reference in any such covenant to any other provision herein or in any other document and such omission to comply shall not constitute a Default or an Event of Default under Section 5.01 hereof, but, except as specified above, the remainder of this Indenture and the Notes shall be unaffected thereby.  Subject to the satisfaction of the conditions set forth in Section 8.03 hereof, Sections 5.01(iii) (with respect to the covenants so defeased), 5.01(iv), 5.01(v), 5.01(vi), 5.01(ix) and 5.01(x) shall not constitute Events of Default or Defaults hereunder.

 

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

 

In order to exercise either Legal Defeasance or Covenant Defeasance:

 

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

 

(b)                                 in the case of Legal Defeasance, the Issuer must deliver to the Trustee an Opinion of Counsel reasonably acceptable to the Trustee confirming that the Issuer has received from, or there has been published by, the Internal Revenue Service a ruling, or there has been a change in the applicable United States federal income tax law after the date of this Indenture, in either case to the

 

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effect that, and based thereon such Opinion of Counsel shall confirm that, the beneficial owners of the Notes will not recognize income, gain or loss for United States federal income tax purposes as a result of such Legal Defeasance, and will be subject to United States federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such Legal Defeasance had not occurred;

 

(c)                                  in the case of Covenant Defeasance, the Issuer must deliver to the Trustee an Opinion of Counsel reasonably acceptable to the Trustee confirming that the beneficial owners of the 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 Defeasance had not occurred;

 

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

 

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

 

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

 

(g)                                  the Issuer must deliver to the Trustee an Officers’ Certificate and an Opinion of Counsel in the United States reasonably acceptable to the Trustee, each stating that the conditions precedent provided for or relating to Legal Defeasance or Covenant Defeasance, as applicable, in the case of the Officers’ Certificate, in clauses (a) through (f) and, in the case of the Opinion of Counsel, in clauses (b) and (c) of this Section 8.03, have been complied with.

 

Section 8.04.  Deposited Money and Government Securities to be Held in Trust; Other Miscellaneous Provisions.  Subject to Section 8.05 hereof, all money and U.S. Government Obligations (including the proceeds thereof) deposited with the Trustee (or other qualifying trustee, collectively, and solely for purposes of this Section 8.04, the “Trustee”) pursuant to Section 8.03 or Section 8.08 hereof in respect of the Notes shall be held in trust and applied by the Trustee, in

 

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accordance with the provisions of the Notes and this Indenture, to the payment, either directly or indirectly or through any paying agent (including the Issuer acting as paying agent) as the Trustee may determine, to the Holders of such Notes of all sums due and to become due thereon in respect of principal, premium, if any, and interest, but such money need not be segregated from other funds except to the extent required by law.

 

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

 

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

 

Section 8.05.  Repayment to Issuer.  Any money deposited with the Trustee or any paying agent, or then held by the Issuer, in trust for the payment of the principal, premium, if any, and interest on the Notes and remaining unclaimed for two years after such principal, premium, if any, and interest has become due and payable shall be paid to the Issuer on its request or (if then held by the Issuer) shall be discharged from such trust; and the Holder of such Note shall thereafter, as an unsecured creditor, look only to the Issuer for payment thereof, and all liability of the Trustee or such paying agent with respect to such trust money, and all liability of the Issuer as trustee thereof, shall thereupon cease.

 

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

 

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principal of, premium, if any, or interest, if any, on any Note following the reinstatement of its obligations, the Issuer shall be subrogated to the rights of the Holders of such Notes to receive such payment from the money held by the Trustee or paying agent.

 

Section 8.07.  Survival.  The Trustee’s rights under Article 7 (including, but not limited to, its right to indemnification) and this Article 8 shall survive termination of this Indenture and the resignation or removal of the Trustee.

 

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 on all the outstanding Notes (other than Notes which have been destroyed, lost or stolen and which have been replaced or paid as provided in Section 2.04) as and when the same shall have become due and payable, or (ii) the Issuer shall have delivered to the Trustee for cancellation all Notes theretofore authenticated (other than Notes which have been destroyed, lost or stolen and which have been replaced or paid as provided in Section 2.04), or (b) (i) the Notes mature within one year, or all of them are to be called for redemption within one year under arrangements satisfactory to the Trustee for giving the notice of redemption, (ii) the Issuer irrevocably deposits in trust with the Trustee, as trust funds solely for the benefit of the Holders, money or U.S. Government Obligations or a combination thereof sufficient, in the opinion of a nationally recognized firm of independent public accountants expressed in a written certificate delivered to the Trustee, without consideration of any reinvestment, to pay principal of and premium, if any, and interest 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, this Indenture or any other agreement or instrument to which the Issuer is a party or by which it is bound, and (v) the Issuer delivers to the Trustee an Officers’ Certificate and an Opinion of Counsel, in each case stating that all conditions precedent provided for herein relating to the satisfaction and discharge of this Indenture have been complied with; and if, in any such case, the Issuer shall also pay or cause to be paid all other sums payable hereunder by the Issuer (including all amounts, payable to the Trustee pursuant to Section 7.07), then, (x) after satisfying the conditions in clause (a), only the Company’s obligations under Sections 7.07 and 8.04 will survive or (y) after satisfying the conditions in clause (b), only the Issuer’s or the Company’s, as applicable, obligations in Article 2 and Sections 4.01, 4.02, 7.07, 7.08, 8.04, 8.05 and 8.06 will survive, and, in either case, the Trustee, on demand of the Issuer accompanied by an Officers’ Certificate and an Opinion of Counsel, each stating that all conditions precedent relating to the satisfaction and discharge contemplated by this provision have been complied with, and at the cost and expense of the Issuer, shall execute proper instruments acknowledging such satisfaction and discharging of this Indenture and the Security Documents and cause the release of all Liens on the

 

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Collateral granted under the Security Documents.  The Issuer agrees to reimburse the Trustee for any costs or expenses thereafter reasonably incurred, and to compensate the Trustee for any services thereafter reasonably rendered, by the Trustee in connection with this Indenture or the Notes.

 

ARTICLE 9
  AMENDMENTS, SUPPLEMENTS AND WAIVERS

 

Section 9.01.  Amendments Without Consent of Holders.  The Company, the Issuer, the Guarantors, the Trustee, the Collateral Agent and the Mortgage Tax Collateral Agent, as applicable, may amend, supplement or waive this Indenture, the Notes, the Guarantees or the Security Documents without notice to or the consent of any Holder:

 

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

 

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

 

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

 

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

 

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

 

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

 

(g)                                  to provide for any Guarantee of the Notes;

 

(h)                                 to add security to or for the benefit of the Notes and, in the case of the Security Documents, to or for the benefit of the other secured parties named therein, or to confirm and evidence the release, termination or discharge of any Guarantee of the Notes or Lien securing the Notes or any Guarantee when such release, termination or discharge is permitted by this Indenture and the Security Documents;

 

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

 

(j)                                    to evidence compliance with Section 4.14;

 

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

 

(l)                                     to conform any provision of this Indenture, the Notes, the Guarantees or the Security Documents to the ‘‘Description of Notes’’ contained in the Offering Circular to the extent that the ‘‘Description of Notes’’ was intended to be a verbatim recitation of a provision in this Indenture, the Notes, the Guarantees or the Security Documents.

 

By receiving Notes, Holders of the Notes are hereby deemed to have consented for purposes of this Indenture and the Security Documents, and the Collateral Agent and the Trustee are hereby authorized and directed by the Holders of the Notes, upon receipt of an Officers’ Certificate more fully described below, to amend, supplement or otherwise modify the Security Documents to add or provide for additional secured parties to the extent Liens securing Indebtedness and other Obligations held by such parties are permitted under this Indenture (and to reflect any differing level of Lien priorities among the holders of First-Priority Lien Obligations); provided that after so securing any such additional secured parties, the amount of First-Priority Lien Obligations, Second-Priority Lien Obligations and Junior-Priority Lien Obligations does not exceed the amount set forth under clause (i) of the definition of “Permitted Liens.”

 

In executing any such amendment, supplement, consent or waiver or other modification of a Security Document (or in entering into a new intercreditor agreement or other Security Document described in the preceding paragraph), the Trustee and the Collateral Agent shall be entitled to receive and (subject to their duties set forth in this Indenture) shall be fully protected in relying upon an Officers’ Certificate stating that the execution of such amendment, supplement, consent or waiver or new agreement is authorized or permitted by the applicable Security Document and complies with the provisions thereof and of this

 

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Indenture.  Notwithstanding anything in this Indenture to the contrary, no Opinion of Counsel shall be required in connection with the execution by the Trustee or Collateral Agent of any such amendment, supplement, consent or waiver or other modification of the Security Documents (or the entry into a new intercreditor agreement or other Security Document) as contemplated above.

 

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

 

(b)                                 Notwithstanding the provisions of paragraph (a) of this Section 9.02, without the consent of, or notice to, 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 extend 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 orSection 5.06,

 

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

 

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

 

(c)                                  Without the consent of the Holders of at least 662/3% in principal amount of the Notes, the Company, the Issuer, the Guarantors, the Trustee and the Collateral Agent may not effect a release of all or substantially all of the Collateral other than pursuant to the terms of the Security Documents or as otherwise permitted under this Indenture.

 

(d)                                 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.

 

(e)                                  An amendment, supplement or waiver under this Section 9.02 shall become effective on receipt by the Trustee of written consents from the Holders of the requisite percentage in principal amount of the outstanding Notes.  After an amendment, supplement or waiver under this Section 9.02 becomes effective, the Issuer (or the Trustee at the request and expense of the Issuer) will send to the Holders affected thereby a notice briefly describing the amendment, supplement or waiver.  The Issuer will send supplemental indentures to Holders upon request.  Any failure of the Issuer to send such notice, or any defect therein, will not, however, in any way impair or affect the validity of any such supplemental indenture, amendment or waiver.

 

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

 

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

 

Section 9.04.  Trustee’s Rights and Obligations.  The Trustee is entitled to receive, in addition to the documents required by Section 13.04, 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

 

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

 

ARTICLE 10
  [RESERVED]

 

ARTICLE 11
  COLLATERAL AND SECURITY

 

Section 11.01.  Security Documents.  The payment of the principal of and interest and premium, if any, on the Notes when due, whether on an interest payment date, at maturity, by acceleration, repurchase, redemption or otherwise and whether by the Issuer pursuant to the Notes or by any Guarantor pursuant to its Guarantee and the performance of all other obligations of the Issuer and the Guarantors under this Indenture, the Notes, the Guarantees and the Security Documents are secured by Second-Priority Liens on the Collateral, subject to Permitted Liens, as provided in the Security Documents which the Issuer and the Guarantors have entered into simultaneously with the execution of this Indenture, or in certain circumstances, subsequent to the Issue Date, and shall be secured as provided in the Security Documents hereafter delivered as required or permitted by this Indenture.

 

Section 11.02.  Collateral Agent.

 

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

 

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(b)                                 Neither the Trustee (subject to Section 7.01) nor the Collateral Agent nor any of their respective officers, directors, employees, attorneys or agents shall be responsible or liable for the legality, enforceability, effectiveness or sufficiency of the Security Documents, for the creation, perfection, priority, sufficiency, maintenance, renewal or protection of any Second-Priority Lien, or for any defect or deficiency as to any such matters, or for any failure to demand, collect, foreclose or realize upon or otherwise enforce any of the Second-Priority Liens or Security Documents or any delay in doing so; provided, however, that nothing in this Section 11.02(b) shall alter the Collateral Agent’s obligations under Section 7.02 of the Security Agreement.

 

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

 

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

 

(2)                                 to foreclose upon or otherwise enforce any Second-Priority Lien with respect to the Notes and the Guarantees; or

 

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

 

(d)                                 The Collateral Agent shall be accountable only for amounts that it actually receives as a result of the enforcement of the Second-Priority Liens with respect to the Notes and the Guarantees or the Security Documents.

 

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

 

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

 

(g)                                  Neither the Trustee nor the Collateral Agent, in their capacities as such hereunder, shall be deemed to owe any fiduciary duty to the holders of the First Lien Notes or the holders of any First-Priority Lien Obligations.

 

101

 

Section 11.03.  Authorization of Actions to be Taken.

 

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

 

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

 

(c)                                  Subject to the provisions of Section 7.01 and Section 7.02, the Trustee may (but shall not be obligated), in its sole discretion and without the consent of the Holders of Notes, direct, on behalf of the Holders of Notes, the Collateral Agent to take all actions it deems necessary or appropriate in order to:

 

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

 

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

 

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

 

Subject to Section 7.01 and Section 7.02, the Trustee is authorized and empowered (but shall not be obligated) to institute and maintain, or direct the Collateral Agent to institute and maintain, such suits and proceedings as it may deem expedient to protect or enforce the Second-Priority Liens or the Security Documents to which the Collateral Agent or Trustee is a party or to prevent any impairment of Collateral by any acts that may be unlawful or in violation of the Security Documents to which the Collateral Agent or Trustee is a party or this Indenture, and such suits and proceedings as the Trustee or the Collateral Agent may deem expedient to preserve or protect its interests and the interests of the Holders of Notes in the Collateral, including power to institute and maintain suits or proceedings to restrain the enforcement of or compliance with any legislative or other governmental enactment, rule

 

102

 

or order that may be unconstitutional or otherwise invalid if the enforcement of, or compliance with, such enactment, rule or order would impair the security interest hereunder or be prejudicial to the interests of Holders of Notes, the Trustee or the Collateral Agent.

 

Section 11.04.  Release of Second-Priority Liens.

 

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

 

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

 

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

 

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

 

(5)                                 in part, as to any property constituting Collateral that (a) is sold, transferred or otherwise disposed of by the Company, the Issuer or one of the Restricted Subsidiaries to any Person other than the Company, the Issuer or any of its Restricted Subsidiaries (but excluding any transaction subject to Section 4.14 where the recipient is required to become the obligor on the Notes or a Guarantor) in a transaction permitted by this Indenture and the Security Documents, at the time of such sale or disposition, to the extent of the interest sold or disposed of, (b) is owned or at any time acquired by a Restricted Subsidiary that has been released from its Guarantee under this Indenture, concurrently with the release of such Guarantee or (c) consists of securities of the Issuer or a Guarantor or of K. Hovnanian JV Holdings, L.L.C. to be released as contemplated by Section 4.18(d)(iii); or

 

(6)                                 in accordance with and subject to the provisions of Article 9, with the consent of Holders (including consents obtained in connection with a tender offer or exchange offer).

 

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

 

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

 

103

 

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

 

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

 

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

 

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

 

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

 

Section 11.05.  Filing, Recording and Opinions.  (a) Any release of Collateral permitted by Section 11.04 hereof or the Security Documents will be deemed not to impair the Liens under this Indenture and the Security Documents in contravention thereof and any person that is required to deliver a certificate or opinion under this Indenture or the Security Documents, shall be entitled to rely upon the foregoing as a basis for delivery of such certificate or opinion.  The Trustee may, to the extent permitted by Section 7.01 andSection 7.02 hereof, accept as conclusive evidence of compliance with the foregoing provisions the appropriate statements contained in such documents and opinion.

 

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

 

104

 

ARTICLE 12
  RELEASE OF ISSUER AND GUARANTORS

 

Section 12.01.  Release of Issuer.  (a) The Issuer shall be released from its obligations under this Indenture and the Notes, without the consent of the Holders, if: (1) the Company or any successor to the Company has assumed the obligations of the Issuer under this Indenture and the Notes, by supplemental indenture executed and delivered to the Trustee and satisfactory in form to the Trustee, (2) the Company delivers an Opinion of Counsel to the Trustee to the effect that beneficial owners of Notes will not recognize income, gain or loss for United States federal income tax purposes as a result of such release and such beneficial owners of Notes 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 at such time subject to the provisions of Article 6 and Section 4.11 hereof, (x) execute a Guarantee, (y) execute a supplemental indenture evidencing its Guarantee and (z) deliver an Opinion of Counsel to the Trustee to the effect that the supplemental indenture has been duly authorized, executed and delivered by the Issuer and constitutes a valid and binding obligation of the Issuer, enforceable against the Issuer in accordance with its terms (subject to customary exceptions), until such time, if any, as such Guarantee may be released as described above under Section 4.19 and Article 6.

 

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

 

ARTICLE 13
  MISCELLANEOUS

 

Section 13.01.  [Reserved]

 

Section 13.02.  Holder Actions.  (a)  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 (b), a Holder may revoke an act as to its Notes, but only if the Trustee receives the notice of revocation before the date the amendment or waiver or other consequence of the act becomes effective.

 

(b)                                 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 § 316(c)) for the purpose of determining the Holders entitled to act with respect to any amendment or waiver or in any other regard, except that during the continuance of an Event of Default, only the Trustee may set a record date as to

 

105

 

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 shall 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 shall be valid or effective for more than 90 days after the record date.

 

Section 13.03.  Notices.  (a) Any notice or communication to the Issuer or the Company shall 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 shall be deemed given if given to the Company.  Any notice to the Trustee shall 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.
 110 West Front Street
 P.O. Box 500
 Red Bank, New Jersey 07701
 Facsimile:  (732) 383-2945
 Attention:  Corporate Counsel

 

if to the Trustee:

 

Wilmington Trust, National Association 
 Rodney Square North
 1100 North Market Street
 Wilmington, DE 19890-1600
 Facsimile:  302-636-4145
 Attention:  Corporate Client Services

 

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

 

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

 

106

 

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

 

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

 

(a)                                 an Officers’ Certificate stating that, in the opinion of the signers, all conditions precedent, if any, provided for in this 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 13.05.  Statements Required in Certificate or Opinion.  Each certificate or opinion with respect to compliance with a condition or covenant provided for in this Indenture must include:

 

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

 

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

 

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

 

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

 

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

 

107

 

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 Trustee shall contain a statement that such firm is independent.

 

Section 13.06.  Payment Date Other Than a Business Day.  If any payment with respect to a payment of any principal of, premium, if any, or interest 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 shall accrue for the intervening period.

 

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

 

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

 

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

 

108

 

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

 

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

 

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

 

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

 

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

 

[Signature page follows]

 

109

 

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/ J.   Larry Sorsby
    
	
 
    	
 
    	
Name:
    	
J.   Larry Sorsby
    
	
 
    	
 
    	
Title:
    	
Executive   Vice President and Chief Financial Officer
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
HOVNANIAN ENTERPRISES, INC., as the Company   and a Guarantor
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/ J.   Larry Sorsby
    
	
 
    	
 
    	
Name:
    	
J.   Larry Sorsby
    
	
 
    	
 
    	
Title:
    	
Executive   Vice President and Chief Financial Officer
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
On behalf of each entity named in Schedule A   hereto, as a Guarantor
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/ J.   Larry Sorsby
    
	
 
    	
 
    	
Name:
    	
J.   Larry Sorsby
    
	
 
    	
 
    	
Title:
    	
Executive   Vice President and Chief Financial Officer
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
WILMINGTON TRUST, NATIONAL ASSOCIATION, as   Trustee and Collateral Agent
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
By:
    	
/s/ Joseph   B. Feil
    	
 
    	
 
    	
 
    
	
 
    	
Name: Joseph   B. Feil
    	
 
    	
 
    	
 
    
	
 
    	
Title:   Vice President
    	
 
    	
 
    	
 
    

 

110

 

[Signature page to the Second Lien Notes Indenture]

 

111

 

SCHEDULE A

 

GUARANTORS

 

ARBOR TRAILS, LLC

AUDDIE ENTERPRISES, L.L.C.

BUILDER SERVICES NJ, L.L.C.

BUILDER SERVICES PA, L.L.C.

DULLES COPPERMINE, L.L.C.

EASTERN NATIONAL TITLE AGENCY, LLC

EASTERN TITLE AGENCY, INC.

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

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

FOUNDERS TITLE AGENCY, INC.

GLENRISE GROVE, L.L.C.

GOVERNOR’S ABSTRACT CO., INC.

HOMEBUYERS FINANCIAL SERVICES, L.L.C.

HOVNANIAN DEVELOPMENTS OF FLORIDA, INC.

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

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

HOVNANIAN LAND INVESTMENT GROUP, L.L.C.

K. HOV IP, II, INC.

K. HOV IP, INC.

K. HOVNANIAN ACQUISITIONS, INC.

K. HOVNANIAN AT 4S, LLC

K. HOVNANIAN AT ACQUA VISTA, LLC

K. HOVNANIAN AT ALISO, LLC

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

K. HOVNANIAN AT ANDALUSIA, LLC

K. HOVNANIAN AT ARBOR HEIGHTS, LLC

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

K. HOVNANIAN AT BAKERSFIELD 463, L.L.C.

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

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

K. HOVNANIAN AT BELLA LAGO, LLC

K. HOVNANIAN AT BENSALEM, LLC

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

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

K. HOVNANIAN AT BRANCHBURG, L.L.C.

K. HOVNANIAN AT BRIDGEPORT, INC.

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

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

K. HOVNANIAN AT CAMERON CHASE, INC.

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

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

K. HOVNANIAN AT CARLSBAD, LLC

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

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

K. HOVNANIAN AT CHARTER WAY, LLC

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

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

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

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

 

Sch. A-1

 

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

K. HOVNANIAN AT CORTEZ HILL, LLC

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

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

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

K. HOVNANIAN AT DOMINGUEZ HILLS, INC.

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

K. HOVNANIAN AT EASTLAKE, LLC

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

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

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

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

K. HOVNANIAN AT EL DORADO RANCH II, L.L.C.

K. HOVNANIAN AT EL DORADO RANCH, L.L.C.

K. HOVNANIAN AT ENCINITAS RANCH, LLC

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

K. HOVNANIAN AT FIDDYMENT RANCH, LLC

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

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

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

K. HOVNANIAN AT FOREST MEADOWS, L.L.C.

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

K. HOVNANIAN AT FRANKLIN III, LLC

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

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

K. HOVNANIAN AT FRESNO, LLC

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

K. HOVNANIAN AT GILROY, LLC

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 HAWTHORNE, L.L.C.

K. HOVNANIAN AT HERSHEY’S MILL, INC.

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

K. HOVNANIAN AT HOWELL, LLC

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

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

K. HOVNANIAN AT JACKSON, L.L.C.

K. HOVNANIAN AT JAEGER RANCH, LLC

K. HOVNANIAN AT JERSEY CITY IV, L.L.C.

K. HOVNANIAN AT JERSEY CITY V URBAN RENEWAL COMPANY, L.L.C.

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

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

K. HOVNANIAN AT LA COSTA, LLC

K. HOVNANIAN AT LA HABRA KNOLLS, LLC

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

K. HOVNANIAN AT LAKE RANCHO VIEJO, LLC

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

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

K. HOVNANIAN AT LEE SQUARE, L.L.C.

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

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

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

 

Sch. A-2

 

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 MAHWAH VI, INC.

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

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

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

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

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

K. HOVNANIAN AT MANTECA, LLC

K. HOVNANIAN AT MAPLE AVENUE, 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 MELANIE MEADOWS, LLC

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

K. HOVNANIAN AT MENIFEE, LLC

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

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

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

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

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

K. HOVNANIAN AT MONROE II, INC.

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

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

K. HOVNANIAN AT MONTVALE II, LLC

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

K. HOVNANIAN AT MOSAIC, LLC

K. HOVNANIAN AT MUIRFIELD, LLC

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

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

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

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

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

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

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

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

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

K. HOVNANIAN AT NORTHERN WESTCHESTER, INC.

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

K. HOVNANIAN AT OCEAN TOWNSHIP, INC

K. HOVNANIAN AT OCEAN WALK, INC.

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

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

K. HOVNANIAN AT OLDE ORCHARD, LLC

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

K. HOVNANIAN AT PARK LANE, LLC

K. HOVNANIAN AT PARKSIDE, LLC

K. HOVNANIAN AT PARSIPPANY, L.L.C.

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

 

Sch. A-3

 

K. HOVNANIAN AT PIAZZA D’ORO,  L.L.C.

K. HOVNANIAN AT PIAZZA SERENA, L.L.C

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

K. HOVNANIAN AT PORT IMPERIAL URBAN RENEWAL IV, L.L.C.

K. HOVNANIAN AT PORT IMPERIAL URBAN RENEWAL V, L.L.C.

K. HOVNANIAN AT PORT IMPERIAL URBAN RENEWAL VI, L.L.C.

K. HOVNANIAN AT PORT IMPERIAL URBAN RENEWAL VII, L.L.C.

K. HOVNANIAN AT PORT IMPERIAL URBAN RENEWAL VIII, L.L.C.

K. HOVNANIAN AT POSITANO, LLC

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

K. HOVNANIAN AT RANCHO SANTA MARGARITA, LLC

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

K. HOVNANIAN AT RAPHO, L.L.C

K. HOVNANIAN AT RIDGEMONT, L.L.C.

K. HOVNANIAN AT RIVERBEND, LLC

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

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

K. HOVNANIAN AT SAGE, L.L.C.

K. HOVNANIAN AT SANTA NELLA, LLC

K. HOVNANIAN AT SAWMILL, INC.

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

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

K. HOVNANIAN AT SEASONS LANDING, LLC

K. HOVNANIAN AT SHELDON GROVE, LLC

K. HOVNANIAN AT SHREWSBURY, LLC

K. HOVNANIAN AT SILVER SPRING, L.L.C.

K. HOVNANIAN AT SKYE ISLE, LLC

K. HOVNANIAN AT SMITHVILLE, INC.

K. HOVNANIAN AT SOMERS POINT, L.L.C.

K. HOVNANIAN AT SOUTH BRUNSWICK II, LLC

K. HOVNANIAN AT SOUTH BRUNSWICK, L.L.C.

K. HOVNANIAN AT STANTON, LLC

K. HOVNANIAN AT STATION SQUARE, L.L.C.

K. HOVNANIAN AT SUNRIDGE PARK, LLC

K. HOVNANIAN AT SYCAMORE, INC.

K. HOVNANIAN AT THE CROSBY, LLC

K. HOVNANIAN AT THE GABLES, LLC

K. HOVNANIAN AT THE MONARCH, L.L.C.

K. HOVNANIAN AT THE PRESERVE, LLC

K. HOVNANIAN AT THOMPSON RANCH, LLC

K. HOVNANIAN AT THORNBURY, INC.

K. HOVNANIAN AT TRAIL RIDGE, LLC

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

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

K. HOVNANIAN AT UPPER MAKEFIELD I, INC.

K. HOVNANIAN AT UPPER PROVIDENCE, LLC

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

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

K. HOVNANIAN AT VALLE DEL SOL, LLC

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

K. HOVNANIAN AT VICTORVILLE, L.L.C.

K. HOVNANIAN AT VINELAND, L.L.C.

K. HOVNANIAN AT VISTA DEL SOL, L.L.C.

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

 

Sch. A-4

 

K. HOVNANIAN AT WASHINGTON, L.L.C.

K. HOVNANIAN AT WATERSTONE, LLC

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

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

K. HOVNANIAN AT WEST VIEW ESTATES, L.L.C.

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

K. HOVNANIAN AT WESTSHORE, LLC

K. HOVNANIAN AT WHEELER RANCH, LLC

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

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

K. HOVNANIAN AT WINCHESTER, LLC

K. HOVNANIAN AT WOODCREEK WEST, LLC

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

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

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

K. HOVNANIAN CLASSICS, L.L.C.

K. HOVNANIAN COMMUNITIES, INC.

K. HOVNANIAN COMPANIES OF CALIFORNIA, INC.

K. HOVNANIAN COMPANIES OF MARYLAND, INC.

K. HOVNANIAN COMPANIES OF NEW YORK, INC.

K. HOVNANIAN COMPANIES OF PENNSYLVANIA, INC.

K. HOVNANIAN COMPANIES OF SOUTHERN CALIFORNIA, INC.

K. HOVNANIAN COMPANIES, LLC

K. HOVNANIAN CONSTRUCTION II, INC

K. HOVNANIAN CONSTRUCTION III, INC

K. HOVNANIAN CONSTRUCTION MANAGEMENT, INC.

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

K. HOVNANIAN 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 GEORGIA, INC.

K. HOVNANIAN DEVELOPMENTS OF ILLINOIS, INC.

K. HOVNANIAN DEVELOPMENTS OF KENTUCKY, INC.

K. HOVNANIAN DEVELOPMENTS OF MARYLAND, INC.

K. HOVNANIAN DEVELOPMENTS OF MINNESOTA, INC.

K. HOVNANIAN DEVELOPMENTS OF NEW JERSEY II, INC.

K. HOVNANIAN DEVELOPMENTS OF NEW JERSEY, INC.

K. HOVNANIAN DEVELOPMENTS OF NEW YORK, INC.

K. HOVNANIAN DEVELOPMENTS OF NORTH CAROLINA, INC.

K. HOVNANIAN DEVELOPMENTS OF OHIO, INC.

K. HOVNANIAN DEVELOPMENTS OF PENNSYLVANIA, INC.

K. HOVNANIAN DEVELOPMENTS OF SOUTH CAROLINA, INC.

K. HOVNANIAN DEVELOPMENTS OF TEXAS, INC.

K. HOVNANIAN DEVELOPMENTS OF VIRGINIA, INC.

K. HOVNANIAN DEVELOPMENTS OF WEST VIRGINIA, INC.

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

K. HOVNANIAN ENTERPRISES, INC.

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

K. HOVNANIAN FAIRWAYS AT WESTWORTH, LLC

K. HOVNANIAN FIRST HOMES, L.L.C.

K. HOVNANIAN FLORIDA REALTY, L.L.C.

K. HOVNANIAN FOUR SEASONS @ HISTORIC VIRGINIA, LLC

K. HOVNANIAN FOUR SEASONS AT GOLD HILL, LLC

 

Sch. A-5

 

K. HOVNANIAN GREAT WESTERN BUILDING COMPANY, LLC

K. HOVNANIAN GREAT WESTERN HOMES, LLC

K. HOVNANIAN HAMPTONS AT OAK CREEK II, L.L.C.

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

K. HOVNANIAN HOMES - DFW, L.L.C.

K. HOVNANIAN HOMES AT CAMERON STATION, LLC

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 GREENWAY FARM PARK TOWNS, L.L.C.

K. HOVNANIAN HOMES AT GREENWAY FARM, L.L.C.

K. HOVNANIAN HOMES AT JONES STATION 1, L.L.C.

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

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

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

K. HOVNANIAN HOMES AT THE HIGHLANDS, LLC

K. HOVNANIAN HOMES NORTHERN CALIFORNIA, INC.

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

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

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

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

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

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

K. HOVNANIAN HOMES OF NORTH CAROLINA, INC.

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

K. HOVNANIAN HOMES OF SOUTH CAROLINA, LLC

K. HOVNANIAN HOMES OF VIRGINIA, INC.

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

K. HOVNANIAN LIBERTY ON BLUFF CREEK, LLC

K. HOVNANIAN MANALAPAN ACQUISITION, LLC

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

K. HOVNANIAN NORTH JERSEY ACQUISITIONS, L.L.C.

K. HOVNANIAN NORTHEAST SERVICES, L.L.C.

K. HOVNANIAN OF HOUSTON II, L.L.C.

K. HOVNANIAN OHIO REALTY, L.L.C.

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

K. HOVNANIAN PA REAL ESTATE, INC.

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

K. HOVNANIAN PORT IMPERIAL URBAN RENEWAL, INC.

K. HOVNANIAN PROPERTIES OF RED BANK, INC.

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

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

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

K. HOVNANIAN STANDING ENTITY, L.L.C.

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

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

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

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

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

K. HOVNANIAN T&C HOMES AT FLORIDA, L.L.C.

K. HOVNANIAN T&C HOMES AT ILLINOIS, L.L.C.

K. HOVNANIAN TIMBRES AT ELM CREEK, LLC

K. HOVNANIAN VENTURE I, L.L.C.

K. HOVNANIAN WINDWARD HOMES, LLC

 

Sch. A-6

 

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 BEAUMONT, LLC

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

K. HOVNANIAN’S FOUR SEASONS AT HEMET, LLC

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

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

K. HOVNANIAN’S FOUR SEASONS AT LOS BANOS, LLC

K. HOVNANIAN’S FOUR SEASONS AT MORENO VALLEY, L.L.C.

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

K. HOVNANIAN’S FOUR SEASONS AT PALM SPRINGS, LLC

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

K. HOVNANIAN’S FOUR SEASONS AT RUSH CREEK II, LLC

K. HOVNANIAN’S FOUR SEASONS AT RUSH CREEK, L.L.C.

K. HOVNANIAN’S FOUR SEASONS AT SILVER MAPLE FARM, L.L.C.

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

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

K. HOVNANIAN’S FOUR SEASONS, LLC

K. HOVNANIAN’S PARKSIDE AT TOWNGATE, L.L.C.

KHIP, L.L.C.

LANDARAMA, INC.

M&M AT CHESTERFIELD, LLC

M&M AT CRESCENT COURT, L.L.C.

M&M AT WEST ORANGE, L.L.C.

M&M AT WHEATENA URBAN RENEWAL, L.L.C.

MATZEL & MUMFORD AT EGG HARBOR, L.L.C.

MATZEL & MUMFORD AT SOUTH BOUND BROOK URBAN RENEWAL, L.L.C.

MCNJ, INC.

MIDWEST BUILDING PRODUCTS & CONTRACTOR SERVICES OF PENNSYLVANIA, L.L.C.

MIDWEST BUILDING PRODUCTS & CONTRACTOR SERVICES OF WEST VIRGINIA, L.L.C.

MIDWEST BUILDING PRODUCTS & CONTRACTOR SERVICES, L.L.C.

MMIP, L.L.C.

NEW LAND TITLE AGENCY OF TEXAS, LLC

NEW LAND TITLE AGENCY, L.L.C.

PADDOCKS, L.L.C.

PARK TITLE COMPANY, LLC

PINE AYR, LLC

RIDGEMORE UTILITY, L.L.C.

SEABROOK ACCUMULATION CORPORATION

STONEBROOK HOMES, INC.

TERRAPIN REALTY, L.L.C.

THE MATZEL & MUMFORD ORGANIZATION, INC

WASHINGTON HOMES AT COLUMBIA TOWN CENTER, L.L.C.

WASHINGTON HOMES, INC.

WESTMINSTER HOMES, INC.

WH PROPERTIES, INC.

WOODLAND LAKE CONDOMINIUMS AT BOWIE NEW TOWN, L.L.C.

 

Sch. A-7

 

EXHIBIT A

 

[FACE OF NOTE]

 

K. HOVNANIAN ENTERPRISES, INC.

 

9.125% Senior Secured Second Lien Notes Due 2020

 

	
 
    	
CUSIP   No.:                                   
    
	
 
    	
 
    
	
No.
    	
$                            [,   or such other amount as is provided in the schedule of exchanges of interests   in global notes attached hereto]
    

 

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 the schedule of exchanges of interests in global notes attached hereto](1), on November 15, 2020.

 

Interest Rate:                      9.125% per annum.

 

Interest Payment Dates:  May 15 and November 15, commencing May 15, 2013.

 

Record Dates:  May 1 and November 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-1

 

IN WITNESS WHEREOF, the Issuer has caused this Note to be signed manually or by facsimile by its duly authorized officer.

 

Dated:

 

	
 
    	
K.   HOVNANIAN ENTERPRISES, INC.
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Name:
    
	
 
    	
 
    	
Title:
    

 

A-2

 

[Form of] Trustee’s Certificate of Authentication

 

This is one of the 9.125% Senior Secured Second Lien Notes Due 2020 described in the Indenture referred to in this Note.

 

	
 
    	
WILMINGTON TRUST, NATIONAL ASSOCIATION, as   Trustee
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Authorized   Signatory
    

 

A-3

 

[REVERSE SIDE OF NOTE]

 

K. HOVNANIAN ENTERPRISES, INC.

 

9.125% Senior Secured Second Lien Notes Due 2020

 

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 November 15, 2020.

 

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 9.125% per annum.

 

Interest will be payable semiannually (to the holders of record of the Notes at the close of business on the May 1 or November 1 immediately preceding the interest payment date) on each interest payment date, commencing May 15, 2013.

 

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 [the date of issuance].  Interest will be computed on the basis of a 360-day year of twelve 30-day months.

 

2.                                      Paying Agent and Registrar.

 

Initially, Wilmington Trust, National Association (the “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; Liens; Guarantees.

 

This is one of the Notes issued under an Indenture dated as of October 2, 2012 (as amended from time to time, the “Indenture”), among the Issuer, the Guarantors party thereto, the Trustee and the Collateral Agent.  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 

 

A-4

 

applicable law, in the event of any inconsistency between the terms of this Note and the terms of the Indenture, the terms of the Indenture will control.

 

The Notes are general obligations of the Issuer, secured by second-priority Liens on the Collateral as described in the Indenture and the Security Documents.  The Indenture limits the original aggregate principal amount of the Notes issued thereunder to $220,000,000 but Additional Notes may be issued pursuant to the Indenture (subject to the conditions stated therein), 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 Issuer, the Guarantors, the Trustee, the Collateral Agent and the Holders.

 

4.                                              Optional Redemption; Redemption with Proceeds of Equity Offering.

 

(a)                       The Issuer may, at its option, redeem the Notes, in whole, at any time, or in part, from time to time, prior to November 15, 2015 at a redemption price equal to the sum of:

 

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

 

(ii) the Make-Whole Amount.

 

The term “Make-Whole Amount” shall mean, in connection with any optional redemption of any Note, the excess, if any, of:

 

(i) the present value at such redemption date of (i) the redemption price of the Note, at November 15, 2015 (such redemption price being set forth in the table appearing in (b) below) plus (ii) all required interest payments due on the Note through November 15, 2015 (excluding accrued but unpaid interest), computed using a discount rate equal to the Treasury Rate as of such redemption date plus 50 basis points; over

 

(ii) 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, as calculated by the Company, 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), most nearly equal to the period from the redemption date to November 15, 2015; provided, however, that if the period from the 

 

A-5

 

redemption date to November 15, 2015 is not equal to the constant maturity of a United States Treasury security for which a weekly average yield is given, the Treasury Rate shall be obtained by linear interpolation (calculated to the nearest one-twelfth of a year) from the weekly average yields of United States Treasury securities for which such yields are given, except that if the period from the redemption date to November 15, 2015 is less than one year, the weekly average yield on actually traded United States Treasury securities adjusted to a constant maturity of one year will be used.

 

(b)          At any time and from time to time on or after November 15, 2015, the Issuer may redeem the Notes, in whole or in part, at a redemption price equal to the percentage of principal amount set forth below plus accrued and unpaid interest thereon, if any, to the applicable redemption date.

 

	
Period Commencing
    	
 
    	
Percentage
    	
 
    
	
November 15, 2015 
    	
 
    	
106.844
    	
%
    
	
November 15, 2016 
    	
 
    	
104.563
    	
%
    
	
November 15, 2017 
    	
 
    	
102.281
    	
%
    
	
November 15, 2018 and thereafter 
    	
 
    	
100.000
    	
%
    

 

At any time and from time to time prior to November 15, 2015, the Issuer may redeem Notes with the net cash proceeds received by the Issuer from any Equity Offering at a redemption price equal to 109.125% of the principal amount plus accrued and unpaid interest to the redemption date, in an aggregate principal amount for all such redemptions not to exceed 35% of the original aggregate principal amount of the Notes (including Additional Notes), provided that:

 

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

 

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

 

If fewer than all of the Notes are being redeemed, the Notes to be redeemed shall be selected in accordance with applicable DTC procedures (subject to compliance with the rules of any securities exchange on which the Notes of such series may be listed).

 

Notes shall be redeemed in denominations of $2,000 principal amount or any multiple of $1,000 in excess thereof.  Notices of any redemption may be given prior to the completion thereof, and may, at the Issuer’s discretion, be subject to one or more conditions precedent, including, but not limited to, completion of a related Equity Offering.

 

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 

 

A-6

 

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.                                      Repurchase Provisions.

 

If a Change of Control occurs, each Holder shall have the right, at such Holder’s option, to require the Issuer to purchase all or any part (equal to $2,000 principal amount or any multiple of $1,000 in excess thereof) of such Holder’s Notes on a date that is no later than 90 days after notice of the Change of Control, at a purchase price equal to 101% of the principal amount thereof, plus accrued and unpaid interest, if any, to the date of repurchase as provided in, and subject to the terms of, the Indenture.

 

6.                                      Mandatory Redemption.

 

There is no sinking fund for, or mandatory redemption of, the Notes.

 

7.                                      Discharge and Defeasance.

 

If the Issuer deposits with the Trustee money and/or U.S. Government Obligations sufficient to pay the then outstanding principal of, premium, interest and accrued interest on the Notes to redemption or maturity, as the case may be, the Issuer, the Company and the Guarantors may in certain circumstances be discharged from the Indenture, the Notes, the Guarantees and the Security Documents or may be discharged from certain of their obligations under certain provisions of the Indenture.  In such circumstances, the Liens securing the Notes and the Guarantees will also be released.

 

8.                                      Registered Form; Denominations; Transfer; Exchange.

 

The Notes are in registered form only without coupons in denominations of $2,000 principal amount and any multiple of $1,000 in excess thereof.  A Holder may register the transfer or exchange of Notes in accordance with the Indenture.  The Trustee may require a Holder, among other things, to furnish appropriate endorsements and transfer documents and to pay any taxes and fees required by law or permitted by the Indenture.  Pursuant to the Indenture, there are certain periods during which the Trustee will not be required to issue, register the transfer of, or exchange any Note or certain portions of a Note.

 

9.                                      Persons Deemed Owners.

 

The registered Holder of this Note shall be treated as the owner of it for all purposes.

 

A-7

 

10.                               Defaults and Remedies.

 

If an Event of Default occurs and is continuing, the Trustee or the Holders of at least 25% in principal amount of the Notes may declare all the Notes to be due and payable immediately.  If a bankruptcy or insolvency default with respect to the Issuer or the Company occurs and is continuing, the Notes automatically become immediately due and payable.  Holders may not enforce the Indenture or the Notes except as provided in the Indenture.  The Trustee may require indemnity satisfactory to it before it enforces the Indenture or the Notes.  Subject to certain limitations, Holders of a majority in principal amount of the Notes then outstanding may direct the Trustee in its exercise of remedies.

 

11.                               Amendment, Supplement and Waiver.

 

Subject to certain exceptions, the Indenture, the Notes, the Guarantees and the Security Documents may be amended or supplemented, or future compliance therewith may be waived, with the consent of the Holders of a majority in principal amount of the outstanding Notes.  Without notice to or the consent of any Holder, the Company, the Issuer, the Guarantors, the Trustee, the Collateral Agent and the Mortgage Tax Collateral Agent, as applicable, may amend or supplement the Indenture, the Notes, the Guarantees or the Security Documents 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.  Without the consent of the Holders of at least 662/3% in principal amount of the Notes, the Company, the Issuer, the Guarantors, the Trustee and the Collateral Agent may not effect a release of all or substantially all of the Collateral other than pursuant to the terms of the Security Documents or as otherwise permitted under the Indenture.

 

12.                               Trustee Dealings With Issuer.

 

The Trustee, in its individual or any other capacity, may become the owner or pledgee of Notes and may otherwise deal with the Issuer or its affiliates, with the same rights as if it were not Trustee; however, if it acquires any conflicting interest (as defined in the Trust Indenture Act), it must eliminate such conflict, apply to the Commission for permission to continue or resign.

 

13.                               No Recourse Against Others.

 

An incorporator, and any past, present or future director, officer, partner, employee or stockholder, as such, of the Issuer, the Company or the Guarantors shall not have any liability for any obligations of the Issuer, the Company or the Guarantors under the Notes, the Indenture or the Guarantees or for any claim based on, in respect of, or by reason of, such obligations or their creation.  Each Holder by accepting a Note waives and releases all such liability.  The waiver and release are part of the consideration for the issue of the Notes.

 

A-8

 

14.                               Governing Law.

 

THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.

 

15.                               CUSIP Numbers.

 

Pursuant to a recommendation promulgated by the Committee on Uniform Note Identification Procedures, the Issuer has caused CUSIP numbers to be printed on the Notes, and the Trustee may use CUSIP numbers in notices as a convenience to Holders.  No representation is made as to the accuracy of such numbers either as printed on the Notes or as contained in any notice and reliance may be placed only on the other identification numbers placed thereon.

 

16.                               Authentication.

 

This Note is not valid until the Trustee (or Authenticating Agent) manually signs the certificate of authentication on the other side of this Note.

 

17.                               Abbreviations.

 

Customary abbreviations may be used in the name of a Holder or an assignee, such as:  TEN COM (= tenants in common), TEN ENT (= tenants by the entireties), JT TEN (= joint tenants with right of survivorship and not as tenants in common), CUST (= Custodian) and U/G/M/A/ (= Uniform Gifts to Minors Act).

 

The Issuer will furnish a copy of the Indenture to any Holder upon written request and without charge.

 

A-9

 

[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(2):
    	
 
    
						

 

(2)  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-10

 

[THE FOLLOWING PROVISION TO BE INCLUDED ON ALL CERTIFICATES BEARING A RESTRICTED LEGEND]

 

In connection with any transfer of this Note occurring prior to the date which is the date following the first anniversary of the original issuance of this Note, the undersigned confirms that such transfer is made without utilizing any general solicitation or general advertising in connection with the transfer and further as follows:

 

Check One

 

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 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-11

 

	
Signature   Guarantee:(3)
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
By:
    	
 
    	
 
    	
 
    
	
 
    	
(To be   executed by an executive officer)
    	
 
    

 

(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-12

 

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:(4) 
    	
 
    	
 
    
						

 

(4)  Signatures must be guaranteed by an “eligible guarantor institution” meeting the requirements of the Trustee, which requirements include membership or participation in the Note Transfer Agent Medallion Program (“STAMP”) or such other “signature guarantee program” as may be determined by the Trustee in addition to, or in substitution for, STAMP, all in accordance with the Securities Exchange Act of 1934, as amended.

 

A-13

 

SCHEDULE OF EXCHANGES OF INTERESTS IN GLOBAL NOTES(5)

 

The following exchanges of a part of this Global Note for Certificated Notes or an interest in another Global Note, or exchanges of a part of another Global Note or Certificated Note for an interest in this Global Note, have been made:

 

	
Date of Exchange
    	
 
    	
Amount of
   decrease in
   principal amount
   of this Global Note
    	
 
    	
Amount of
   increase in
   principal amount
   of this Global Note
    	
 
    	
Principal amount
   of this Global Note
   following such
   decrease or
   increase
    	
 
    	
Signature of
   authorized officer
   of Trustee
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    

 

(5)  For Global Notes

 

A-14

 

[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 on the Issuer’s 9.125% Senior Secured Second Lien Notes due 2020 (the “Notes”), whether at maturity or on an interest payment date, by acceleration or otherwise, on the Notes, to the extent lawful, and of all other obligations of the Issuer to the Holders or the Trustee all in accordance with the terms set forth in Article 6 of the Indenture and (ii) in case of any extension of time of payment or renewal of any Notes or any of such other obligations, that the same will be promptly paid in full when due or performed in accordance with the terms of the extension or renewal, whether at stated maturity, by acceleration or otherwise.  This Guarantee is secured by second-priority Liens on the Collateral as described in the Indenture and the Security Documents.

 

No past, present or future stockholder, officer, director, employee, partner or incorporator, as such, of any of the Guarantors shall have any liability under the Guarantee evidenced hereby by reason of such person’s status as stockholder, officer, director, employee, partner or incorporator. Each Holder of a Note by accepting a Note waives and releases all such liability. This waiver and release are part of the consideration for the issuance of the Guarantee.

 

Each Holder of a Note by accepting a Note agrees that any Guarantor named below shall have no further liability with respect to its Guarantee if such Guarantor otherwise ceases to be liable in respect of its Guarantee in accordance with the terms of the Indenture.

 

The Guarantee evidenced hereby shall not be valid or obligatory for any purpose until the certificate of authentication on the Notes upon which the Guarantee is noted shall have been executed by the Trustee under the Indenture by the manual signature of one of its authorized officers.

 

This Guarantee shall be governed by, and construed in accordance with, the laws of the State of New York.

 

ARBOR TRAILS, LLC

AUDDIE ENTERPRISES, L.L.C.

BUILDER SERVICES NJ, L.L.C.

BUILDER SERVICES PA, L.L.C.

DULLES COPPERMINE, L.L.C.

EASTERN NATIONAL TITLE AGENCY, LLC

EASTERN TITLE AGENCY, INC.

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

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

 

A-15

 

FOUNDERS TITLE AGENCY, INC.

GLENRISE GROVE, L.L.C.

GOVERNOR’S ABSTRACT CO., INC.

HOMEBUYERS FINANCIAL SERVICES, L.L.C.

HOVNANIAN DEVELOPMENTS OF FLORIDA, INC.

HOVNANIAN ENTERPRISES, INC.

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

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

HOVNANIAN LAND INVESTMENT GROUP, L.L.C.

K. HOV IP, II, INC.

K. HOV IP, INC.

K. HOVNANIAN ACQUISITIONS, INC.

K. HOVNANIAN AT 4S, LLC

K. HOVNANIAN AT ACQUA VISTA, LLC

K. HOVNANIAN AT ALISO, LLC

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

K. HOVNANIAN AT ANDALUSIA, LLC

K. HOVNANIAN AT ARBOR HEIGHTS, LLC

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

K. HOVNANIAN AT BAKERSFIELD 463, L.L.C.

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

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

K. HOVNANIAN AT BELLA LAGO, LLC

K. HOVNANIAN AT BENSALEM, LLC

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

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

K. HOVNANIAN AT BRANCHBURG, L.L.C.

K. HOVNANIAN AT BRIDGEPORT, INC.

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

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

K. HOVNANIAN AT CAMERON CHASE, INC.

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

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

K. HOVNANIAN AT CARLSBAD, LLC

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

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

K. HOVNANIAN AT CHARTER WAY, LLC

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

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

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

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

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

K. HOVNANIAN AT CORTEZ HILL, LLC

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

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

 

A-16

 

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

K. HOVNANIAN AT DOMINGUEZ HILLS, INC.

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

K. HOVNANIAN AT EASTLAKE, LLC

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

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

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

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

K. HOVNANIAN AT EL DORADO RANCH II, L.L.C.

K. HOVNANIAN AT EL DORADO RANCH, L.L.C.

K. HOVNANIAN AT ENCINITAS RANCH, LLC

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

K. HOVNANIAN AT FIDDYMENT RANCH, LLC

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

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

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

K. HOVNANIAN AT FOREST MEADOWS, L.L.C.

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

K. HOVNANIAN AT FRANKLIN III, LLC

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

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

K. HOVNANIAN AT FRESNO, LLC

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

K. HOVNANIAN AT GILROY, LLC

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 HAWTHORNE, L.L.C.

K. HOVNANIAN AT HERSHEY’S MILL, INC.

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

K. HOVNANIAN AT HOWELL, LLC

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

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

K. HOVNANIAN AT JACKSON, L.L.C.

K. HOVNANIAN AT JAEGER RANCH, LLC

K. HOVNANIAN AT JERSEY CITY IV, L.L.C.

K. HOVNANIAN AT JERSEY CITY V URBAN RENEWAL COMPANY, L.L.C.

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

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

K. HOVNANIAN AT LA COSTA, LLC

K. HOVNANIAN AT LA HABRA KNOLLS, LLC

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

K. HOVNANIAN AT LAKE RANCHO VIEJO, LLC

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

 

A-17

 

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

K. HOVNANIAN AT LEE SQUARE, L.L.C.

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

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

K. HOVNANIAN AT LONG HILL, 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 MAHWAH VI, INC.

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

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

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

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

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

K. HOVNANIAN AT MANTECA, LLC

K. HOVNANIAN AT MAPLE AVENUE, 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 MELANIE MEADOWS, LLC

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

K. HOVNANIAN AT MENIFEE, LLC

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

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

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

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

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

K. HOVNANIAN AT MONROE II, INC.

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

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

K. HOVNANIAN AT MONTVALE II, LLC

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

K. HOVNANIAN AT MOSAIC, LLC

K. HOVNANIAN AT MUIRFIELD, LLC

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

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

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

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

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

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

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

 

A-18

 

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

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

K. HOVNANIAN AT NORTHERN WESTCHESTER, INC.

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

K. HOVNANIAN AT OCEAN TOWNSHIP, INC

K. HOVNANIAN AT OCEAN WALK, INC.

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

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

K. HOVNANIAN AT OLDE ORCHARD, LLC

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

K. HOVNANIAN AT PARK LANE, LLC

K. HOVNANIAN AT PARKSIDE, LLC

K. HOVNANIAN AT PARSIPPANY, L.L.C.

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

K. HOVNANIAN AT PIAZZA D’ORO,  L.L.C.

K. HOVNANIAN AT PIAZZA SERENA, L.L.C

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

K. HOVNANIAN AT PORT IMPERIAL URBAN RENEWAL IV, L.L.C.

K. HOVNANIAN AT PORT IMPERIAL URBAN RENEWAL V, L.L.C.

K. HOVNANIAN AT PORT IMPERIAL URBAN RENEWAL VI, L.L.C.

K. HOVNANIAN AT PORT IMPERIAL URBAN RENEWAL VII, L.L.C.

K. HOVNANIAN AT PORT IMPERIAL URBAN RENEWAL VIII, L.L.C.

K. HOVNANIAN AT POSITANO, LLC

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

K. HOVNANIAN AT RANCHO SANTA MARGARITA, LLC

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

K. HOVNANIAN AT RAPHO, L.L.C

K. HOVNANIAN AT RIDGEMONT, L.L.C.

K. HOVNANIAN AT RIVERBEND, LLC

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

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

K. HOVNANIAN AT SAGE, L.L.C.

K. HOVNANIAN AT SANTA NELLA, LLC

K. HOVNANIAN AT SAWMILL, INC.

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

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

K. HOVNANIAN AT SEASONS LANDING, LLC

K. HOVNANIAN AT SHELDON GROVE, LLC

K. HOVNANIAN AT SHREWSBURY, LLC

K. HOVNANIAN AT SILVER SPRING, L.L.C.

K. HOVNANIAN AT SKYE ISLE, LLC

K. HOVNANIAN AT SMITHVILLE, INC.

K. HOVNANIAN AT SOMERS POINT, L.L.C.

K. HOVNANIAN AT SOUTH BRUNSWICK II, LLC

K. HOVNANIAN AT SOUTH BRUNSWICK, L.L.C.

 

A-19

 

K. HOVNANIAN AT STANTON, LLC

K. HOVNANIAN AT STATION SQUARE, L.L.C.

K. HOVNANIAN AT SUNRIDGE PARK, LLC

K. HOVNANIAN AT SYCAMORE, INC.

K. HOVNANIAN AT THE CROSBY, LLC

K. HOVNANIAN AT THE GABLES, LLC

K. HOVNANIAN AT THE MONARCH, L.L.C.

K. HOVNANIAN AT THE PRESERVE, LLC

K. HOVNANIAN AT THOMPSON RANCH, LLC

K. HOVNANIAN AT THORNBURY, INC.

K. HOVNANIAN AT TRAIL RIDGE, LLC

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

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

K. HOVNANIAN AT UPPER MAKEFIELD I, INC.

K. HOVNANIAN AT UPPER PROVIDENCE, LLC

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

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

K. HOVNANIAN AT VALLE DEL SOL, LLC

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

K. HOVNANIAN AT VICTORVILLE, L.L.C.

K. HOVNANIAN AT VINELAND, L.L.C.

K. HOVNANIAN AT VISTA DEL SOL, L.L.C.

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

K. HOVNANIAN AT WASHINGTON, L.L.C.

K. HOVNANIAN AT WATERSTONE, LLC

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

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

K. HOVNANIAN AT WEST VIEW ESTATES, L.L.C.

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

K. HOVNANIAN AT WESTSHORE, LLC

K. HOVNANIAN AT WHEELER RANCH, LLC

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

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

K. HOVNANIAN AT WINCHESTER, LLC

K. HOVNANIAN AT WOODCREEK WEST, LLC

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

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

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

K. HOVNANIAN CLASSICS, L.L.C.

K. HOVNANIAN COMMUNITIES, INC.

K. HOVNANIAN COMPANIES OF CALIFORNIA, INC.

K. HOVNANIAN COMPANIES OF MARYLAND, INC.

K. HOVNANIAN COMPANIES OF NEW YORK, INC.

K. HOVNANIAN COMPANIES OF PENNSYLVANIA, INC.

K. HOVNANIAN COMPANIES OF SOUTHERN CALIFORNIA, INC.

 

A-20

 

K. HOVNANIAN COMPANIES, LLC

K. HOVNANIAN CONSTRUCTION II, INC

K. HOVNANIAN CONSTRUCTION III, INC

K. HOVNANIAN CONSTRUCTION MANAGEMENT, INC.

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

K. HOVNANIAN 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 GEORGIA, INC.

K. HOVNANIAN DEVELOPMENTS OF ILLINOIS, INC.

K. HOVNANIAN DEVELOPMENTS OF KENTUCKY, INC.

K. HOVNANIAN DEVELOPMENTS OF MARYLAND, INC.

K. HOVNANIAN DEVELOPMENTS OF MINNESOTA, INC.

K. HOVNANIAN DEVELOPMENTS OF NEW JERSEY II, INC.

K. HOVNANIAN DEVELOPMENTS OF NEW JERSEY, INC.

K. HOVNANIAN DEVELOPMENTS OF NEW YORK, INC.

K. HOVNANIAN DEVELOPMENTS OF NORTH CAROLINA, INC.

K. HOVNANIAN DEVELOPMENTS OF OHIO, INC.

K. HOVNANIAN DEVELOPMENTS OF PENNSYLVANIA, INC.

K. HOVNANIAN DEVELOPMENTS OF SOUTH CAROLINA, INC.

K. HOVNANIAN DEVELOPMENTS OF TEXAS, INC.

K. HOVNANIAN DEVELOPMENTS OF VIRGINIA, INC.

K. HOVNANIAN DEVELOPMENTS OF WEST VIRGINIA, INC.

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

K. HOVNANIAN ENTERPRISES, INC.

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

K. HOVNANIAN FAIRWAYS AT WESTWORTH, LLC

K. HOVNANIAN FIRST HOMES, L.L.C.

K. HOVNANIAN FLORIDA REALTY, L.L.C.

K. HOVNANIAN FOUR SEASONS @ HISTORIC VIRGINIA, LLC

K. HOVNANIAN FOUR SEASONS AT GOLD HILL, LLC

K. HOVNANIAN GREAT WESTERN BUILDING COMPANY, LLC

K. HOVNANIAN GREAT WESTERN HOMES, LLC

K. HOVNANIAN HAMPTONS AT OAK CREEK II, L.L.C.

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

K. HOVNANIAN HOMES - DFW, L.L.C.

K. HOVNANIAN HOMES AT CAMERON STATION, LLC

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 GREENWAY FARM PARK TOWNS, L.L.C.

K. HOVNANIAN HOMES AT GREENWAY FARM, L.L.C.

K. HOVNANIAN HOMES AT JONES STATION 1, L.L.C.

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

 

A-21

 

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

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

K. HOVNANIAN HOMES AT THE HIGHLANDS, LLC

K. HOVNANIAN HOMES NORTHERN CALIFORNIA, INC.

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

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

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

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

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

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

K. HOVNANIAN HOMES OF NORTH CAROLINA, INC.

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

K. HOVNANIAN HOMES OF SOUTH CAROLINA, LLC

K. HOVNANIAN HOMES OF VIRGINIA, INC.

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

K. HOVNANIAN LIBERTY ON BLUFF CREEK, LLC

K. HOVNANIAN MANALAPAN ACQUISITION, LLC

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

K. HOVNANIAN NORTH JERSEY ACQUISITIONS, L.L.C.

K. HOVNANIAN NORTHEAST SERVICES, L.L.C.

K. HOVNANIAN OF HOUSTON II, L.L.C.

K. HOVNANIAN OHIO REALTY, L.L.C.

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

K. HOVNANIAN PA REAL ESTATE, INC.

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

K. HOVNANIAN PORT IMPERIAL URBAN RENEWAL, INC.

K. HOVNANIAN PROPERTIES OF RED BANK, INC.

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

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

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

K. HOVNANIAN STANDING ENTITY, L.L.C.

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

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

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

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

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

K. HOVNANIAN T&C HOMES AT FLORIDA, L.L.C.

K. HOVNANIAN T&C HOMES AT ILLINOIS, L.L.C.

K. HOVNANIAN TIMBRES AT ELM CREEK, LLC

K. HOVNANIAN VENTURE I, L.L.C.

K. HOVNANIAN WINDWARD HOMES, LLC

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

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

K. HOVNANIAN’S FOUR SEASONS AT BEAUMONT, LLC

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

 

A-22

 

K. HOVNANIAN’S FOUR SEASONS AT HEMET, LLC

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

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

K. HOVNANIAN’S FOUR SEASONS AT LOS BANOS, LLC

K. HOVNANIAN’S FOUR SEASONS AT MORENO VALLEY, L.L.C.

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

K. HOVNANIAN’S FOUR SEASONS AT PALM SPRINGS, LLC

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

K. HOVNANIAN’S FOUR SEASONS AT RUSH CREEK II, LLC

K. HOVNANIAN’S FOUR SEASONS AT RUSH CREEK, L.L.C.

K. HOVNANIAN’S FOUR SEASONS AT SILVER MAPLE FARM, L.L.C.

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

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

K. HOVNANIAN’S FOUR SEASONS, LLC

K. HOVNANIAN’S PARKSIDE AT TOWNGATE, L.L.C.

KHIP, L.L.C.

LANDARAMA, INC.

M&M AT CHESTERFIELD, LLC

M&M AT CRESCENT COURT, L.L.C.

M&M AT WEST ORANGE, L.L.C.

M&M AT WHEATENA URBAN RENEWAL, L.L.C.

MATZEL & MUMFORD AT EGG HARBOR, L.L.C.

MATZEL & MUMFORD AT SOUTH BOUND BROOK URBAN RENEWAL, L.L.C.

MCNJ, INC.

MIDWEST BUILDING PRODUCTS & CONTRACTOR SERVICES OF PENNSYLVANIA, L.L.C.

MIDWEST BUILDING PRODUCTS & CONTRACTOR SERVICES OF WEST VIRGINIA, L.L.C.

MIDWEST BUILDING PRODUCTS & CONTRACTOR SERVICES, L.L.C.

MMIP, L.L.C.

NEW LAND TITLE AGENCY OF TEXAS, LLC

NEW LAND TITLE AGENCY, L.L.C.

PADDOCKS, L.L.C.

PARK TITLE COMPANY, LLC

PINE AYR, LLC

RIDGEMORE UTILITY, L.L.C.

SEABROOK ACCUMULATION CORPORATION

STONEBROOK HOMES, INC.

TERRAPIN REALTY, L.L.C.

THE MATZEL & MUMFORD ORGANIZATION, INC

WASHINGTON HOMES AT COLUMBIA TOWN CENTER, L.L.C.

WASHINGTON HOMES, INC.

WESTMINSTER HOMES, INC.

WH PROPERTIES, INC.

WOODLAND LAKE CONDOMINIUMS AT BOWIE NEW TOWN, L.L.C.

 

A-23

 

	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Name:
    
	
 
    	
 
    	
Title:   Authorized   Officer
    

 

[This Guarantee relates to K. Hovnanian Enterprises, Inc.’s  9.125% Senior Secured Second Lien Notes due 2020 — CUSIP No.:                          ]

 

A-24

 

EXHIBIT B

 

SUPPLEMENTAL INDENTURE

 

dated as of                   ,           

 

among

 

K. HOVNANIAN ENTERPRISES, INC.,

 

HOVNANIAN ENTERPRISES, INC.,

 

The Other Guarantors Party Hereto

 

and

 

WILMINGTON TRUST, NATIONAL ASSOCIATION

 

as Trustee and Collateral Agent

 

 

9.125% Senior Secured Second Lien Notes due 2020

 

B-1

 

THIS [          ] SUPPLEMENTAL INDENTURE (this “[         ] Supplemental Indenture”), entered into as of             ,        , among K. Hovnanian Enterprises, Inc., a California corporation (the “Issuer”), Hovnanian Enterprises, Inc., a Delaware corporation (the “Company”), [list each new guarantor and its jurisdiction of incorporation] (each an “Undersigned”) and Wilmington Trust, National Association, a national banking association, as Trustee (the “Trustee”) and as Collateral Agent (the “Collateral Agent”).

 

RECITALS

 

WHEREAS, the Issuer, Company, the other Guarantors party thereto, the Trustee and the Collateral Agent entered into an indenture, dated as of October 2, 2012 (the “Indenture”), relating to the Issuer’s 9.125% Senior Secured Second Lien Notes due 2020 (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 shall 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 shall henceforth be read together.

 

SECTION 6.  The Trustee shall not be responsible in any manner whatsoever for or in respect of the validity or sufficiency of this Supplemental 

 

B-2

 

Indenture or for or in respect of the Recitals contained herein, all of which are made solely by the Issuer, the Company and each of the undersigned.

 

B-3

 

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:
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
WILMINGTON TRUST, NATIONAL ASSOCIATION, as   Trustee and Collateral Agent
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Name:
    
	
 
    	
 
    	
Title:
    

 

B-4

 

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, THE COMPANY OR ANY OF ITS SUBSIDIARIES, (B) TO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS A QIB PURCHASING FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QIB IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (C) IN AN OFFSHORE TRANSACTION MEETING THE REQUIREMENTS OF RULE 903 OR 904 OF REGULATION S OF THE SECURITIES ACT, (D) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144 UNDER THE SECURITIES ACT, (E) TO AN IAI THAT, PRIOR TO SUCH TRANSFER, FURNISHES THE TRUSTEE A SIGNED LETTER CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS RELATING TO THE TRANSFER OF THIS NOTE (THE FORM OF WHICH CAN BE OBTAINED FROM THE TRUSTEE) AND, IF SUCH TRANSFER IS IN RESPECT OF AN AGGREGATE PRINCIPAL AMOUNT OF NOTES LESS THAN $250,000, AN OPINION OF COUNSEL ACCEPTABLE TO THE ISSUER AND THE TRUSTEE THAT SUCH TRANSFER IS IN COMPLIANCE WITH THE SECURITIES ACT, (F) IN ACCORDANCE WITH ANOTHER EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT (AND BASED UPON AN OPINION OF COUNSEL ACCEPTABLE TO THE ISSUER AND THE TRUSTEE) OR (G) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT AND, IN EACH CASE, IN ACCORDANCE 

 

C-1

 

WITH THE APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR ANY OTHER APPLICABLE JURISDICTION AND

 

(3)         AGREES THAT IT WILL DELIVER TO EACH PERSON TO WHOM THIS NOTE OR AN INTEREST HEREIN IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND.

 

AS USED HEREIN, THE TERMS “OFFSHORE TRANSACTIONS” AND “UNITED STATES” HAVE THE MEANINGS GIVEN TO THEM BY RULE 902 OF REGULATION S UNDER THE SECURITIES ACT.  THE INDENTURE CONTAINS A PROVISION REQUIRING THE TRUSTEE TO REFUSE TO REGISTER ANY TRANSFER OF THIS NOTE IN VIOLATION OF THE FOREGOING.

 

C-2

 

EXHIBIT D

 

DTC LEGEND

 

UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION (“DTC”), TO THE ISSUER OR 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

 

                 ,        

 

To:                             Wilmington Trust, National Association

Rodney Square North

1100 North Market Street

Wilmington, DE 19890-1600

Facsimile:  302-636-4149

Attention:  Corporate Client Services

 

	
Re:
    	
K.   Hovnanian Enterprises, Inc.
    
	
 
    	
9.125%   Senior Secured Second Lien Notes due 2020 (the “Notes”)
    
	
 
    	
Issued   under the Indenture (the “Indenture”)   dated as
    
	
 
    	
as of   October 2, 2012 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

 

E-1

 

on our behalf reasonably believed that the buyer was outside the United States or (b) the transaction was executed in, on or through the facilities of a designated offshore securities market, and neither we nor any person acting on our behalf knows that the transaction was pre-arranged with a buyer in the United States.

 

3.                                      Neither we, any of our affiliates, nor any person acting on our or their behalf has made any directed selling efforts in the United States with respect to the Notes.

 

4.                                      The proposed transfer of Notes is not part of a plan or scheme to evade the registration requirements of the Securities Act.

 

5.                                      If we are a dealer or a person receiving a selling concession, fee or other remuneration in respect of the Notes, and the proposed transfer takes place during the Restricted Period (as defined in the Indenture), or we are an officer or director of the Company or an Initial Purchaser (as defined in the Indenture), we certify that the proposed transfer is being made in accordance with the provisions of Rule 904(b) of Regulation S.

 

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

 

E-2

 

we did not pre-arrange the transaction in the United States.

 

3.                                      The proposed exchange of Notes is not part of a plan or scheme to evade the registration requirements of the Securities Act.

 

You and the Issuer are entitled to rely upon this Certificate and are irrevocably authorized to produce this Certificate or a copy hereof to any interested party in any administrative or legal proceeding or official inquiry with respect to the matters covered hereby.

 

 

	
 
    	
Very   truly yours,
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
[NAME   OF SELLER (FOR TRANSFERS) OR OWNER (FOR EXCHANGES)]
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Name:
    
	
 
    	
 
    	
Title:
    
	
 
    	
 
    	
Address:
    
	
 
    	
 
    	
 
    
	
Date:
    	
 
    	
 
    	
 
    
					

 

Upon transfer of certificated Notes, the Notes would be registered in the name of the new beneficial owner as follows:

 

 

	
By:
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
Date:
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Taxpayer   ID number:
    	
 
    	
 
    

 

E-3

 

EXHIBIT F

 

Rule 144A Certificate

 

                   ,        

 

To:                             Wilmington Trust, National Association

Rodney Square North

1100 North Market Street

Wilmington, DE 19890-1600

Facsimile:  302-636-4149

Attention:  Corporate Client Services

 

	
Re:
    	
K.   Hovnanian Enterprises, Inc.
    
	
 
    	
9.125%   Senior Secured Second Lien Notes due 2020 (the “Notes”)
    
	
 
    	
Issued   under the Indenture (the “Indenture”)   dated as
    
	
 
    	
as of   October 2, 2012 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.

 

F-1

 

You and the Issuer are entitled to rely upon this Certificate and are irrevocably authorized to produce this Certificate or a copy hereof to any interested party in any administrative or legal proceeding or official inquiry with respect to the matters covered hereby.

 

 

	
 
    	
Very   truly yours,
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
[NAME OF PURCHASER (FOR TRANSFERS) OR OWNER (FOR   EXCHANGES)]
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Name:
    
	
 
    	
 
    	
Title:
    
	
 
    	
 
    	
Address:
    
	
 
    	
 
    	
 
    
	
Date:
    	
 
    	
 
    	
 
    	
 
    
					

 

Upon transfer of certificated Notes, the Notes would be registered in the name of the new beneficial owner as follows:

 

	
By:
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
Date:
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
Taxpayer ID number:
    	
 
    	
 
    	
 
    

 

F-2

 

EXHIBIT G

 

Institutional Accredited Investor Certificate

 

To:                             Wilmington Trust, National Association

Rodney Square North

1100 North Market Street

Wilmington, DE 19890-1600

Facsimile:  302-636-4149

Attention:  Corporate Client Services

 

	
Re:
    	
K.   Hovnanian Enterprises, Inc.
    
	
 
    	
9.125%   Senior Secured Second Lien Notes due 2020 (the “Notes”)
    
	
 
    	
Issued   under the Indenture (the “Indenture”)   dated as
    
	
 
    	
as of   October 2, 2012 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.

 

G-1

 

3.                                      We have such knowledge and experience in financial and business matters that we are capable of evaluating the merits and risks of an investment in the Notes and we and any accounts for which we are acting are able to bear the economic risks of and an entire loss of our or their investment in the Notes.

 

4.                                      We are not acquiring the Notes or beneficial interest therein with a view to any distribution thereof in a transaction that would violate the Securities Act or the securities laws of any State of the United States or any other applicable jurisdiction; provided, that the disposition of our property and the property of any accounts for which we are acting as fiduciary will remain at all times within our and their control.

 

5.                                      We acknowledge that the Notes have not been registered under the Securities Act and that the Notes may not be offered or sold within the United States or to or for the benefit of U.S. persons except as set forth below.

 

6.                                      The principal amount of Notes to which this Certificate relates is at least equal to $250,000.

 

We agree for the benefit of the Issuer and the Guarantors, on our own behalf and on behalf of each account for which we are acting, that we will not resell or otherwise transfer this Note or any beneficial interest herein except (A) to the Issuer, the Company or any of its subsidiaries, (B) to a person whom we reasonably believe is a QIB purchasing for its own account or for the account of a QIB in a transaction meeting the requirements of Rule 144A, (C) in an offshore transaction meeting the requirements of Rule 903 or 904 of Regulation S of the Securities Act, (D) in a transaction meeting the requirements of Rule 144 under the Securities Act, (E) to an Institutional Accredited Investor that, prior to such transfer, furnishes the Trustee a signed letter containing certain representations and agreements relating to the transfer of the Notes (the form of which can be obtained from the Trustee) and, if such transfer is in respect of an aggregate principal amount of Notes less than $250,000, an opinion of counsel acceptable to the Issuer and the Trustee that such transfer is in compliance with the Securities Act, (F) in accordance with another exemption form the registration requirements of the Securities Act (and based upon an opinion of counsel acceptable to the Issuer and the Trustee) or (G) pursuant to an effective Registration Statement and, in each case, in accordance with the applicable securities laws of any state of the United States or any other applicable jurisdiction.

 

G-2

 

Prior to the registration of any transfer or exchange, we acknowledge that the Issuer reserves the right to require the delivery of such legal opinions, certifications or other evidence as may reasonably be required in order to determine that the proposed transfer or exchange is being made in compliance with the Securities Act and applicable state securities laws.  We acknowledge that no representation is made as to the availability of any Rule 144 exemption from the registration requirements of the Securities Act.

 

We understand that the Trustee will not be required to accept for registration of transfer or exchange any Notes acquired by us, except upon presentation of evidence satisfactory to the Issuer and the Trustee that the foregoing restrictions on transfer have been complied with.  We further agree to deliver to each person acquiring any of the Notes or any beneficial interest therein from us a notice advising such person that resales of the Notes are restricted as stated herein.

 

We agree to notify you promptly in writing if any of our acknowledgments, representations or agreements herein ceases to be accurate and complete.

 

We represent to you that we have full power to make the foregoing acknowledgments, representations and agreements on our own behalf and on behalf of any account for which we are acting.

 

You and the Issuer are entitled to rely upon this Certificate and are irrevocably authorized to produce this Certificate or a copy hereof to any interested party in any administrative or legal proceeding or official inquiry with respect to the matters covered hereby.

 

	
 
    	
Very   truly yours,
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
[NAME OF PURCHASER (FOR TRANSFERS) OR OWNER (FOR   EXCHANGES)]
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Name:
    
	
 
    	
 
    	
Title:
    
	
 
    	
 
    	
Address:
    
	
 
    	
 
    	
 
    
	
Date:
    	
 
    	
 
    	
 
    	
 
    
					

 

G-3

 

Upon transfer of certificated Notes, the Notes would be registered in the name of the new beneficial owner as follows:

 

 

	
By:
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
Date:
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
Taxpayer ID number:
    	
 
    	
 
    	
 
    

 

G-4

 

EXHIBIT H

 

[COMPLETE FORM I OR FORM II AS APPLICABLE.]

 

[FORM I]

 

Certificate of Beneficial Ownership

 

To:                             Wilmington Trust, National Association

Rodney Square North

1100 North Market Street

Wilmington, DE 19890-1600

Facsimile:  302-636-4149

Attention:  Corporate Client Services

 

[Euroclear Bank S.A./N.V., as operator of the Euroclear System] OR

 

[Clearstream Banking, société anonyme]

 

	
Re:
    	
K.   Hovnanian Enterprises, Inc.
    
	
 
    	
9.125%   Senior Secured Second Lien Notes due 2020 (the “Notes”)
    
	
 
    	
Issued   under the Indenture (the “Indenture”)   dated as
    
	
 
    	
as   of October 2, 2012 relating to the Notes
    	
 
    

 

Ladies and Gentlemen:

 

We are the beneficial owner of $       principal amount of Notes issued under the Indenture and represented by a Regulation S Temporary Global Note (as defined in the Indenture).

 

[CHECK A OR B AS APPLICABLE.]

 

o  A.                            We are a non-U.S. person (within the meaning of Regulation S under the Securities Act of 1933, as amended).

 

o  B.                            We are a U.S. person (within the meaning of Regulation S under the Securities Act of 1933, as amended) that purchased the Notes in a transaction that did not require registration under the Securities Act of 1933, as amended.

 

You and the Issuer are entitled to rely upon this Certificate and are irrevocably authorized to produce this Certificate or a copy hereof to any 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:                             Wilmington Trust Company

Rodney Square North

1100 North Market Street

Wilmington, DE 19890-1600

Facsimile:  302-636-4149

Attention:  Corporate Client Services

 

	
Re:
    	
K.   Hovnanian Enterprises, Inc.
    
	
 
    	
9.125%   Senior Secured Second Lien Notes due 2020 (the “Notes”)
    
	
 
    	
Issued   under the Indenture (the “Indenture”)   dated as
    
	
 
    	
as of   October 2, 2012 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.

 

H-2

 

We further certify that (i) we are not submitting herewith for exchange any portion of such Regulation S Temporary Global Note excepted in such Member Organization certifications and (ii) as of the date hereof we have not received any notification from any Member Organization to the effect that the statements made by such Member Organization with respect to any portion of such Regulation S Temporary Global Note submitted herewith for exchange are no longer true and cannot be relied upon as of the date hereof.

 

You and the Issuer are entitled to rely upon this Certificate and are irrevocably authorized to produce this Certificate or a copy hereof to any interested party in any administrative or legal proceeding or official inquiry with respect to the matters covered hereby.

 

	
 
    	
 
    	
Yours   faithfully,
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
[EUROCLEAR   BANK S.A./N.V., as operator of the Euroclear System]  
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
OR
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
[CLEARSTREAM   BANKING, société anonyme]
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
By:
    	
 
    
	
 
    	
 
    	
 
    	
Name:
    
	
 
    	
 
    	
 
    	
Title:
    
	
 
    	
 
    	
 
    	
Address:
    
	
 
    	
 
    	
 
    	
 
    
	
Date:
    	
 
    	
 
    	
 
    	
 
    
					

 

H-3

 

EXHIBIT I

 

THIS NOTE IS A TEMPORARY GLOBAL NOTE.  PRIOR TO THE EXPIRATION OF THE RESTRICTED PERIOD APPLICABLE HERETO, BENEFICIAL INTERESTS HEREIN MAY NOT BE HELD BY ANY PERSON OTHER THAN (1) A NON-U.S. PERSON OR (2) A U.S. PERSON THAT PURCHASED SUCH INTEREST IN A TRANSACTION EXEMPT FROM REGISTRATION UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”).  BENEFICIAL INTERESTS HEREIN ARE NOT EXCHANGEABLE FOR CERTIFICATED NOTES OTHER THAN A PERMANENT GLOBAL NOTE IN ACCORDANCE WITH THE TERMS OF THE INDENTURE. TERMS IN THIS LEGEND ARE USED AS USED IN REGULATION S UNDER THE SECURITIES ACT.

 

I-1

 

EXHIBIT J

 

UNRESTRICTED SUBSIDIARIES

 

77 HUDSON STREET JOINT DEVELOPMENT, L.L.C.

AG/HOV DELRAY HOLDINGS, L.L.C.

AG/HOV DELRAY, L.L.C.

AMBER RIDGE, LLC

COBBLESTONE SQUARE DEVELOPMENT, L.L.C.

FIRST MORTGAGE LENDERS OF FLORIDA, L.L.C.

GTIS-HOV DULLES PARKWAY PARENT LLC

GTIS-HOV FESTIVAL LAKES LLC

GTIS-HOV GREENFIELD CROSSING PARENT LLC

GTIS-HOV HOLDINGS LLC

GTIS-HOV LEELAND STATION LLC

GTIS-HOV POSITANO LLC

GTIS-HOV RANCHO 79 LLC

GTIS-HOV RESIDENCES AT DULLES PARKWAY LLC

GTIS-HOV RESIDENCES AT GREENFIELD CROSSING LLC

GTIS-HOV VILLAGES AT PEPPER MILL LLC

GTIS-HOV WARMINSTER LLC

HERITAGE PINES, L.L.C.

HEXTER-FAIR LAND TITLE COMPANY I, INC.

HOMEBUYERS FINANCIAL USA, LLC

HOVSITE CATALINA LLC

HOVSITE CHURCHILL CLUB LLC

HOVSITE CIDER GROVE LLC

HOVSITE FIRENZE LLC

HOVSITE FLORIDA HOLDINGS LLC

HOVSITE GREENWOOD MANOR LLC

HOVSITE HOLDINGS LLC

HOVSITE HUNT CLUB LLC

HOVSITE ILLINOIS HOLDINGS LLC

HOVSITE IRISH PRAIRIE LLC

HOVSITE LIBERTY LAKES LLC

HOVSITE MONTEVERDE 1 & 2 LLC

HOVSITE MONTEVERDE 3 & 4 LLC

HOVSITE PROVIDENCE LLC

HOVSITE SOUTHAMPTON LLC

HOVWEST LAND ACQUISITION, LLC

K. HOVNANIAN 77 HUDSON STREET INVESTMENTS, L.L.C.

K. HOVNANIAN AMERICAN MORTGAGE, L.L.C.

K. HOVNANIAN AT 77 HUDSON STREET URBAN RENEWAL COMPANY, L.L.C.

 

J-1

 

K. HOVNANIAN AT COBBLESTONE SQUARE CONDOMINIUMS, L.L.C.

K. HOVNANIAN AT DELRAY BEACH, L.L.C.

K. HOVNANIAN AT EAGLE HEIGHTS, LLC

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 RIVER HILLS, LLC

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

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

K. HOVNANIAN AT WALDWICK, LLC

K. HOVNANIAN BUILDING COMPANY, LLC

K. HOVNANIAN COMPANIES OF ARIZONA, LLC

K. HOVNANIAN GT INVESTMENT, L.L.C.

K. HOVNANIAN HOMES AT WILLOWSFORD GRANGE, LLC

K. HOVNANIAN HOMES OF DELAWARE I, LLC

K. HOVNANIAN HOMES OF FLORIDA I, LLC

K. HOVNANIAN HOMES OF MARYLAND I, LLC

K. HOVNANIAN HOMES OF VIRGINIA I, LLC

K. HOVNANIAN HOVWEST HOLDINGS, L.L.C.

K. HOVNANIAN INVESTMENTS, L.L.C.

K. HOVNANIAN JV HOLDINGS, L.L.C.

K. HOVNANIAN JV SERVICES COMPANY, L.L.C.

K. HOVNANIAN M.E. INVESTMENTS, LLC

K. HOVNANIAN MANALAPAN INVESTMENT, L.L.C.

K. HOVNANIAN NASSAU GROVE HOLDINGS, L.L.C.

LAUREL HIGHLANDS, LLC

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

MILLENNIUM TITLE AGENCY, LTD.

MM-BEACHFRONT NORTH I, L.L.C.

MM-BEACHFRONT NORTH II, L.L.C.

MSHOV HOLDING COMPANY, L.L.C.

NASSAU GROVE ENTERPRISES, L.L.C.

NORTH MANATEE, L.L.C.

OLD CITY DELAWARE, L.L.C.

OLD CITY DEVELOPMENT, INC.

OLD CITY JOINT DEVELOPMENT, L.L.C.

PRESTON GRANDE HOMES, INC.

RR HOUSTON DEVELOPERS, LLC

RR HOUSTON DEVELOPMENT, L.P.

TOWN HOMES AT MONTGOMERY, L.L.C.

WHI-REPUBLIC, LLC

WOODMORE RESIDENTIAL, L.L.C.

WTC VENTURES, L.L.C.

 

J-2EXHIBIT 4.23

 

 

UNITS AGREEMENT

 

Dated as of October 2, 2012

 

among

 

HOVNANIAN ENTERPRISES, INC.

 

and

 

K. HOVNANIAN ENTERPRISES, INC.

 

and

 

WILMINGTON TRUST COMPANY,

 

as Units Agent

 

 

 

TABLE OF CONTENTS

 

 

	
 
    	
 
    	
PAGE
    
	
 
    	
 
    	
 
    
	
ARTICLE 1
    
	
DEFINITIONS AND OTHER PROVISIONS OF GENERAL   APPLICATION
    
	
 
    	
 
    	
 
    
	
Section 1.01.  Definitions
    	
 
    	
1
    
	
Section 1.02.  Compliance Certificates and Opinions
    	
 
    	
8
    
	
Section 1.03.  Notices
    	
 
    	
9
    
	
Section 1.04.  Effect of Headings and Table of Contents
    	
 
    	
10
    
	
Section 1.05.  Successors and Assigns
    	
 
    	
10
    
	
Section 1.06.  Separability Clause
    	
 
    	
10
    
	
Section 1.07.  Benefits of Agreement
    	
 
    	
10
    
	
Section 1.08.  Governing Law
    	
 
    	
11
    
	
Section 1.09.  Conflict with Indenture
    	
 
    	
11
    
	
Section 1.10.  Counterparts
    	
 
    	
11
    
	
Section 1.11.  Inspection of Agreement
    	
 
    	
11
    
	
 
    	
 
    	
 
    
	
ARTICLE 2
    
	
UNIT   FORMS
    
	
 
    	
 
    	
 
    
	
Section 2.01.  Form of Units Generally
    	
 
    	
11
    
	
Section 2.02.  Form of Certificate of Authentication
    	
 
    	
12
    
	
Section 2.03.  Global Units; Separation of Units
    	
 
    	
12
    
	
Section 2.04.  Recreation of Units
    	
 
    	
13
    
	
Section 2.05.  Exercise/Required   Repurchase
    	
 
    	
14
    
	
 
    	
 
    	
 
    
	
ARTICLE 3
    
	
THE UNITS
    
	
 
    	
 
    	
 
    
	
Section 3.01.  Amount and Denominations
    	
 
    	
15
    
	
Section 3.02.  Rights and Obligations Evidenced by the   Units
    	
 
    	
16
    
	
Section 3.03.  Execution, Authentication, Delivery and   Dating
    	
 
    	
16
    
	
Section 3.04.  Temporary Units
    	
 
    	
16
    
	
Section 3.05.  Registration; Registration of Transfer and   Exchange
    	
 
    	
17
    
	
Section 3.06.  Book-Entry Interests
    	
 
    	
19
    
	
Section 3.07.  Notices to Holders
    	
 
    	
19
    
	
Section 3.08.  Appointment of Successor Depositary
    	
 
    	
19
    
	
Section 3.09.  Definitive Securities
    	
 
    	
20
    
	
Section 3.10.  Mutilated, Destroyed, Lost and Stolen Units
    	
 
    	
20
    
	
Section 3.11.  Persons Deemed Owners
    	
 
    	
22
    
	
Section 3.12.  Cancellation
    	
 
    	
23
    

 

i

 

	
ARTICLE 4
    
	
CONCERNING THE HOLDERS OF UNITS
    
	
 
    	
 
    	
 
    
	
Section 4.01.  Evidence of Action Taken by Holders
    	
 
    	
24
    
	
Section 4.02.  Proof of Execution of Instruments and of   Holding of Units
    	
 
    	
24
    
	
Section 4.03.  Units Deemed Not Outstanding
    	
 
    	
24
    
	
Section 4.04.  Right of Revocation of Action Taken
    	
 
    	
25
    
	
Section 4.05.  Record Date for Consents and Waivers
    	
 
    	
25
    
	
 
    	
 
    	
 
    
	
ARTICLE 5
    
	
 
    	
 
    	
 
    
	
Section 5.01.  Notice To Units Agent; Limitation On   Proceedings
    	
 
    	
26
    
	
Section 5.02.  Restoration of Rights and Remedies
    	
 
    	
26
    
	
Section 5.03.  Rights and Remedies Cumulative
    	
 
    	
26
    
	
Section 5.04.  Delay or Omission Not Waiver
    	
 
    	
26
    
	
Section 5.05.  Undertaking for Costs
    	
 
    	
26
    
	
Section 5.06.  Waiver of Stay or Extension Laws
    	
 
    	
27
    
	
Section 5.07.  Control by Majority
    	
 
    	
27
    
	
 
    	
 
    	
 
    
	
ARTICLE 6
    
	
THE UNITS AGENT
    
	
 
    	
 
    	
 
    
	
Section 6.01.  Certain Duties and Responsibilities
    	
 
    	
27
    
	
Section 6.02.  Notice of Default
    	
 
    	
28
    
	
Section 6.03.  Certain Rights of Units   Agent
    	
 
    	
29
    
	
Section 6.04.  Not Responsible for Recitals
    	
 
    	
31
    
	
Section 6.05.  May Hold Units
    	
 
    	
31
    
	
Section 6.06.  Compensation, Reimbursement and   Indemnification
    	
 
    	
31
    
	
Section 6.07.  Corporate Units Agent Required; Eligibility
    	
 
    	
32
    
	
Section 6.08.  Resignation and Removal; Appointment of   Successor
    	
 
    	
32
    
	
Section 6.09.  Acceptance of Appointment by Successor
    	
 
    	
33
    
	
Section 6.10.  Merger; Conversion; Consolidation or   Succession to Business
    	
 
    	
34
    
	
Section 6.11.  Preservation of Information; Communications   to Holders
    	
 
    	
34
    
	
 
    	
 
    	
 
    
	
ARTICLE 7
    
	
SUPPLEMENTAL AGREEMENTS
    
	
 
    	
 
    	
 
    
	
Section 7.01.  Supplemental Agreements Without Consent of   Holders
    	
 
    	
35
    
	
Section 7.02.  Supplemental Agreements With Consent of   Holders
    	
 
    	
35
    
	
Section 7.03.  Execution of Supplemental Agreements
    	
 
    	
36
    
	
Section 7.04.  Effect of Supplemental Agreements
    	
 
    	
36
    
	
Section 7.05.  Reference to Supplemental Agreements
    	
 
    	
36
    
	
Section 7.06.  Notice of Supplemental Agreements
    	
 
    	
36
    

 

ii

 

	
ARTICLE 8
    
	
SUCCESSION OF COMPANY OR NOTE ISSUER
    
	
 
    	
 
    	
 
    
	
Section 8.01. Succession   of Company or Note Issuer
    	
 
    	
36
    
	
 
    	
 
    	
 
    
	
ARTICLE 9
    
	
COVENANTS OF THE COMPANY AND THE NOTE ISSUER
    
	
 
    	
 
    	
 
    
	
Section 9.01.  Performance Under this Agreement
    	
 
    	
37
    
	
Section 9.02.  Maintenance of Office Or   Agency
    	
 
    	
37
    
	
Section 9.03.  Statements of Officers of the Company as to   Default; Notice of Default
    	
 
    	
37
    
	
Section 9.04.  Existence
    	
 
    	
38
    
	
Section 9.05.  Tax Treatment
    	
 
    	
38
    
	
 
    	
 
    	
 
    
	
EXHIBITS
    
	
 
    
	
Exhibit A:   Form of Unit
    	
 
    	
 
    

 

iii

 

UNITS AGREEMENT, dated as of October 2, 2012 among HOVNANIAN ENTERPRISES, INC., a Delaware corporation (the “Company”), K. HOVNANIAN ENTERPRISES, INC., a California corporation (the “Note Issuer”), and WILMINGTON TRUST COMPANY, a Delaware banking corporation acting as units agent (the “Units Agent”).

 

RECITALS OF THE COMPANY AND THE NOTE ISSUER

 

The Company and the Note Issuer have duly authorized the execution and delivery of this Agreement and the Units issuable hereunder.

 

All things necessary to make the Units, when such are executed by the Company and by the Note Issuer, and authenticated and delivered by the Units Agent, as provided in this Agreement, the valid obligations of the Company and of the Note Issuer, and to constitute this Agreement a valid agreement of the Company and the Note Issuer, in accordance with its terms, have been done. For and in consideration of the premises and the purchase of the Units (including the constituent parts thereof) by the Holders thereof, it is mutually agreed as follows:

 

ARTICLE 1
  DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION

 

Section 1.01.  Definitions.  For all purposes of this Agreement, except as otherwise expressly provided or unless the context otherwise requires:

 

(a)                        the terms defined in this Article have the meanings assigned to them in this Article and include the plural as well as the singular, and nouns and pronouns of the masculine gender include the feminine and neuter genders;

 

(b)                       all accounting terms not otherwise defined herein have the meanings assigned to them in accordance with generally accepted accounting principles in the United States;

 

(c)                        the terms “includes” and “including” shall be deemed to be followed by the phrase “without limitation”;

 

(d)                       “will” shall have the same meaning as “shall”;

 

(e)                        the words “herein,” “hereof” and “hereunder” and other words of similar import refer to this Agreement as a whole and not to any particular Article, Section, Exhibit or other subdivision; and

 

(f)                          the following terms have the meanings given to them in this Section 1.01(f):

 

 

“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.

 

“Agreement” or “Units Agreement” means this instrument as originally executed or as it may from time to time be supplemented or amended by one or more agreements supplemental hereto entered into pursuant to the applicable provisions hereof.

 

“Amortizing  Notes” means the series of notes designated as the 11.00% Senior Notes due 2017 to be issued by the Note Issuer under the Amortizing Notes Indenture, and, unless the context otherwise requires, “Amortizing  Note” means each note of such series having an initial principal amount of $231.49.

 

“Amortizing Notes Indenture” means the Senior Indenture, dated as of February 14, 2011, among the Note Issuer, the Company and the Amortizing Notes Trustee (including any provisions of the TIA that are deemed incorporated therein), as supplemented by the Fifth Supplemental Indenture, dated as of October 2, 2012, among the Note Issuer, the Company, the other Guarantors from time to time party thereto, and the Amortizing Notes Trustee, pursuant to which the Amortizing Notes will be issued.

 

“Amortizing Notes  Trustee” means Wilmington Trust Company, as trustee under the Amortizing Notes Indenture, or any successor thereto.

 

“Applicants” has the meaning set forth in Section 6.11(b).

 

“Bankruptcy Event” means the occurrence of one or more of the following events:

 

(a)                                  a decree or order by a court having jurisdiction in the premises shall have been entered adjudging the Company a bankrupt or insolvent, or approving as properly filed a petition seeking reorganization of the Company under any Bankruptcy Law and such decree or order shall have continued undischarged and unstayed for a period of 60 days;

 

(b)                                 a decree or order by a court having jurisdiction in the premises for the appointment of a receiver or liquidator or trustee or assignee (or other similar official) in bankruptcy or insolvency of the Company or of all or substantially all of its property, or for the winding up or liquidation of its affairs, shall have been entered and such decree or order shall have continued undischarged and unstayed for a period of 60 days; or

 

(c)                                  the Company shall institute proceedings to be adjudicated a voluntary bankrupt, or shall consent to the filing of a bankruptcy proceeding against it, or shall file a petition or answer or consent seeking reorganization 

 

2

 

under any Bankruptcy Law, or shall consent to the filing of any such petition, or shall consent to the appointment of a receiver or liquidator or trustee or assignee (or other similar official) in bankruptcy or insolvency of it or of its property, or shall make an assignment for the benefit of creditors, or shall admit in writing its inability to pay its debts generally as they become due.

 

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

 

“Beneficial Holder” means, with respect to a Book-Entry Interest, a Person who is the beneficial owner of such Book-Entry Interest as reflected on the books of the Depositary or on the books of a Person maintaining an account with the Depositary (directly as a Depositary Participant or as an indirect participant, in each case in accordance with the rules of the Depositary).

 

 “Board of Directors” means, with respect to the Company or the Note Issuer, the board of directors thereof or any duly authorized committee of that board or any director or directors to whom that board or committee shall have duly delegated its authority.

 

“Board Resolution” means one or more resolutions, certified by the secretary or an assistant secretary of the Company or the Note Issuer, as the case may be, to have been duly adopted or consented to by the Board of Directors of the Company or the Note Issuer, as appropriate, and to be in full force and effect delivered to the Units Agent.

 

“Book-Entry Interest” means a beneficial interest in a Global Security, registered in the name of a Depositary or a nominee thereof, ownership and transfers of which shall be maintained and made through book entries by such Depositary as described in Section 3.06.

 

“Business Day” means any day other than a Saturday, Sunday or any day on which banking institutions in New York, New York are authorized or obligated by applicable law or executive order to close or be closed.

 

“Clearing Agency” means an organization registered as a “Clearing Agency” pursuant to Section 17A of the Exchange Act.

 

“Company” means the Person named as the “Company” in the first paragraph of this Agreement until a successor shall have become such pursuant to Article 8, and thereafter “Company” shall mean such successor.

 

“Component Amortizing Note” means an Amortizing Note, attached to a Global Unit, that (a) shall evidence the number of Amortizing Notes specified therein that are components of the Units evidenced by such Global Unit (which shall be equal to the aggregate stated amount of such Units divided by $1,000), (b) 

 

3

 

shall be registered on the security register for the Amortizing Notes in the name of the Depositary or a nominee thereof, and (c) shall be held by the Units Agent, as custodian of such Global Unit for the Depositary.

 

“Component Exchangeable Note” means an Exchangeable Note, attached to a Global Unit, that (a) shall evidence the number of Exchangeable Notes specified therein that are components of the Units evidenced by such Global Unit (which shall be equal to the aggregate stated amount of such Units divided by $1,000), (b) shall be registered on the security register for the Exchangeable Notes in the name of the Depositary or a nominee thereof, and (c) shall be held by the Units Agent, as custodian of such Global Unit for the Depositary.

 

“Component Definitive Notes” means the Exchangeable Notes in definitive form and the Amortizing Notes in definitive form that are included in Definitive Units.

 

“Component Notes” means the Component Amortizing Notes and the Component Exchangeable Notes, collectively.

 

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

 

“Corporate Trust Office” means the principal corporate trust office of the Units Agent at which, at any particular time, its corporate trust business shall be principally administered, which office at the date hereof is located at Rodney Square North, 1100 North Market Street, Wilmington, DE 19890.

 

 “default” means any failure to comply with terms of this Agreement or any covenant contained herein.

 

“Definitive Security” means any Security in definitive form.

 

“Definitive Unit” means a Unit in definitive form that (a) shall evidence the aggregate stated amount of Units specified therein, (b) shall be registered on the Security Register in the name of the Holder thereof and (c) shall include, as attachments thereto, a Component Amortizing Note and a Component Exchangeable Note, each in the name of the Holder of such Unit, evidencing, respectively, a number of Amortizing Notes and a number of Exchangeable Notes, in each case, equal to the aggregate stated amount of Units evidenced by such Unit in definitive form divided by $1,000.

 

“Depositary” means a Clearing Agency that is acting as a depositary for the Units and in whose name, or in the name of a nominee of that organization, 

 

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shall be registered one or more Global Units and which shall undertake to effect book-entry transfers of the Units as contemplated by Section 3.06, Section 3.07, Section 3.08 and Section 3.09.

 

“Depositary Participant” means a broker, dealer, bank, other financial institution or other Person for whom from time to time the Depositary effects book-entry transfers of securities deposited with the Depositary.

 

“DTC” means The Depository Trust Company.

 

“DWAC System” has the meaning set forth in Section 2.03(a).

 

“Exchange Act” means the Securities Exchange Act of 1934, as amended, and any statute successor thereto, in each case as amended from time to time, together with the rules and regulations promulgated thereunder.

 

“Exchangeable  Notes” means the series of notes designated as the Zero Coupon Senior Exchangeable Notes due 2017 to be issued by the Note Issuer under the Exchangeable Notes Indenture, and, unless the context otherwise requires, “Exchangeable  Note” means each note of such series having a principal amount at maturity of $1,000.

 

“Exchangeable  Notes Indenture” means the Senior Indenture, dated as of February 14, 2011, among the Note Issuer, the Company and the Exchangeable Notes Trustee (including any provisions of the TIA that are deemed incorporated therein), as supplemented by the Fourth Supplemental Indenture, dated as of October 2, 2012, among the Note Issuer, the Company, the other Guarantors from time to time party thereto, and the Exchangeable Notes Trustee, pursuant to which the Exchangeable Notes will be issued.

 

“Exchangeable  Notes  Trustee” means Wilmington Trust Company, as trustee under the Exchangeable Notes Indenture, or any successor thereto.

 

“Global Amortizing Note” means an Amortizing Note in global form that (a) shall evidence the number of Separate Amortizing Notes specified therein, (b) shall be registered on the security register for the Amortizing Notes in the name of the Depositary or its nominee, and (c) shall be held by the Amortizing Notes Trustee as custodian for the Depositary.

 

“Global Exchangeable Note” means an Exchangeable Note in global form that (a) shall evidence the number of Separate Exchangeable Notes specified therein, (b) shall be registered on the security register for the Exchangeable Notes in the name of the Depositary or its nominee, and (c) shall be held by the Exchangeable Notes Trustee as custodian for the Depositary.

 

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“Global Note” means a Global Amortizing Note or a Global Exchangeable Note, as applicable.

 

“Global Security” means a Global Unit or a Global Note, as applicable.

 

“Global Unit” means a Unit in global form that (a) shall evidence the aggregate stated amount of Units specified therein, (b) shall be registered on the Security Register in the name of the Depositary or its nominee, (c) shall include, as attachments thereto, a Component Amortizing Note and a Component Exchangeable Note, each in the name of the Depositary or its nominee, evidencing, respectively, a number of Amortizing Notes and a number of Exchangeable Notes, in each case, equal to the aggregate stated amount of Units evidenced by such Unit in global form divided by $1,000, and (d) shall be held by the Units Agent as custodian for the Depositary.

 

“Holder” means, with respect to a Unit, the Person in whose name the Unit is registered in the Security Register.

 

“Indentures” means the Amortizing Notes Indenture and the Exchangeable Notes Indenture, collectively.

 

“Installment Payment” shall have the meaning set forth in the Amortizing Notes Indenture.

 

“Installment Payment Date” shall have the meaning set forth in the Amortizing Notes Indenture.

 

“Issue Date” means October 2, 2012.

 

“Issuer Order” means a written statement, request or order of the Company or the Note Issuer, as the case may be, which is signed in its name by the chairman of the applicable Board of Directors, the chief financial officer, the president or chief executive officer, any senior vice president, any vice president or the treasurer of the Company or the Note Issuer, as appropriate, and delivered to the Units Agent.

 

“Note Issuer” means the Person named as the “Note Issuer” in the first paragraph of this Agreement until a successor shall have become such pursuant to Article 8, and thereafter “Note Issuer” shall mean such successor.

 

“Notes” means the Amortizing Notes and the Exchangeable Notes, collectively.

 

“Officers’ Certificate” means, with respect to the Company or the Note Issuer, a certificate signed by the chairman of the applicable Board of Directors, the president or chief executive officer, or any vice president and by the chief 

 

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financial officer, the treasurer, any assistant treasurer, the controller, any assistant controller, the secretary or any assistant secretary of the Company or the Note Issuer, as the case may be.  Each such certificate shall include the statements provided for in Section 1.02 if and to the extent required by the provisions of such Section 1.02.

 

 “Opinion of Counsel” means an opinion in writing signed by the chief counsel of the Company or the Note Issuer or by such other legal counsel who may be an employee of or counsel to the Company or the Note Issuer and who shall be reasonably satisfactory to the Units Agent. Each such opinion shall include the statements provided for in Section 1.02 if and to the extent required by the provisions of such Section 1.02.

 

“Outstanding Units” means, subject to the provisions of Section 4.03, as of the date of determination, all Units theretofor executed, authenticated and delivered under this Agreement, except:

 

(a)                        Units theretofor cancelled by the Units Agent or delivered to the Units Agent for cancellation or deemed cancelled pursuant to the provisions of this Agreement; and

 

(b)                       Units in exchange for or in lieu of which other Units have been executed, authenticated and delivered pursuant to this Agreement, other than any such Unit in respect of which there shall have been presented to the Units Agent proof satisfactory to it that such Unit is held by a protected purchaser in whose hands the Units are valid obligations of the Company and the Note Issuer.

 

“Participant” has the meaning set for in Section 2.03(a).

 

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

 

“Prospectus Supplement” means the preliminary prospectus supplement dated September 18, 2012, as supplemented by the pricing term sheet dated September 19, 2012, relating to the offering and sale of the Units.

 

“Responsible Officer” means any officer of the Units Agent with direct responsibility for the administration of this Agreement.

 

“Scheduled Trading Day” shall have the meaning set forth in the Exchangeable Notes Indenture.

 

“Securities” means the Units and the Notes, collectively.

 

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“Security Register” has the meaning set forth in Section 3.05.

 

“Security Registrar” has the meaning set forth in Section 3.05.

 

“Separate Amortizing Note” has the meaning set forth in Section 2.03(a).

 

“Separate Exchangeable Note” has the meaning set forth in Section 2.03(a).

 

“Separate Notes” means the Separate Amortizing Notes and Separate Exchangeable Notes, collectively.

 

“TIA” means the Trust Indenture Act of 1939, as amended from time to time.

 

“Trustees” means the Amortizing Notes Trustee and the Exchangeable Notes Trustee, collectively.

 

“Unit” means the collective rights of a Holder of a unit, with $1,000 in stated amount per Unit, consisting of a single Exchangeable Note and a single Amortizing Note prior to separation pursuant Section 2.03 or subsequent to recreation pursuant to Section 2.04. Any reference herein to a “Unit,” unless the context otherwise requires, means $1,000 stated amount of Units.

 

“Units Agent” means the Person named as the “Units Agent” in the first paragraph of this Agreement until a successor Units Agent shall have become such pursuant to Article 8, and thereafter “Units Agent” shall mean such Person, in each case, acting in such capacity.

 

Section 1.02.  Compliance Certificates and Opinions.  Upon any application or request by the Company or the Note Issuer to the Units Agent to take any action in accordance with any provision of this Agreement, the Company or the Note Issuer, as applicable, shall furnish to the Units Agent an Officers’ Certificate stating that all conditions precedent, if any, provided for in this Agreement relating to the proposed action have been complied with and an Opinion of Counsel stating that, in the opinion of such counsel, all such conditions precedent, if any, have been complied with.

 

Every Officers’ Certificate or opinion with respect to compliance with a condition or covenant provided for in this Agreement shall include:

 

(i)                                     a statement that each individual signing such Officers’ Certificate or opinion has read such covenant or condition and the definitions herein relating thereto;

 

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(ii)                                  a brief statement as to the nature and scope of the examination or investigation upon which the statements or opinions contained in such Officers’ Certificate or opinion are based;

 

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

 

(iv)                              a statement as to whether, in the opinion of each such individual, such condition or covenant has been complied with.

 

Any certificate, statement or opinion of an officer of the Company or the Note Issuer, as applicable, may be based, insofar as it relates to legal matters, upon a certificate or opinion of or representations by counsel, unless such officer knows that the certificate or opinion or representations with respect to the matters upon which his 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 relating to information that is in the possession of the Company or the Note Issuer, as applicable, upon the certificate, statement or opinion of or representations by an officer or officers of the Company or the Note Issuer, as applicable, unless such counsel knows that the certificate, statement or opinion or representations with respect to the matters upon which his 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 Company or the Note Issuer, 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 Company or the Note Issuer, 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 his 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 Units Agent shall contain a statement that such firm is independent.

 

Section 1.03.  Notices.  Any notice or demand which by any provision of this Agreement is required or permitted to be given or served by the Units Agent or by the Holders to or on the Company or the Note Issuer may be given or served by being deposited postage prepaid, first class mail (except as otherwise 

 

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specifically provided herein) addressed (until another address of the Company or the Note Issuer is filed by the Company or the Note Issuer with the Units Agent) (a) in the case of the Company, to Hovnanian Enterprises, Inc., 110 West Front Street, P.O. Box 500, Red Bank, New Jersey 07701, and (b) in the case of the Note Issuer, to K. Hovnanian Enterprises, Inc., 110 West Front Street, P.O. Box 500, Red Bank, New Jersey 07701.  Any notice, direction, request or demand by the Company, the Note Issuer or any Holder to or upon the Units Agent shall be deemed to have been sufficiently given or served by being deposited postage prepaid, first class mail (except as otherwise specifically provided herein) addressed (until another address of the Units Agent is filed by the Units Agent with the Company and the Note Issuer) to Wilmington Trust Company, Rodney Square North, 1100 North Market Street, Wilmington, DE 19890.

 

Where this Agreement provides for notice to Holders, such notice shall be sufficiently given (unless otherwise herein expressly provided) if in writing and mailed, first class postage prepaid, to each Holder entitled thereto, at his last address as it appears in the Security Register.  Where this Agreement provides for notice in any manner, such notice may be waived in writing by the Person entitled to receive such notice, either before or after the event, and such waiver shall be the equivalent of such notice.  Waivers of notice by Holders shall be filed with the Units Agent, but such filing shall not be a condition precedent to the validity of any action taken in reliance upon such waiver.

 

Section 1.04.  Effect of Headings and Table of Contents.  The Article and Section headings herein and in the Table of Contents are for convenience only and shall not affect the construction hereof.

 

Section 1.05.  Successors and Assigns.  All covenants and agreements in this Agreement by the Company, the Note Issuer and the Units Agent shall bind their respective successors and assigns, whether so expressed or not.

 

Section 1.06.  Separability Clause.  In case any provision in this Agreement or in the Units shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions hereof and thereof shall not in any way be affected or impaired thereby.

 

Section 1.07.  Benefits of Agreement.  Nothing contained in this Agreement or in the Units, express or implied, shall give to any Person, other than the parties hereto and their successors hereunder and, to the extent provided hereby, the Holders, any benefits or any legal or equitable right, remedy or claim under this Agreement. The Holders from time to time shall be beneficiaries of this Agreement and shall be bound by all of the terms and conditions hereof and of the Units by their acceptance of delivery of such Units.

 

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Section 1.08.  Governing Law.  This Agreement and the Units, and any claim, controversy or dispute arising under or related to this Agreement or the Units, shall be governed by, and construed in accordance with, the laws of the State of New York.

 

Section 1.09.  Conflict with Indenture.  To the extent that any provision of this Units Agreement relating to or affecting any Notes conflicts with or is inconsistent with the applicable Indenture, such Indenture shall govern.

 

Section 1.10.  Counterparts.  This Agreement may be executed in any number of counterparts by the parties hereto on separate counterparts, each of which, when so executed and delivered, shall be deemed an original, but all such counterparts shall together constitute one and the same instrument.

 

Section 1.11.  Inspection of Agreement.  A copy of this Agreement shall be available at all reasonable times during normal business hours at Hovnanian Enterprises, Inc., 110 West Front Street, Red Bank, New Jersey 07701 for inspection by any Holder or Beneficial Holder.

 

ARTICLE 2
  UNIT FORMS

 

Section 2.01.  Form of Units Generally.  (a)  The Units shall be in substantially the form set forth in Exhibit A, which shall be incorporated in and made a part of this Units Agreement, with such letters, numbers or other marks of identification or designation and such legends or endorsements printed, lithographed or engraved thereon as may be required by the rules of any securities exchange on which the Units may be listed or of any depositary therefor, or as may, consistently herewith, be determined by the officers of the Company and the Note Issuer executing such Units, as evidenced by their execution thereof.

 

(b)                                 The Units shall be issuable only in registered form and only in denominations of a single unit, $1,000 in stated amount per Unit, and any integral multiple thereof.

 

(c)                                  The Units will initially be issued in the form of one or more fully registered Global Units as set forth in Section 3.06.

 

(d)                                 Definitive Units shall be printed, lithographed or engraved with steel engraved borders or may be produced in any other manner, all as determined by the officers of the Company and the Note Issuer executing the Units evidenced by such Definitive Units, consistent with the provisions of this Agreement, as evidenced by their execution thereof.

 

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(e)                                  Every Global Unit executed, authenticated and delivered hereunder shall bear a legend in substantially the following form:

 

“THIS SECURITY IS A GLOBAL UNIT WITHIN THE MEANING OF THE UNITS AGREEMENT HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF A DEPOSITARY OR A NOMINEE OF A DEPOSITARY OR A SUCCESSOR DEPOSITARY.  UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR SECURITIES IN CERTIFICATED FORM, THIS SECURITY MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION (THE “DEPOSITARY”) TO THE NOMINEE OF THE DEPOSITARY OR BY A NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY OR ANOTHER NOMINEE OF THE DEPOSITARY OR BY THE DEPOSITARY OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH SUCCESSOR DEPOSITARY.

 

UNLESS THIS SECURITY IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITARY TO THE COMPANY AND THE NOTE ISSUER OR THEIR AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY SECURITY ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE  DEPOSITARY (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITARY), 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 AN INTEREST HEREIN.”

 

Section 2.02.  Form of Certificate of Authentication.  The form of certificate of authentication of the Units shall be in substantially the form set forth in the form of Unit attached hereto.

 

Section 2.03.  Global Units; Separation of Units.

 

(a)                        On any Business Day during the period beginning on, and including, the Business Day immediately following the Issue Date to, but excluding, the third Scheduled Trading Day immediately preceding December 1, 2017, and also excluding the Business Day immediately preceding any Installment Payment Date (provided that, for the avoidance of doubt, such right to separate Units shall resume after such Business Day), a Holder or Beneficial Holder of a Unit may separate such Unit into its constituent Exchangeable Note and Amortizing Note (each such separated Exchangeable Note and separated Amortizing Note, a “Separate Exchangeable Note” and “Separate Amortizing Note,” respectively), which will thereafter trade under their respective CUSIP numbers (442488 BP6 

 

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and 442488 BQ4), in which case that Unit shall cease to exist. Beneficial interests in a Unit, and after separation, the Separate Exchangeable Note and Separate Amortizing Note, will be shown on and transfers will be effected through direct or indirect participants in DTC. Beneficial interests in Units, Separate Exchangeable Notes and Separate Amortizing Notes will be evidenced by Global Units, Global Exchangeable Notes and Global Amortizing Notes, respectively. In order to separate a Unit into its component parts, a Beneficial Holder must deliver written instruction to the broker or other direct or indirect participant (the “Participant”) through which it holds an interest in such Unit to notify DTC through DTC’s Deposit/Withdrawal at Custodian System (the “DWAC System”) of such Beneficial Holder’s election to separate such Unit, following which the Units Agent, the Depositary and, pursuant to the applicable Indenture, each Trustee shall reflect on their books and records (i) a decrease in the aggregate stated amount of Units represented by the Global Unit by the aggregate stated amount of Units so separated and a decrease in the number of Exchangeable Notes and Amortizing Notes represented by the Component Exchangeable Note and the Component Amortizing Note attached to the Global Unit as Attachments 3 and 4, respectively,  in each case, by the aggregate stated amount of Units so separated divided by $1,000 and (ii) a corresponding increase in the number of Exchangeable Notes and Amortizing Notes represented by the Global Exchangeable Note and the Global Amortizing Note, respectively, in each case, by the aggregate stated amount of Units so separated divided by $1,000. If, however, such Unit is in the form of a Definitive Security in accordance with Section 3.09, the Holder thereof must deliver to the Units Agent such Unit,  together with a separation notice (which shall also be delivered to each Trustee, if other than the Units Agent), in the form set forth in Attachment 1 to the form of Unit attached hereto as Exhibit A. Upon the receipt of such separation notice, the Company shall promptly cause delivery, in accordance with the delivery instructions set forth in such separation notice, of one Separate Exchangeable Note and one Separate Amortizing Note, in each case in definitive form, for each $1,000 in stated amount of Units so separated. Separate Exchangeable Notes and Separate Amortizing Notes will be transferable independently from each other.

 

(b)                       Holders which elect to separate the Notes constituting components of a Unit in accordance with this Section 2.03 shall be responsible for any fees or expenses payable in connection with such separation, and neither the Company nor the Units Agent shall be liable for any such fees or expenses.

 

Section 2.04.  Recreation of Units.

 

(a)                        On any Business Day during the period beginning on, and including, the Business Day immediately following the Issue Date to, but excluding, the third Scheduled Trading Day immediately preceding December 1, 2017, and also excluding the Business Day immediately preceding any Installment Payment Date (provided that, for the avoidance of doubt, such right to recreate Units shall 

 

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resume after such Business Day), a Holder or Beneficial Holder of a Separate Exchangeable Note and a Separate Amortizing Note may recreate a Unit (which will thereafter trade under the CUSIP number 442488 BN1 for the Units), and each such Separate Exchangeable Note and Separate Amortizing Note shall cease to exist. In order to recreate a Separate Exchangeable Note and Separate Amortizing Note into a Unit, a Beneficial Holder must deliver written instruction to the Participant through which it holds an interest in such Separate Exchangeable Note and Separate Amortizing Note to notify DTC through the DTC’s DWAC System of such Beneficial Holder’s election to recreate a Unit, following which the Units Agent, the Depositary and, pursuant to the applicable Indenture, each Trustee shall reflect on their books and records (i) an increase in the aggregate stated amount of Units represented by the Global Unit by the aggregate stated amount of Units so recreated and an increase in the number of Exchangeable Notes and Amortizing Notes represented by the Component Exchangeable Note and the Component Amortizing Note attached to the Global Unit as Attachments 3 and 4, respectively, in each case, by the aggregate stated amount of Units so recreated divided by $1,000 and (ii) a corresponding decrease in the number of Exchangeable Notes and Amortizing Notes represented by the Global Exchangeable Note and Global Amortizing Note, respectively, in each case, by the aggregate stated amount of Units so recreated divided by $1,000. If, however, such Separate Exchangeable Note and Separate Amortizing Note are in the form of Definitive Securities, the Holder thereof must deliver to the Units Agent such Definitive Securities, together with a recreation notice (which shall also be delivered to each Trustee, if other than the Units Agent), in the form set forth in Attachment 2 to the form of Unit attached hereto as Exhibit A. Upon the receipt of such recreation notice, the Company shall promptly cause delivery, in  accordance with the delivery instructions set forth in such recreation notice, of a Unit in definitive form with aggregate stated amount equal to $1,000 per Unit so recreated.

 

(b)                       Holders that recreate Units in accordance with this Section 2.04 shall be responsible for any fees or expenses payable in connection with such recreation, and neither the Company nor the Units Agent shall be liable for any such fees or expenses.

 

Section 2.05.   Exercise/Required Repurchase.

 

(a)                        Any Holder of a Definitive Unit may surrender such Unit to the Units Agent in connection with any exchange of the Exchangeable Note included in such Unit for Class A common stock of the Company or any required repurchase at the option of such Holder of any Component Definitive Note, in each case, pursuant to the applicable Indenture, in which case the Units Agent shall cause the delivery of each such Component Definitive Note to the applicable Trustee.

 

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(b)                       If (x) any Component Definitive Note included in any Definitive Unit has been surrendered for required repurchase, and (y) the other Component Definitive Note included in such Unit will remain outstanding beyond the applicable repurchase date, in each case, pursuant to the applicable Indenture, the Note Issuer shall issue a Separate Amortizing Note or Separate Exchangeable Note, as applicable, in definitive form to the applicable Holder evidencing the Note that will remain outstanding.

 

(c)                        If (x) the Exchangeable Note included in any Definitive Unit has been surrendered for exchange for Class A common stock of the Company, and (y) the Amortizing Note included in such Unit will remain outstanding beyond the settlement date for the consideration due upon exchange, in each case, pursuant to the applicable Indenture, the Note Issuer shall issue a Separate Amortizing Note in definitive form to the applicable Holder evidencing such Amortizing Note.

 

(d)                       To effect an exchange of any Component Exchangeable Notes for Class A common stock of the Company or a required repurchase of any Component Notes constituting part of a Global Unit, the Holder or Beneficial Holder thereof must comply with applicable procedures of the Depositary therefor, in which event:

 

(i)                                     the Units Agent and the Depositary will reflect a decrease on their books and records in the aggregate stated amount of Units reflected by such Global Unit equal to the aggregate stated amount of Units that contained the Component Notes so exchanged or repurchased, and

 

(ii)                                  if any Component Notes included in such Unit will remain outstanding beyond the applicable repurchase date or settlement date,  pursuant to the applicable Indenture, the Depositary and, pursuant to the applicable Indenture, the applicable Trustee shall reflect on their books and records a corresponding increase in the number of Notes represented by the applicable Global Note equal to the number of such Notes that will remain outstanding.

 

ARTICLE 3
  THE UNITS

 

Section 3.01.  Amount and Denominations.  The aggregate stated amount of Units executed, authenticated and delivered hereunder is limited to $100,000,000 (equivalent to 100,000 Units), except for Units executed, authenticated and delivered upon registration of transfer of, in exchange for, or in lieu of, other Units pursuant to Section 3.04, Section 3.05, Section 3.10 or Section 7.05.

 

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Units that are not in the form of Global Units shall be issuable in denominations of a single Unit, $1,000 in stated amount per Unit, and integral multiples in excess thereof.

 

Section 3.02.  Rights and Obligations Evidenced by the Units.  Each Unit certificate shall evidence the aggregate stated amount of Units specified therein, with each $1,000 in stated amount of such Unit representing the rights and obligations of the Holder thereof, the Company, the Note Issuer and other parties to the Indentures under a single Unit composed of (i) one Exchangeable Note and (ii) one Amortizing Note.  The Holder of a Unit shall, for all purposes hereunder and under the applicable Indenture, be deemed to be the holder of the Exchangeable Note and the Amortizing Note that are components of a single Unit.

 

Section 3.03.  Execution, Authentication, Delivery and Dating.  Upon the execution and delivery of this Agreement, and at any time and from time to time thereafter, the Company and the Note Issuer may deliver Units executed by the Company and the Note Issuer to the Units Agent for authentication and delivery, together with the Company’s Issuer Order for authentication of such Units, and the Units Agent in accordance with such Issuer Order shall authenticate and deliver such Units.

 

The Units shall be executed on behalf of the Company and the Note Issuer by any authorized officer of the Company and the Note Issuer, respectively. The signature of any such officer on the Units may be manual or facsimile.

 

Units bearing the manual or facsimile signature of an individual who was at any time the proper officer of the Company or the Note Issuer shall bind the Company or the Note Issuer, as the case may be, notwithstanding that such individual has ceased to hold such offices prior to the authentication and delivery of such Units or did not hold such offices at the date of such Units.

 

Each Unit shall be dated the date of its authentication.

 

No Unit shall be entitled to any benefit under this Agreement or be valid or obligatory for any purpose unless there appears on such Unit a certificate of authentication substantially in the form provided for herein executed by an authorized officer of the Units Agent by manual signature, and such certificate upon any Unit shall be conclusive evidence, and the only evidence, that such Unit has been duly authenticated and delivered hereunder.

 

Section 3.04.  Temporary Units.  Pending the preparation of Definitive Units, the Company and the Note Issuer shall execute and deliver to the Units Agent, and the Units Agent shall authenticate and deliver, in lieu of such Definitive Units, temporary Units that are in substantially the form set forth in Exhibit A hereto, with such letters, numbers or other marks of identification or designation and such legends or endorsements printed, lithographed or engraved thereon as may be 

 

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required by the rules of any securities exchange on which the Units may be listed, or as may, consistently herewith, be determined by the officers of the Company executing such Units, as evidenced by their execution of the Units.

 

If temporary Units are issued, the Company and the Note Issuer will cause Definitive Units to be prepared without unreasonable delay. After the preparation of Definitive Units, the temporary Units shall be exchangeable for Definitive Units upon surrender of the temporary Units at the Corporate Trust Office, at the expense of the Company and the Note Issuer and without charge to the Holder or the Units Agent. Upon surrender for cancellation of any one or more temporary Units, the Company and the Note Issuer shall execute and deliver to the Units Agent, and the Units Agent shall authenticate and deliver in exchange therefor one or more Definitive Units of like tenor and denominations and evidencing a like aggregate stated amount of Units as the temporary Unit or Units so surrendered. Until so exchanged, the temporary Units shall in all respects evidence the same benefits and the same obligations with respect to the Units evidenced thereby as Definitive Units.

 

Section 3.05.  Registration; Registration of Transfer and Exchange.  The Company and the Note Issuer shall cause to be kept at the Corporate Trust Office a register (the “Security Register”) in which, subject to such reasonable regulations as it may prescribe, the Company and the Note Issuer shall provide for the registration of Definitive Units and of transfers of Definitive Units. The Units Agent is hereby initially appointed Security Registrar (the “Security Registrar”) for the purpose of registration of Definitive Units and transfers of Definitive Units as provided herein.

 

Upon surrender for registration of transfer of any Definitive Unit at the Corporate Trust Office, the Company and the Note Issuer shall execute and deliver to the Units Agent, and the Units Agent shall authenticate and deliver, to the designated transferee or transferees, one or more new Definitive Units of any authorized denominations, of like tenor, and evidencing a like aggregate stated amount of Units.

 

At the option of the Holder, Definitive Units may be exchanged for other Definitive Units, of any authorized denomination and evidencing a like aggregate stated amount of Units, upon surrender of the Definitive Units to be exchanged at the Corporate Trust Office. Whenever any Definitive Units are so surrendered for exchange, the Company and the Note Issuer shall execute and deliver to the Units Agent, and the Units Agent shall authenticate and deliver the Definitive Units which the Holder making the exchange is entitled to receive.

 

All Definitive Units issued upon any registration of transfer or exchange of a Definitive Unit shall evidence the ownership of the same aggregate stated amount of Units, and be entitled to the same benefits and subject to the same 

 

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obligations, under this Agreement as the Definitive Units surrendered upon such registration of transfer or exchange.

 

Every Definitive Unit presented or surrendered for registration of transfer or exchange shall (if so required by the Units Agent) be duly endorsed, or be accompanied by a written instrument of transfer in form satisfactory to the Company, the Note Issuer and the Units Agent duly executed by the Holder thereof, or its attorney duly authorized in writing.

 

No service charge shall be made for any registration of transfer or exchange of a Definitive Unit, but the Company or the Units Agent on behalf of the Company may require payment from the Holder of a sum sufficient to cover any tax or other governmental charge that may be imposed in connection with any registration of transfer or exchange of Definitive Units, other than any exchanges pursuant to Section 3.06 and Section 7.05 not involving any transfer.

 

Notwithstanding the foregoing, the Company and the Note Issuer shall not be obligated to execute and deliver to the Units Agent, and the Units Agent shall not be obligated to authenticate or deliver any Definitive Unit in exchange for any other Definitive Unit (i) if the Exchangeable Note included in such Unit has been surrendered for exchange for shares of Class A common stock of the Company pursuant to the Exchangeable Notes Indenture, (ii) the Exchangeable Note and/or the Amortizing Note included in such Unit has been surrendered for required repurchase or (iii) on or after the Business Day immediately preceding December 1, 2017. In lieu of delivery of a new Definitive Unit, upon satisfaction of the applicable conditions specified above in this Section and receipt of appropriate registration or transfer instructions from such Holder, (x) if the relevant Exchangeable Note has been so exchanged, the Note Issuer (or the Company on its behalf) shall deliver to the Holder or its designee the shares of its Class A common stock deliverable upon such exchange (together with cash in lieu of any fractional share) pursuant to the Exchangeable Notes Indenture, and if the Amortizing Note included in such Unit will remain outstanding beyond the settlement date for the consideration due upon exchange, the Note Issuer shall deliver a certificate for a Separate Amortizing Note to the Holder or its designated transferee, (y) if either or both Notes included in such Unit have been surrendered for required repurchase, the Note Issuer shall make the required payment on each  Note so surrendered pursuant to the terms of the applicable Indenture and if either Note will remain outstanding after such required repurchase, the Note Issuer shall deliver a certificate for the Separate Note to remain outstanding and (z) if the Notes included in such Unit have become due and payable on the Maturity Date (as defined in the Exchangeable Notes Indenture), the Note Issuer shall make the required principal payment on the Exchangeable Note and shall make the final Installment Payment on the Amortizing Note, in each case, pursuant to the terms of the applicable Note and the applicable Indenture.

 

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Section 3.06.  Book-Entry Interests.  The Units, on original issuance, will be issued in the form of one or more fully registered Global Units, to be delivered to the Depositary or its custodian by, or on behalf of, the Company and the Note Issuer. The Company and the Note Issuer hereby designate DTC as the initial Depositary. Such Global Units shall initially be registered on the books and records of the Company in the name of Cede & Co., the nominee of DTC, and no Beneficial Holder will receive a Definitive Unit representing such Beneficial Holder’s interest in such Global Unit, except as provided in Section 3.09. Unless and until definitive, fully registered Units have been issued to Beneficial Holders pursuant to Section 3.09:

 

(i)                                     the provisions of this Section 3.06 shall be in full force and effect;

 

(ii)                                  the Company and the Note Issuer shall treat the Depositary for all purposes of this Agreement as the Holder of the Global Units and shall have no obligation to the Beneficial Holders;

 

(iii)                               to the extent that the provisions of this Section 3.06 conflict with any other provisions of this Agreement, the provisions of this Section 3.06 shall control; and

 

(iv)                              the rights of the Beneficial Holders shall be exercised only through the Depositary and shall be limited to those established by law and agreements between such Beneficial Holders and the Depositary or the Depositary Participants;

 

provided that a Beneficial Holder may directly enforce its right pursuant to Section 3.09(iii) to exchange its beneficial interest in a Global Unit for a Definitive Unit.

 

Section 3.07.  Notices to Holders.  Whenever a notice or other communication to the Holders is required to be given under this Agreement, the Company or the Company’s agent shall give such notices and communications to the Holders and, with respect to any Units registered in the name of the Depositary or the nominee of the Depositary, the Company or the Company’s agent shall, except as set forth herein, have no obligations to give such notices and communications directly to the Beneficial Holders.

 

Section 3.08.  Appointment of Successor Depositary.  If the Depositary elects to discontinue its services as securities depositary with respect to the Units, the Company and the Note Issuer may, in their sole discretion, appoint a successor Depositary with respect to such Units.

 

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Section 3.09.  Definitive Securities.  If:

 

(i)                                     the Depositary is unwilling or unable to continue as depositary for the Global Units and the Company is unable to find a qualified replacement for such Depository within 90 days;

 

(ii)                                  at any time the Depositary ceases to be a Clearing Agency registered under the Exchange Act; or

 

(iii)                               an Event of Default under either Indenture (as defined therein), a default hereunder, or any failure on the part of the Company or the Note Issuer to observe or perform any covenant or agreement in either Indenture or the Notes, has occurred and is continuing and a Beneficial Holder requests that its Units be issued in physical, certificated form,

 

then, in each case the Company and the Note Issuer shall execute, and the Units Agent, upon receipt of an Issuer Order for the authentication and delivery of Definitive Units, shall authenticate and deliver Definitive Units representing the aggregate stated amount of Units represented by such Global Unit or Units (or representing an aggregate stated amount of Units equal to the aggregate stated amount of Units in respect of which such Beneficial Holder has requested the issuance of Definitive Units pursuant to clause (iii) above) in exchange for such Global Unit or Units (or portion thereof). Each Definitive Unit so delivered shall evidence Units of the same kind and tenor as the Global Unit so surrendered in respect thereof.

 

Section 3.10.  Mutilated, Destroyed, Lost and Stolen Units.  If any mutilated Definitive Unit is surrendered to the Units Agent, at the expense of the Holder, the Company and the Note Issuer shall execute and deliver to the Units Agent, and the Units Agent shall authenticate and deliver in exchange therefor a new Definitive Unit, evidencing the same aggregate stated amount of Units, and bearing a security number not contemporaneously outstanding.

 

If there shall be delivered to the Company, the Note Issuer and the Units Agent (i) evidence to their satisfaction of the destruction, loss or theft of any Definitive Unit, and (ii) such security or indemnity as may be reasonably required by them to hold each of them and any agent of any of them harmless, then, in the absence of notice to the Company, the Note Issuer or the Units Agent that such Definitive Unit has been acquired by a protected purchaser, at the expense of the Holder, the Company and the Note Issuer shall execute and deliver to the Units Agent, and the Units Agent shall authenticate and deliver to the Holder, in lieu of any such destroyed, lost or stolen Definitive Unit, a new Definitive Unit,  evidencing the same aggregate stated amount of Units, and bearing a security number not contemporaneously outstanding.

 

Notwithstanding the foregoing, the Company and the Note Issuer shall not be obligated to execute and deliver to the Units Agent, and the Units Agent shall 

 

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not be obligated to authenticate and deliver to the Holder, a Definitive Unit pursuant to this Section (i) if the Exchangeable Note included in such Unit has been surrendered for exchange for shares of Class A common stock of the Company pursuant to the Exchangeable Notes Indenture, (ii) the Exchangeable Note and/or the Amortizing Note included in such Unit has been surrendered for required repurchase or (iii) on or after the Business Day immediately preceding December 1, 2017. In lieu of delivery of a new Definitive Unit, upon satisfaction of the applicable conditions specified above in this Section and receipt of appropriate registration or transfer instructions from such Holder, (x) if the relevant Exchangeable Note has been so exchanged, the Note Issuer (or the Company on its behalf) shall deliver to the Holder or its designee the shares of its Class A common stock deliverable upon such exchange (together with cash in lieu of any fractional share) pursuant to the Exchangeable Notes Indenture, and if the Amortizing Note included in such Unit will remain outstanding beyond the settlement date for the consideration due upon exchange, the Note Issuer shall deliver a certificate for a Separate Amortizing Note to the Holder or its designated transferee, (y) if either or both Notes included in such Unit have been surrendered for required repurchase, the Note Issuer shall make the required payment on each Note so surrendered pursuant to the terms of the applicable Indenture and if either Note will remain outstanding after such required repurchase, the Note Issuer shall deliver a certificate for the Separate Note to remain outstanding and (z) if the Notes included in such Unit have become due and payable on the Maturity Date (as defined in the Exchangeable Notes Indenture), the Note Issuer shall make the required principal payment on the Exchangeable Note and shall make the final Installment Payment on the Amortizing Note, in each case, pursuant to the terms of the applicable Note and the applicable Indenture.

 

Upon the issuance of any new Definitive Unit under this Section 3.10, the Company, the Note Issuer and the Units Agent may require the payment by the Holder of a sum sufficient to cover any tax or other governmental charge that may be imposed in relation thereto and any other expenses (including the fees and expenses of the Units Agent) connected therewith.

 

Every new Definitive Unit issued pursuant to this Section 3.10 in lieu of any destroyed, lost or stolen Definitive Unit shall constitute an original additional contractual obligation of the Company and the Note Issuer and of the Holder in respect of the Units evidenced thereby, whether or not the destroyed, lost or stolen Definitive Unit shall be found at any time. Such new Definitive Unit (and the Units evidenced thereby) shall be at any time enforceable by anyone, and shall be entitled to all the benefits and be subject to all the obligations of this Agreement equally and proportionately with any and all other Units delivered hereunder.

 

The provisions of this Section 3.10 are exclusive and shall preclude, to the extent lawful, all other rights and remedies with respect to the replacement or payment of mutilated, destroyed, lost or stolen Definitive Units.

 

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Section 3.11.  Persons Deemed Owners.  Prior to due presentment of a Definitive Unit for registration of transfer, the Company, the Note Issuer, and the Units Agent, and any agent of the Company, the Note Issuer or the Units Agent, may treat the Person in whose name such Definitive Unit is registered as the owner of the Units evidenced thereby for all purposes whatsoever, and none of the Company, the Note Issuer nor the Units Agent, nor any agent of the Company, the Note Issuer or the Units Agent, shall be affected by notice to the contrary.

 

Neither the Units Agent nor the Security Registrar shall have any responsibility or obligation to any Beneficial Holder in a Global Unit, an agent member or other Person with respect to the accuracy of the records of the Depositary or its nominee or of any agent member, with respect to any ownership interest in the Units or with respect to the delivery to any agent member, Beneficial Holder or other Person (other than the Depositary) of any notice or the payment of any amount, under or with respect to such Units (or the Component Notes).  All notices and communications to be given to the Holders and all payments or deliveries to be made to Holders under the Component Notes and this Agreement shall be given or made only to or upon the order of the registered Holders (which shall be the Depositary or its nominee in the case of a Global Unit or Component Note).  The rights of Beneficial Holders in Global Units or Component Notes shall be exercised only through the Depositary subject to the applicable procedures.  The Units Agent and the Security Registrar shall be entitled to rely and shall be fully protected in relying upon information furnished by the Depositary with respect to its members, participants and any Beneficial Holders.  The Units Agent and the Security Registrar shall be entitled to deal with the Depositary, and any nominee thereof, that is the registered Holder of any Global Unit for all purposes of this Agreement relating to such Global Unit (including the payment or delivery of amounts due under the Component Notes and the giving of instructions or directions by or to any Beneficial Holder) as the sole Holder of such Global Unit and shall have no obligations to the Beneficial Holders thereof.  Neither the Units Agent nor the Security Registrar shall have any responsibility or liability for any acts or omissions of the Depositary with respect to such Global Unit, for the records of any such Depositary, including records in respect of the Beneficial Holders of any such Global Unit, for any transactions between the Depositary and any agent member or between or among the Depositary, any such agent member and/or any Holder or Beneficial Holder of such Global Unit, or for any transfers of beneficial interests in any such Global Unit.

 

Notwithstanding the foregoing, with respect to any Global Unit or Component Note, nothing herein shall prevent the Company, the Units Agent or any agent of the Company or the Units Agent from giving effect to any written certification, proxy or other authorization furnished by any depositary (or its  nominee), as a Holder, with respect to such Global Unit or Component Note or shall impair, as between such Depositary and Beneficial Holders of such Global 

 

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Unit or Component Note, the operation of customary practices governing the exercise of the rights of such depositary (or its nominee) as Holder of such Global Unit or Component Note.

 

Neither the Units Agent nor the Security Registrar shall have any obligation or duty to monitor, determine or inquire as to compliance with any restrictions on transfer imposed under this Agreement or under applicable law with respect to any transfer of any interest in any Unit (including any transfers between or among participants of DTC, members or Beneficial Holders in any Global Unit) other than to require delivery of such certificates and other documentation or evidence as are expressly required by, and to do so if and when expressly required by, the terms of this Agreement, and to examine the same to determine substantial compliance as to form with the express requirements hereof.

 

Section 3.12.  Cancellation.  All Securities surrendered for separation or recreation and all Units surrendered for exchange or required repurchase of the Notes included therein pursuant to Section 2.05 and the applicable Indenture or upon the registration of transfer of a Unit or exchange of a Unit for other Units shall, if surrendered to any Person other than the Units Agent, be delivered to the Units Agent and, if not already cancelled, be promptly cancelled by it; provided, however, that the Units Agent shall deliver any Notes included in such Units or Separate Notes so surrendered to it to the applicable Trustee for disposition in accordance with the provisions of the applicable Indenture. The Company may at any time (subject to the following paragraph) deliver to the Units Agent for cancellation any Units previously executed, authenticated and delivered hereunder that the Company may have acquired in any manner whatsoever, and all Units so delivered shall, upon an Issuer Order of the Company, be promptly cancelled by the Units Agent; provided, however, that the Units Agent shall deliver the Notes included in such Units to the applicable Trustee for disposition in accordance with the provisions of the applicable Indenture. No Units shall be executed, authenticated and delivered in lieu of or in exchange for any Units cancelled as provided in this Section, except as expressly permitted by this Agreement. All cancelled Units held by the Units Agent shall be disposed of in accordance with its customary practices.

 

The Company or the Note Issuer may from time to time repurchase Units or Separate Notes in open market purchases or by tender at any price, or in negotiated transactions, in each case without prior notice to Holders.  Any Units (including any Notes included therein) or Separate Notes purchased by the Company or the Note Issuer shall be promptly delivered to the Units Agent or the applicable Trustee for cancellation in accordance with this Agreement or the applicable Indenture, as the case may be.

 

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ARTICLE 4
  CONCERNING THE HOLDERS OF UNITS

 

Section 4.01.  Evidence of Action Taken by Holders.  Any request, demand, authorization, direction, notice, consent, waiver or other action provided by this Agreement to be given or taken by a specified percentage of Units may be embodied in and evidenced by one or more instruments of substantially similar tenor signed by such specified percentage of Holders in Person or by agent duly appointed in writing; and, except as herein otherwise expressly provided, such action shall become effective when such instrument or instruments are delivered to the Units Agent.  Proof of execution of any instrument or of a writing appointing any such agent shall be sufficient for any purpose of this Agreement and (subject to Section 6.01 and Section 6.03) conclusive in favor of the Units Agent, the Company and the Note Issuer, if made in the manner provided in this Article 4.

 

Section 4.02.  Proof of Execution of Instruments and of Holding of Units.  Subject to Section 6.01 and Section 6.03, the execution of any instrument by a Holder or his agent or proxy may be proved in the following manner:

 

(a)                        The fact and date of the execution by any Holder of any instrument may be proved by the certificate of any notary public or other officer of any jurisdiction authorized to take acknowledgments of deeds or administer oaths that the Person executing such instruments acknowledged to him the execution thereof, or by an affidavit of a witness to such execution sworn to before any such notary or other such officer.  Where such execution is by or on behalf of any legal entity other than an individual, such certificate or affidavit shall also constitute sufficient proof of the authority of the Person executing the same.

 

(b)                       The ownership of the Units shall be proved by the Security Register or by a certificate of the Security Registrar.

 

Section 4.03.  Units Deemed Not Outstanding.  In determining whether the Holders of the requisite stated amount of Outstanding Units have concurred in any direction, consent or waiver under this Agreement, Units which are owned by the Company or by any Affiliate of the Company with respect to which such determination is being made shall be disregarded and deemed not to be Outstanding Units for the purpose of any such determination, except that for the purpose of determining whether the Units Agent shall be protected in relying on any such direction, consent or waiver only Units which a Responsible Officer of the Units Agent knows are so owned shall be so disregarded.  Units so owned which have been pledged in good faith may be regarded as Outstanding Units if the pledgee establishes to the satisfaction of the Units Agent the pledgee’s right so to act with respect to such Units and that the pledgee is not the Company or any Affiliate of the Company.  In case of a dispute as to such right, the advice of 

 

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counsel shall be full protection in respect of any decision made by the Units Agent in accordance with such advice.  Upon request of the Units Agent, the  Company shall furnish to the Units Agent promptly an Officers’ Certificate listing and identifying all Units, if any, known by the Company to be owned or held by or for the account of any of the above described Persons; and, subject to Section 6.01 and Section 6.03, the Units Agent shall be entitled to accept such Officers’ Certificate as conclusive evidence of the facts therein set forth and of the fact that all Units not listed therein are Outstanding Units for the purpose of any such determination.

 

Section 4.04.  Right of Revocation of Action Taken.  At any time prior to (but not after) the evidencing to the Units Agent, as provided in Section 4.01, of the taking of any action by the Holders of the percentage of Units specified in this Agreement in connection with such action, any Holder of a Unit the serial number of which is shown by the evidence to be included among the serial numbers of the Units the Holders of which have consented to such action may, by filing written notice at the Corporate Trust Office and upon proof of holding as provided in this Article 4, revoke such action so far as concerns such Unit; provided that such revocation shall not become effective until three Business Days after such filing.  Except as aforesaid, any such action taken by the Holder of any Unit shall be conclusive and binding upon such Holder and upon all future Holders and owners of such Unit and of any Units issued in exchange or substitution therefor or on registration of transfer thereof, irrespective of whether or not any notation in regard thereto is made upon any such Unit.  Any action taken by the Holders of the percentage of Units specified in this Agreement in connection with such action shall be conclusively binding upon the Company, the Note Issuer, the Units Agent and the Holders of all the Units affected by such action.

 

Section 4.05.  Record Date for Consents and Waivers.  The Company may, but shall not be obligated to, establish a record date for the purpose of determining the Persons entitled to give, make or take any request, demand, authorization, direction, notice, consent, waiver or other action provided or permitted by this Agreement to be given made or taken by Holders of Units.  If a record date is fixed, the Holders on such record date, or their duly designated proxies, and any such Persons, shall be entitled to give, make or take any such request, demand, authorization, direction, notice, consent, waiver or other action, whether or not such Holder remains a Holder after such record date; provided, however, that unless such waiver or consent is obtained from the Holders, or duly designated proxies, of the requisite stated amount of Outstanding Units prior to the date which is the 120th day after such record date, any such waiver or consent previously given shall automatically and, without further action by any Holder be cancelled and of no further effect.

 

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ARTICLE 5

 

Section 5.01.  Notice To Units Agent;  Limitation On Proceedings.  Holders of not less than 25% of Outstanding Units, by notice given to the Units Agent, may request the Units Agent to institute proceedings with respect to a default relating to any covenant hereunder.  No Holder of Units may institute any  proceedings, judicial or otherwise, with respect to this Agreement or for any remedy hereunder, except in the case of failure of the Units Agent, for 60 days, to act after the Units Agent has received a written request to institute proceedings in respect of a default with respect to any covenant hereunder from the Holders of not less than 25% of the Outstanding Units, as well as an offer of indemnity reasonably satisfactory to the Units Agent.

 

Section 5.02.  Restoration of Rights and Remedies.  If any Holder or the Units Agent has instituted any proceeding to enforce any right or remedy under this Agreement and such proceeding has been discontinued or abandoned for any reason, or has been determined adversely to such Holder or the Units Agent, then and in every such case, subject to any determination in such proceeding, the Company and the Note Issuer, as the case may be, and such Holder or the Units Agent shall be restored severally and respectively to their former positions hereunder and thereafter all rights and remedies of such Holder shall continue as though no such proceeding had been instituted.

 

Section 5.03.  Rights and Remedies Cumulative.  Except as otherwise provided with respect to the replacement or payment of mutilated, destroyed, lost or stolen Units in the last paragraph of Section 3.10, no right or remedy herein conferred upon or reserved to the Holders or the Units Agent is intended to be exclusive of any other right or remedy, and every right and remedy shall, to the extent permitted by law, be cumulative and in addition to every other right and remedy given hereunder or now or hereafter existing at law or in equity or otherwise. The assertion or employment of any right or remedy hereunder, or otherwise, shall not prevent the concurrent assertion or employment of any other appropriate right or remedy.

 

Section 5.04.  Delay or Omission Not Waiver.  No delay or omission of any Holder or the Units Agent to exercise any right or remedy upon a default hereunder shall impair any such right or remedy or constitute a waiver of any such right. Every right and remedy given by this Article or by law to the Holders or the Units Agent may be exercised from time to time, and as often as may be deemed expedient, by such Holders or the Units Agent.

 

Section 5.05.  Undertaking for Costs.  All parties to this Agreement agree, and each Holder of a Unit, by its acceptance of such Unit shall be deemed to have agreed, that any court may in its discretion require, in any suit for the enforcement of any right or remedy under this Agreement, or in any suit against the Units 

 

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Agent for any action taken, suffered or omitted by it as Units Agent, the filing by any party litigant in such suit of an undertaking to pay the costs of such suit, and that such court may in its discretion assess reasonable costs, including reasonable attorneys’ fees and costs against any party litigant in such suit, having due regard to the merits and good faith of the claims or defenses made by such party litigant; provided that the provisions of this Section shall not apply to any suit instituted by (a) the Units Agent or (b) any Holder, or group of Holders, holding in the aggregate more than 10% of the Outstanding Units.

 

Section 5.06.  Waiver of Stay or Extension Laws.  The Company and the Note Issuer covenant (to the extent that they may lawfully do so) that they will not at any time insist upon, or plead, or in any manner whatsoever claim or assume or take the benefit or advantage of, any stay or extension law wherever enacted, now or at any time hereafter in force, that may affect the covenants or the performance of this Agreement, in each case, to the extent permitted by law; and the Company and the Note Issuer (to the extent that they may lawfully do so) hereby expressly waive all benefit or advantage of any such law and covenants that they will not hinder, delay or impede the execution of any power herein granted to the Units Agent or the Holders, but will suffer and permit the execution of every such power as though no such law had been enacted, in each case, to the extent permitted by law.

 

Section 5.07.  Control by Majority.  The Holders of not less than a majority in stated amount of Outstanding Units shall have the right to direct the time, method and place of conducting any proceeding for any remedy available to the Units Agent hereunder or under the Units, or of exercising any trust or power conferred upon the Units Agent hereunder or under the Units; provided that the Units Agent has received indemnity reasonably satisfactory to it. Notwithstanding the foregoing, the Units Agent may refuse to follow any direction that is in conflict with any law or the Units Agreement, that may involve it in personal liability or that may be unduly prejudicial to the Holders of Units not joining in the action.

 

ARTICLE 6
  THE UNITS AGENT

 

Section 6.01.  Certain Duties and Responsibilities.  (a) The Units Agent undertakes to perform such duties and only such duties as are specifically delegated to it and set forth in this Agreement.

 

(b)                       No provision of this Agreement shall be construed to relieve the Units Agent from liability for its own negligent action, its own negligent failure to act or its own willful misconduct, except that:

 

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(i)                                     the duties and obligations of the Units Agent with respect to the Units shall be determined solely by the express provisions of this Agreement, and the Units Agent shall not be liable except for the performance of such duties and obligations as are specifically set forth in this Agreement, and no implied covenants or obligations shall be read into this Agreement against the Units Agent;

 

(ii)                                  in the absence of bad faith on the part of the Units Agent, the Units Agent may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon any statements, certificates or opinions furnished to the Units Agent and conforming to the requirements of this Agreement; but in the case of any such statements,  certificates or opinions which by any provision hereof are specifically required to be furnished to the Units Agent, the Units Agent shall be under a duty to examine the same to determine whether or not they conform to the requirements of this Agreement;

 

(iii)                               the Units Agent shall not be liable for any error of judgment made in good faith by a Responsible Officer or Responsible Officers of the Units Agent, unless it shall be proved that the Units Agent was negligent in ascertaining the pertinent facts; and

 

(iv)                              the Units Agent shall not be liable with respect to any action taken or omitted to be taken by it in good faith in accordance with the direction of the Holders pursuant to Section 5.07 relating to the time, method and place of conducting any proceeding for any remedy available to the Units Agent, or exercising any right or power conferred upon the Units Agent under this Agreement.

 

(c)                        This Agreement shall not be deemed to create a fiduciary relationship under state or federal law between Wilmington Trust Company, in its capacity as the Units Agent, and any Holder of any Unit.

 

None of the provisions contained in this Agreement shall require the Units Agent to expend or risk its own funds or otherwise incur personal financial liability in the performance of any of its duties or in the exercise of any of its rights or powers, if there shall be reasonable ground for believing that the repayment of such funds or adequate indemnity against such liability is not reasonably assured to it.

 

Section 6.02.  Notice of Default.  Within 90 days after the occurrence of any default by the Company or the Note Issuer hereunder of which a Responsible Officer of the Units Agent has knowledge, subject to Section 6.03(h) hereof, the Units Agent shall transmit by mail to the Company, the Note Issuer and the Holders of Units, as their names and addresses appear in the Security Register, 

 

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notice of such default hereunder, unless such Responsible Officer of the Units Agent has actual knowledge that such default shall have been cured or waived.

 

Section 6.03.  Certain Rights of Units Agent.  Subject to the provisions of Section 6.01:

 

(a)                        the Units Agent may rely and shall be protected in acting or refraining from acting upon any resolution, Officers’ Certificate or any other certificate, statement, instrument, opinion, report, notice, request, consent, order, bond, debenture, note, coupon, security or other paper or document believed by it to be genuine and to have been signed or presented by the proper party or parties;

 

(b)                       any request, direction, order or demand of the Company or the Note Issuer mentioned herein shall be sufficiently evidenced by an Officers’ Certificate or Issuer Order (unless other evidence in respect thereof be herein specifically  prescribed); and any resolution of the Board of Directors may be evidenced to the Units Agent by a Board Resolution;

 

(c)                        the Units Agent may consult with counsel of its selection and any advice of such counsel promptly confirmed in writing shall be full and complete authorization and protection in respect of any action taken, suffered or omitted to be taken by it hereunder in good faith and in reliance thereon in accordance with such advice or Opinion of Counsel;

 

(d)                       the Units Agent shall be under no obligation to exercise any of the rights or powers vested in it by this Agreement at the request, order or direction of any of the Holders pursuant to the provisions of this Agreement, unless such Holders shall have offered to the Units Agent reasonable security or indemnity against the costs, expenses and liabilities which might be incurred therein or thereby;

 

(e)                        the Units Agent shall not be liable for any action taken or omitted by it in good faith and believed by it to be authorized or within the discretion, rights or powers conferred upon it by this Agreement;

 

(f)                          the Units Agent shall not be bound to make any investigation into the facts or matters stated in any resolution, certificate, statement, instrument, opinion, report, notice, request, consent, order, approval, appraisal, bond, debenture, note, coupon, security, or other paper or document unless requested in writing so to do by the Holders of not less than a majority in stated amount of the Outstanding Units; provided that, if the payment within a reasonable time to the Units Agent of the costs, expenses or liabilities likely to be incurred by it in the making of such investigation is, in the opinion of the Units Agent, not reasonably assured to the Units Agent by the security afforded to it by the terms of this Agreement, the Units Agent may require reasonable indemnity against such expenses or liabilities as a condition to proceeding; the reasonable expenses of

 

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every such investigation shall be paid by the Company or, if paid by the Units Agent or any predecessor Units Agent, shall be repaid by the Company upon demand;

 

(g)        the Units Agent may execute any of the rights or powers hereunder or perform any duties hereunder either directly or by or through agents or attorneys not regularly in its employ and the Units Agent shall not be responsible for any misconduct or negligence on the part of any such agent or attorney appointed with due care by it hereunder;

 

(h)        the Units Agent shall not be charged with knowledge of any default with respect to the Units unless a Responsible Officer of the Units Agent assigned to the Corporate Trust Office of the Units Agent (or any successor division or department of the Units Agent) shall have received written notice of such default from the Company, the Note Issuer or any Holder;

 

(i)         the Units Agent shall not be liable for any action taken, suffered or omitted by it in good faith and believed by it to be authorized or within the discretion or rights or powers conferred upon it by this Agreement;

 

(j)         the permissive rights of the Units Agent hereunder shall not be construed as duties;

 

(k)        in no event shall the Units Agent be liable for any consequential, special, punitive or indirect loss or damages, even if advised of the likelihood thereof in advance and regardless of the form of action;

 

(l)         the rights, privileges, protections, immunities and benefits given to the Units Agent, including, without limitation, its right to be indemnified, are extended to, and shall be enforceable by, each agent, custodian and other Person employed by the Units Agent to act hereunder;

 

(m)       the Units Agent may request that the Company (on behalf of itself and the Note Issuer) deliver an Officers’ Certificate setting forth the name of the individuals and/or titles of Officers authorized at such time to take specific actions pursuant to this Agreement, which Officers’ Certificate may be signed by any Person authorized to sign an Officers’ Certificate, including any Person specified as so authorized in any such Officers’ Certificate previously delivered and not superseded; and

 

(n)        the Units Agent shall not be responsible for delays or failures in performance of its obligations hereunder resulting from acts beyond its reasonable control.  Such acts shall include but not be limited to acts of God, strikes, lockouts, riots, acts of war, epidemics, governmental regulations superimposed after the fact, fire, communication line failures, computer viruses, power failures, earthquakes, terrorist attacks or other disasters, it being understood that each of 

 

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the Units Agent shall use reasonable best efforts which are consistent with accepted practices in the banking industry to resume performance as soon as practicable under the circumstances.

 

Section 6.04.  Not Responsible for Recitals.  The recitals contained herein and in the Certificates shall be taken as the statements of the Company or the Note Issuer, as the case may be, and the Units Agent does not assume any responsibility for their accuracy. The Units Agent does not make any representations as to the validity or sufficiency of either this Agreement or of the Units. The Units Agent shall not be accountable for the use or application by the Company or the Note Issuer of the proceeds in respect of the Units.

 

Section 6.05.  May Hold Units.  Any Security Registrar, any other agent of the Company, the Units Agent, and any of their Affiliates, in their individual or any other capacity, may become the owner of Units and Separate Notes and may otherwise deal with the Company, the Note Issuer or any other Person with the same rights it would have if it were not Security Registrar or such other agent, or the Units Agent. The Company and the Note Issuer may become the owner of Units and Separate Notes, subject to Section 3.12.

 

Section 6.06.  Compensation, Reimbursement and Indemnification.  The Company covenants and agrees to pay to the Units Agent from time to time, and the Units Agent shall be entitled to, such compensation as shall be agreed to in writing between the Company and the Units Agent and the Company covenants and agrees to pay or reimburse the Units Agent and each predecessor Units Agent upon its request for all reasonable expenses, disbursements and advances incurred or made by or on behalf of it in accordance with any of the provisions of this Agreement (including the reasonable compensation and the expenses and disbursements of its counsel and of all agents and other Persons not regularly in its employ) except any such expense, disbursement or advance as may arise from its negligence or bad faith.  The Company also covenants to indemnify the Units Agent and each predecessor Units Agent for, and to hold it harmless against, any and all loss, liability, damage, claim or expense, including taxes (other than taxes based on the income of the Units Agent), incurred without negligence or bad faith on its part, arising out of or in connection with the acceptance or administration of this Agreement and its duties hereunder, including the costs and expenses of defending itself against or investigating any claim or liability in the premises.  The obligations of the agreement under this Section 6.06 to compensate and indemnify the Units Agent and each predecessor Units Agent and to pay or reimburse the Units Agent and each predecessor Units Agent for expenses, disbursements and advances shall survive the satisfaction and discharge of this Agreement or the resignation or removal of the Units Agent.  If the Units Agent incurs any expenses, or if the Units Agent is entitled to any compensation for services rendered (including fees and expenses of its agent and counsel), in each case, in connection with the performance of its obligations under this Agreement 

 

31

 

after the occurrence of a Bankruptcy Event, then any such expenses or compensation are intended to constitute expenses of administration under applicable Bankruptcy Laws.

 

Section 6.07.  Corporate Units Agent Required; Eligibility.  There shall at all times be a Units Agent hereunder.  The Units Agent shall at all times be a corporation organized and doing business under the laws of the United States of America or of any state thereof or the District of Columbia having a combined capital and surplus of at least $25,000,000, and which is authorized under such laws to exercise corporate trust powers and is subject to supervision or examination by federal, state or District of Columbia authority, or a corporation or other Person permitted to act as trustee by the Commission.  If such corporation publishes reports of condition at least annually, pursuant to law or to the requirements of the aforesaid supervising or examining authority, then for the purposes of this Section, the combined capital and surplus of such corporation shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published.  In case at any time the Units Agent shall cease to be eligible in accordance with the provisions of this Section, it shall resign immediately in the manner and with the effect specified in this Article.

 

Section 6.08.  Resignation and Removal; Appointment of Successor.  (a) No resignation or removal of the Units Agent and no appointment of a successor Units Agent pursuant to this Article shall become effective until the acceptance of appointment by the successor Units Agent in accordance with the applicable requirements of Section 6.09.

 

(b)        The Units Agent may resign at any time by giving written notice thereof to the Company 60 days prior to the effective date of such resignation. If the instrument of acceptance by a successor Units Agent required by Section 6.09 shall not have been delivered to the Units Agent within 30 days after the giving of such notice of resignation, the resigning Units Agent may petition, at the expense of the Company, any court of competent jurisdiction for the appointment of a successor Units Agent.

 

(c)        The Units Agent may be removed at any time the Holders of a majority in stated amount of the Outstanding Units. If the instrument of acceptance by a successor Units Agent required by Section 6.09 shall not have been delivered to the Units Agent within 30 days after evidence of such removal is delivered to the Company and Units Agent, the removed Units Agent may petition, at the expense of the Company, any court of competent jurisdiction for the appointment of a successor Units Agent.

 

(d)        If at any time:

 

32

 

(i)        the Units Agent shall cease to be eligible under Section 6.07 and shall fail to resign after written request therefor by the Company or by any such Holder; or

 

(ii)       the Units Agent shall be adjudged bankrupt or insolvent or a receiver of the Units Agent or of its property shall be appointed or any public officer shall take charge or control of the Units Agent or of its property or affairs for the purpose of rehabilitation, conservation or liquidation,

 

then, in any such case, (x) the Company by a Board Resolution may remove the Units Agent, or (y) any Holder who has been a bona fide Holder of a Unit for at least six months may, on behalf of himself and all others similarly situated, petition any court of competent jurisdiction for the removal of the Units Agent and the appointment of a successor Units Agent.

 

(e)        If the Units Agent shall resign, be removed or become incapable of acting, or if a vacancy shall occur in the office of Units Agent for any cause, the Company and the Note Issuer shall promptly appoint a successor Units Agent and shall comply with the applicable requirements of Section 6.09. If no successor Units Agent shall have been so appointed by the Company and the Note Issuer and accepted appointment in the manner required by Section 6.09, any Holder who has been a bona fide Holder of a Unit for at least six months, on behalf of itself and all others similarly situated, or the Units Agent may petition at the expense of the Company, any court of competent jurisdiction for the appointment of a successor Units Agent.

 

(f)         The Company shall give, or shall cause such successor Units Agent to give, notice of each resignation and each removal of the Units Agent and each appointment of a successor Units Agent by mailing written notice of such event by first-class mail, postage prepaid, to Holders as their names and addresses appear in the applicable Security Register. Each notice shall include the name of the successor Units Agent and the address of its Corporate Trust Office.

 

Section 6.09.  Acceptance of Appointment by Successor.  (a) In case of the appointment hereunder of a successor Units Agent, every such successor Units Agent so appointed shall execute, acknowledge and deliver to the Company and the Note Issuer and to the retiring Units Agent an instrument accepting such appointment, and thereupon the resignation or removal of the retiring Units Agent shall become effective and such successor Units Agent, without any further act, deed or conveyance, shall become vested with all the rights, powers, agencies and duties of the retiring Units Agent. At the request of the Company or the successor Units Agent, such retiring Units Agent shall, upon its receipt of payment or reimbursement of any amounts due to it hereunder, execute and deliver an 

 

33

 

instrument transferring to such successor Units Agent all the rights, powers and trusts of the retiring Units Agent.

 

(b)        Upon request of any such successor Units Agent, the Company and the Note Issuer shall execute any and all instruments for more fully and certainly vesting in and confirming to such successor Units Agent all such rights, powers and agencies referred to in paragraph (a) of this Section.

 

(c)        No successor Units Agent shall accept its appointment unless at the time of such acceptance such successor Units Agent shall be qualified and eligible under this Article.

 

Section 6.10.  Merger; Conversion; Consolidation or Succession to Business.  Any corporation into which the Units Agent may be merged or converted or with which it may be consolidated, or any corporation resulting from any merger, conversion or consolidation to which the Units Agent shall be a party, or any corporation succeeding to all or substantially all the corporate trust business of the Units Agent, shall be the successor of the Units Agent hereunder; provided that such corporation shall be otherwise qualified and eligible under this Article, without the execution or filing of any paper or any further act on the part of any of the parties hereto. If any Units shall have been authenticated by the Units Agent then in office, but not delivered, any successor by merger, conversion or consolidation to such Units Agent may adopt such Units Agent’s authentication and deliver the Units so authenticated with the same effect as if such successor Units Agent had itself authenticated such Units.

 

Section 6.11.  Preservation of Information; Communications to Holders.  (a) The Units Agent shall preserve, in as current a form as is reasonably practicable, the names and addresses of Holders as received by the Units Agent in its capacity as Security Registrar.

 

(b)        If three or more Holders (such three or more Holders, the “Applicants”) apply in writing to the Units Agent, and furnish to the Units Agent reasonable proof that each such Applicant has owned a Unit for a period of at least six months preceding the date of such application, and such application states that the Applicants desire to communicate with other Holders with respect to their rights under this Agreement or under the Units and is accompanied by a copy of the form of proxy or other communication that such Applicants propose to transmit, then the Units Agent shall mail to all the Holders copies of the form of proxy or other communication that is specified in such request, with reasonable promptness after a tender to the Units Agent of the materials to be mailed and of payment, or provision for the payment, of the reasonable expenses of such mailing.

 

34

 

ARTICLE 7
  SUPPLEMENTAL AGREEMENTS

 

Section 7.01.  Supplemental Agreements Without Consent of Holders.  Without the consent of any Holders, the Company, the Note Issuer and the Units Agent at any time and from time to time, may enter into one or more agreements supplemental hereto, in form satisfactory to the Company, the Note Issuer and the Units Agent, to:

 

(i)        evidence the succession of another Person to the Company or the Note Issuer pursuant to Article 8, and the assumption by any such successor of the covenants and obligations of the Company or the Note Issuer under this Agreement and the Units;

 

(ii)       add to the covenants of the Company or Note Issuer for the benefit of Holders or to surrender any of the Company’s or Note Issuer’s rights or powers;

 

(iii)      evidence and provide for the acceptance of appointment of a successor Units Agent in accordance with this Agreement;

 

(iv)     conform the terms of the Units or the provisions of this Agreement to the “Description of the Units” section in the Prospectus Supplement;

 

(v)      cure any ambiguity or manifest error, to correct or supplement any provisions that may be inconsistent, so long as such action does not adversely affect the interest of the Holders; or

 

(vi)     make any other provisions with respect to such matters or questions, so long as such action does not adversely affect the interest of the Holders.

 

Section 7.02.  Supplemental Agreements With Consent of Holders.  With the consent of the Holders of not less than a majority in stated amount of the Outstanding Units, the Units Agent, the Company, when authorized by a Board Resolution, and the Note Issuer, when authorized by a Board Resolution, may enter into an agreement or agreements supplemental hereto for the purpose of modifying this Agreement; provided, however, that, except as contemplated herein, no such supplemental agreement shall, without the consent of each Holder of an Outstanding Unit affected thereby reduce the above-stated percentage of Outstanding Units the consent of the Holders of which is required for the modification or amendment of the provisions of this Agreement.

 

35

 

It shall not be necessary for any consent of Holders under this Section to approve the particular form of any proposed supplemental agreement, but it shall be sufficient if such consent shall approve the substance thereof.

 

Section 7.03.  Execution of Supplemental Agreements.  In executing, or accepting the additional agencies created by, any supplemental agreement permitted by this Article or the modifications thereby of the agencies created by this Agreement, the Units Agent shall be provided, and (subject to Section 6.01) shall be fully protected in relying upon, an Officers’ Certificate and an Opinion of Counsel, in each case of the Company, stating that the execution of such supplemental agreement is authorized or permitted by this Agreement and does not violate the Indentures, and that any and all conditions precedent to the execution and delivery of such supplemental agreement have been satisfied. The Units Agent may, but shall not be obligated to, enter into any such supplemental agreement that affects the Units Agent’s own rights, duties or immunities under this Agreement or otherwise.

 

Section 7.04.  Effect of Supplemental Agreements.  Upon the execution of any supplemental agreement under this Article, this Agreement shall be modified in accordance therewith, and such supplemental agreement shall form a part of this Agreement for all purposes; and every Holder of Units theretofore or thereafter authenticated and delivered hereunder, shall be bound thereby.

 

Section 7.05.  Reference to Supplemental Agreements.  Units authenticated and delivered after the execution of any supplemental agreement pursuant to this Article may, and shall if required by the Units Agent, bear a notation in form approved by the Units Agent as to any matter provided for in such supplemental agreement. If the Company and the Note Issuer shall so determine, new Units so modified as to conform, in the opinion of the Units Agent, the Company and the Note Issuer, to any such supplemental agreement may be prepared and executed by the Company and the Note Issuer and authenticated and delivered by the Units Agent in exchange for outstanding Units.

 

Section 7.06.  Notice of Supplemental Agreements.  After any supplemental agreement under this Article becomes effective, the Company shall mail to the Holders a notice briefly describing such supplemental agreement; provided, however, that the failure to give such notice to all Holders, or any defect therein, shall not impair or affect the validity of such supplemental agreement.

 

ARTICLE 8
  SUCCESSION OF COMPANY OR NOTE ISSUER

 

Section 8.01.  Succession of Company or Note Issuer.   Upon any succession of another Person to the obligations, rights and powers of the Company or the 

 

36

 

Note Issuer under either Indenture, (i) such successor Person and (subject to Section 7.03) the other parties hereto shall execute a supplemental agreement, pursuant to which such successor Person shall assume all obligations, rights and powers of the Company or the Note Issuer, as the case may be, hereunder and under the Units, as if such successor Person were named as the Company or the Note Issuer herein and therein, and (ii) following execution of such supplemental agreement, if the Company or the Note Issuer has been discharged of its obligations under both Indentures, the Company or the Note Issuer, as the case may be, shall also be discharged from its obligations hereunder and under the Units.

 

ARTICLE 9
  COVENANTS OF THE COMPANY AND THE NOTE ISSUER

 

Section 9.01.  Performance Under this Agreement.  Each of the Company and the Note Issuer covenants and agrees for the benefit of the Holders from time to time of the Units that it will duly and punctually perform its obligations under the Units in accordance with the terms of the Units and this Agreement.

 

Section 9.02. Maintenance of Office Or Agency.  The Company will maintain in the Borough of Manhattan, New York City or in Delaware an office or agency where Securities may be presented or surrendered to take any action provided for hereunder, and where notices and demands to or upon the Company in respect of the Units and this Agreement may be served. The Company will give prompt written notice to the Units Agent of the location, and any change in the location, of such office or agency. If at any time the Company shall fail to maintain any such required office or agency or shall fail to furnish the Units Agent with the address thereof, such presentations, surrenders, notices and demands may be made or served at the Corporate Trust Office, and the Company hereby appoints the Units Agent as its agent to receive all such presentations, surrenders, notices and demands. The Company may also from time to time designate one or more other offices or agencies where Securities may be presented or surrendered for any or all such purposes and may from time to time rescind such designations; provided, however, that no such designation or rescission shall in any manner relieve the Company of its obligation to maintain an office or agency in the Borough of Manhattan, New York City or in Delaware for such purposes. The Company will give prompt written notice to the Units Agent of any such designation or rescission and of any change in the location of any such other office or agency.

 

Section 9.03.  Statements of Officers of the Company as to Default; Notice of Default.  (a) The Company will deliver to the Units Agent, within 120 days after the end of each fiscal year of the Company (which as of the Issue Date is October 31) ending after the date hereof, an Officers’ Certificate (one of the 

 

37

 

signers of which shall be the principal executive officer, principal financial officer or principal accounting officer of the Company), stating whether or not to the knowledge of the signers thereof the Company or the Note Issuer is in default in the performance and observance of any of the terms, provisions and conditions hereof, and if the Company or the Note Issuer shall be in default, specifying all such defaults and the nature and status thereof of which they may have knowledge and what action the Company or the Note Issuer, as the case may be, is taking or proposes to take with respect thereto.

 

(b)        The Company shall promptly deliver to the Units Agent written notice of the occurrence of any default in the performance and observance of any of the terms, provisions and conditions hereof and the status thereof.

 

Section 9.04.  Existence.  The Company and the Note Issuer shall each do or cause to be done all things necessary to preserve and keep in full force and effect its existence in accordance with their respective organizational documents, and the material rights, licenses and franchises of the Company and the Note Issuer; provided that this Section 9.04 shall not prohibit any transaction otherwise permitted by the Indentures.

 

Section 9.05. Tax Treatment.  The Company and the Note Issuer agree, and by purchasing a Unit each Beneficial Holder agrees, for United States federal income tax purposes, to (a) treat a Unit as an investment unit composed of two separate instruments, an Amortizing Note and an Exchangeable Note, and (b) in the case of each Beneficial Holder acquiring the Units at original issuance, allocate the stated amount of each Unit between the Amortizing Note and the Exchangeable Note so that such Beneficial Holder’s initial tax basis in each Amortizing Note will be $231.49 and such Beneficial Holder’s initial tax basis in each Exchangeable Note will be $768.51.

 

[SIGNATURES ON THE FOLLOWING PAGE]

 

38

 

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed as of the day and year first above written.

 

	
 
    	
HOVNANIAN   ENTERPRISES, INC.
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/ J. Larry   Sorsby
    
	
 
    	
 
    	
Name:
    	
J. Larry Sorsby
    
	
 
    	
 
    	
Title:
    	
Executive Vice   President and Chief Financial Officer
    
	
 
    	
 
    	
 
    
	
 
    	
K. HOVNANIAN   ENTERPRISES, INC.
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/ J. Larry   Sorsby
    
	
 
    	
 
    	
Name:
    	
J. Larry Sorsby
    
	
 
    	
 
    	
Title:
    	
Executive Vice   President and Chief Financial Officer
    
	
 
    	
 
    	
 
    
	
 
    	
WILMINGTON TRUST   COMPANY, as Units Agent
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/ Joshua C.   Jones
    
	
 
    	
 
    	
Name:
    	
Joshua C. Jones
    
	
 
    	
 
    	
Title:
    	
Assistant   Secretary and Financial Services Officer
    

 

 

EXHIBIT A

 

[FORM OF FACE OF UNIT]

 

[THIS SECURITY IS A GLOBAL UNIT WITHIN THE MEANING OF THE UNITS AGREEMENT HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF A DEPOSITARY OR A NOMINEE OF A DEPOSITARY OR A SUCCESSOR DEPOSITARY.  UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR SECURITIES IN CERTIFICATED FORM, THIS SECURITY MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION (THE “DEPOSITARY”) TO THE NOMINEE OF THE DEPOSITARY OR BY A NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY OR ANOTHER NOMINEE OF THE DEPOSITARY OR BY THE DEPOSITARY OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH SUCCESSOR DEPOSITARY.

 

UNLESS THIS SECURITY IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITARY TO THE COMPANY AND THE NOTE ISSUER OR THEIR AGENTS FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY SECURITY ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITARY (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITARY), 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 AN INTEREST HEREIN.]*

 

* Include if a Global Unit.

 

A-1

 

HOVNANIAN ENTERPRISES, INC.

 

and

 

K. HOVNANIAN ENTERPRISES, INC.

 

6.00% EXCHANGEABLE NOTE UNITS

 

	
CUSIP No.      442488 BN1
    
	
ISIN No.   US442488BN15
    
	
No.        
    	
[Initial]*   Aggregate Stated Amount of Units                            
    
	
 
    	
(equivalent   to                      Units)
    

 

This Unit certifies that [CEDE & CO., as nominee of The Depository Trust Company]*[             ]** (the “Holder”), or registered assigns, is the registered owner of the aggregate stated amount of Units set forth above[, or such other aggregate stated amount of Units reflected on the books and records of the Units Agent and the Depositary, in accordance with the terms of the Units Agreement (as defined below), but which aggregate stated amount, taken together with the aggregate stated amount of all other outstanding Units, shall not exceed $100,000,000 (equivalent to 100,000 Units) at any time]*.

 

Each $1,000 in stated amount of Units consists of (i) an Exchangeable Note, and (ii) an Amortizing Note, each issued by the Note Issuer. Each Unit evidenced hereby is governed by a Units Agreement, dated as of October 2, 2012 (as may be supplemented from time to time, the “Units Agreement”), among the Company, the Note Issuer and Wilmington Trust Company, as Units Agent (including its successors hereunder, the “Units Agent”).

 

Reference is hereby made to the Units Agreement and the Indentures and, in each case supplemental agreements thereto, for a description of the respective rights, limitations of rights, obligations, duties and immunities thereunder of the Units Agent, the Company, the Note Issuer and the Holders and of the terms upon which the Units are, and are to be, executed and delivered.

 

Upon the conditions and under the circumstances set forth in the Units Agreement, Holders of Units shall have the right to separate a Unit into its component parts, and a Holder of a Separate Exchangeable Note and Separate Amortizing Note shall have the right to re-create a Unit.

 

The Company and the Note Issuer agree, and by purchasing a Unit each Beneficial Holder agrees, for United States federal income tax purposes, to (1) treat each Unit as an investment unit composed of two separate instruments, an Amortizing Note and an Exchangeable Note, and (2) in the case of each Beneficial Holder acquiring the Units at original issuance, allocate the stated amount of each Unit between the Amortizing Note and the Exchangeable Note so 

 

A-2

 

that such Beneficial Holder’s initial tax basis in each Amortizing Note will be $231.49 and such Beneficial Holder’s initial tax basis in each Exchangeable Note will be $768.51.

 

The Units, and any claim, controversy or dispute arising under or related to the Units, shall be governed by, and construed in accordance with, the laws of the State of New York.

 

Capitalized terms used herein and not defined have the meanings given to such terms in the Units Agreement.

 

In the event of any inconsistency between the provisions of this Unit and the provisions of the Units Agreement, the Units Agreement shall prevail.

 

[SIGNATURES ON THE FOLLOWING PAGE]

 

* Include only if a Global Unit.

** Include only if not a Global Unit.

 

A-3

 

IN WITNESS WHEREOF, the Company and the Note Issuer have caused this instrument to be duly executed.

 

 

	
Dated:
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
HOVNANIAN   ENTERPRISES, INC.
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
By:
    	
 
    
	
 
    	
 
    	
 
    	
Name:
    
	
 
    	
 
    	
 
    	
Title:
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
K. HOVNANIAN   ENTERPRISES, INC.
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
By:
    	
 
    
	
 
    	
 
    	
 
    	
Name:
    
	
 
    	
 
    	
 
    	
Title:
    

 

A-4

 

UNIT CERTIFICATE OF AUTHENTICATION 
 OF UNITS AGENT

 

This is one of the Units referred to in the within mentioned Units Agreement.

 

 

	
Dated:
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
WILMINGTON TRUST   COMPANY, as Units Agent
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
By:
    	
 
    
	
 
    	
 
    	
 
    	
Authorized   Signatory
    

 

A-5

 

[FORM OF REVERSE OF UNIT]

 

[Intentionally Blank]

 

A-6

 

ATTACHMENT 1

 

[FORM OF SEPARATION NOTICE]

 

[UNITS AGENT 
 ADDRESS]

 

[AMORTIZING NOTES TRUSTEE
 ADDRESS]

 

[EXCHANGEABLE NOTES TRUSTEE
 ADDRESS]

 

Re: Separation of [Global]* Units

 

The undersigned [Beneficial Holder]* hereby notifies you that it wishes to separate            aggregate stated amount of Units [as to which it holds a Book-Entry Interest]* (such aggregate stated amount divided by $1,000, the “number of  Relevant Units”) into a number of Amortizing Notes equal to the number of Relevant Units and a number of Exchangeable Notes equal to the number of Relevant Units in accordance with the Units Agreement (the “Units Agreement”) dated October 2, 2012 among the Company, the Note Issuer and Wilmington Trust Company, as Units Agent, and the Indentures. Terms used and not defined herein have the meaning assigned to such terms in the Units Agreement.

 

The undersigned [includes herewith]** [Beneficial Holder has instructed the undersigned Depository Participant to transfer to you its Book-Entry Interests in]* the aggregate stated amount of Units specified in the immediately preceding paragraph. The undersigned [includes herewith]** [Beneficial Holder has furnished the undersigned Depository Participant with]* the appropriate endorsements and documents and paid all applicable transfer or similar taxes, if any, to the extent required by the Units Agreement and the Indentures.

 

Please [deliver to the undersigned’s address specified below]** [transfer to the account of the undersigned Beneficial Holder with the undersigned Depositary Participant the beneficial interests in]* (i) a number of Separate Amortizing Notes and (ii) a number of Separate Exchangeable Notes equal to the number of Relevant Units.

 

[SIGNATURES ON THE FOLLOWING PAGE]

 

* Include only if a Global Unit.

** Include only if not a Global Unit.

 

A-7

 

IN WITNESS WHEREOF, the [undersigned has caused this instrument to be duly executed]** [Depository Participant has caused this instrument to be duly executed on behalf of itself and the undersigned Beneficial Holder]*.

 

	
Dated:
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
[NAME OF   BENEFICIAL HOLDER]
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
By:
    	
 
    
	
 
    	
 
    	
 
    	
Name:
    
	
 
    	
 
    	
 
    	
Title:
    
	
 
    	
 
    	
 
    	
Address:
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
[NAME OF   DEPOSITORY PARTICIPANT]*
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
By:
    	
 
    	
 
    	
 
    
	
 
    	
Name:
    	
 
    	
 
    
	
 
    	
Address:
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
Attest By:
    	
 
    	
 
    
						

 

* Include only if a Global Unit.

** Include only if not a Global Unit.

 

A-8

 

ATTACHMENT 2

 

[FORM OF RECREATION NOTICE]

 

[UNITS AGENT 
 ADDRESS]

 

[AMORTIZING NOTES TRUSTEE
 ADDRESS]

 

[EXCHANGEABLE NOTES TRUSTEE
 ADDRESS]

 

Re: Recreation of [Global]* Units

 

The undersigned [Beneficial Holder]* hereby notifies you that it wishes to recreate              aggregate stated amount of Units [as to which it holds a Book-Entry Interest]* (such aggregate stated amount divided by $1,000, the “number of  New Units”) from a number of Separate Amortizing Notes equal to the number of New Units and a number of Separate Exchangeable Notes equal to the number of New Units in accordance with the Units Agreement (the “Units Agreement”) dated as of October 2, 2012 among the Company, the Note Issuer and Wilmington Trust Company, as Units Agent, and the Indentures. Terms used and not defined herein have the meaning assigned to such terms in the Units Agreement.

 

The undersigned [includes herewith]** [Beneficial Holder has instructed the undersigned Depository Participant to transfer to you its Book-Entry Interests in]* the applicable number of Separate Amortizing Notes and the applicable number of Separate Exchangeable Notes sufficient for the recreation of the aggregate stated amount of Units specified above. The undersigned [includes herewith]** [Beneficial Holder has furnished the undersigned Depository Participant with]* the appropriate endorsements and documents and paid all applicable transfer or similar taxes, if any, to the extent required by the Units Agreement and the Indentures.

 

Please [deliver to the undersigned’s address specified below]** [transfer to the account of the undersigned Beneficial Holder with the undersigned Depositary Participant the beneficial interests in]* the aggregate stated amount of Units specified above.

 

[SIGNATURES ON THE FOLLOWING PAGE]

 

* Include only if a Global Unit.

** Include only if not a Global Unit.

 

A-9

 

IN WITNESS WHEREOF, the [undersigned has caused this instrument to be duly executed]** [Depository Participant has caused this instrument to be duly executed on behalf of itself and the undersigned Beneficial Holder]*.

 

 

	
Dated:
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
[NAME OF   BENEFICIAL HOLDER]
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
By:
    	
 
    
	
 
    	
 
    	
 
    	
Name:
    
	
 
    	
 
    	
 
    	
Title:
    
	
 
    	
 
    	
 
    	
Address:
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
[NAME OF   DEPOSITORY PARTICIPANT]*
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
By:
    	
 
    	
 
    	
 
    
	
 
    	
Name:
    	
 
    	
 
    
	
 
    	
Address:
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
Attest By:
    	
 
    	
 
    
						

 

* Include only if a Global Unit.

** Include only if not a Global Unit.

 

A-10

 

ATTACHMENT 3

 

COMPONENT EXCHANGEABLE NOTE

 

A-11

 

K. HOVNANIAN ENTERPRISES, INC.

Zero Coupon Senior Exchangeable Note due 2017

 

	
No. 1
    	
 
    	
Initial   Principal Amount at Maturity: $100,000,000
   (equivalent to 100,000 Exchangeable Notes)
    

 

K. HOVNANIAN ENTERPRISES, INC., a California corporation (the “Issuer,” which term includes any successor corporation or other entity under the Indenture referred to on the reverse hereof), for value received hereby promises to pay to CEDE & CO., or registered assigns, the principal sum of $100,000,000, or such other amount reflected on the books and records of the Depositary and the Trustee, in accordance with the Indenture (with respect to this Exchangeable Note, the “Principal Amount at Maturity”), which amount, taken together with the Principal Amount at Maturity of all other Outstanding Exchangeable Notes, shall not, unless permitted by the Indenture, exceed $100,000,000 in aggregate at any time, in accordance with the rules and procedures of the Depositary, on December 1, 2017.

 

The Exchangeable Notes shall not bear cash interest.  The principal amount (as of any date of determination, the “Accreted Principal Amount”) of the Exchangeable Notes, with respect to each $1,000 Principal Amount at Maturity, on the Issue Date shall be equal to the Initial Principal Amount, and following the Issue Date shall accrete daily at a rate of 5.17% per annum, calculated on a semi-annual bond equivalent yield basis, using a 360 day year composed of twelve 30 day months and compounding on June 1 and December 1 of each year, beginning June 1, 2013.

 

The Issuer shall pay the principal of this Exchangeable Note in immediately available funds to the Depositary or its nominee, as the case may be, as the registered Holder of such Exchangeable Note.  The Issuer has initially designated the Trustee as its paying agent and registrar in respect of the Exchangeable Notes and its agency at its Corporate Trust Office as a place where Exchangeable Notes may be presented for payment or for registration of transfer.

 

Reference is made to the further provisions of this Exchangeable Note set forth on the reverse hereof, including, without limitation, provisions giving the Holder of this Exchangeable Note the right to exchange this Exchangeable Note into shares of Class A Common Stock (together with cash in lieu of any fractional share, if applicable) on the terms and subject to the limitations set forth in the Indenture.  Such further provisions shall for all purposes have the same effect as though fully set forth at this place.

 

This Exchangeable Note, and any claim, controversy or dispute arising under or related to this Exchangeable Note, shall be governed by and construed in accordance with the laws of the State of New York.

 

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In the case of any conflict between this Exchangeable Note and the Indenture, the provisions of the Indenture shall control and govern.

 

This Exchangeable Note shall not be valid or become obligatory for any purpose until the certificate of authentication hereon shall have been manually signed by the Trustee or a duly authorized authenticating agent under the Indenture.

 

[Remainder of page intentionally left blank]

 

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IN WITNESS WHEREOF, the Issuer has caused this Exchangeable Note to be duly executed.

 

	
 
    	
 
    	
K. HOVNANIAN   ENTERPRISES, INC.
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
By:
    	
 
    
	
 
    	
 
    	
 
    	
Name:
    
	
 
    	
 
    	
 
    	
Title:
    

 

 

	
Dated:
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
TRUSTEE’S   CERTIFICATE OF AUTHENTICATION
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
This is one of the   Securities of the series designated therein referred to in the   within-mentioned Indenture.
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
WILMINGTON TRUST   COMPANY,
    	
 
    	
 
    
	
As Trustee
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
By:
    	
 
    	
 
    	
 
    
	
 
    	
Authorized   Signatory
    	
 
    	
 
    

 

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REVERSE OF NOTE

 

K. HOVNANIAN ENTERPRISES, INC.

Zero Coupon Senior Exchangeable Note due 2017

 

This Exchangeable Note is one of a duly authorized issue of Securities of the Issuer, designated as its Zero Coupon Senior Exchangeable Notes due 2017 (the “Exchangeable Notes”), limited to the aggregate Principal Amount at Maturity of $100,000,000 all issued or to be issued under and pursuant to a Senior Indenture dated as of February 14, 2011 (the “Base Indenture”), as amended and supplemented by the Fourth Supplemental Indenture dated as of October 2, 2012 (herein called the “Supplemental Indenture”; the Base Indenture, as amended and supplemented by the Supplemental Indenture, and as it may be further amended or supplemented from time to time, the “Indenture”), by and between the Issuer and Wilmington Trust Company (the “Trustee”) to which Indenture and all indentures supplemental thereto reference is hereby made for a description of the rights, limitations of rights, obligations, duties and immunities thereunder of the Trustee, the Issuer and the Holders of the Exchangeable Notes.

 

In case an Event of Default, as defined in the Indenture, shall have occurred and be continuing, the Accreted Principal Amount, as of the date of acceleration, of all Exchangeable Notes may be declared, by either the Trustee or Holders of at least 25% in aggregate Principal Amount at Maturity of Exchangeable Notes then Outstanding, and upon said declaration shall become, due and payable, in the manner, with the effect and subject to the conditions and certain exceptions set forth in the Indenture.  Notwithstanding the foregoing, if an Event of Default involving certain bankruptcy events with respect to the Issuer or Hovnanian, as specified in the Indenture, occurs, the Accreted Principal Amount, as of the date of acceleration, shall automatically become due and payable without any declaration, notice or other act on the part of the Trustee, the Issuer, any Guarantor or any Holder.

 

Subject to the terms and conditions of the Indenture, the Issuer will make all payments in respect of the Fundamental Change Repurchase Price and the principal amount on the Maturity Date, as the case may be, to the Holder who surrenders an Exchangeable Note to a paying agent to collect such payments in respect of the Exchangeable Note.  The Issuer shall pay cash amounts in money of the United States that at the time of payment is legal tender for payment of public and private debts.

 

The Indenture contains provisions permitting the Issuer and the Trustee in certain circumstances, without the consent of the Holders of the Exchangeable Notes, and in certain other circumstances, with the consent of the Holders of not less than a majority in aggregate Principal Amount at Maturity of the Exchangeable Notes at the time Outstanding, evidenced as in the Indenture provided, to execute supplemental indentures modifying the terms of the Indenture and the Exchangeable Notes as described therein.  It is also provided in

 

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the Indenture that, subject to certain exceptions, the Holders of a majority in aggregate Principal Amount at Maturity of the Exchangeable Notes at the time Outstanding may on behalf of the Holders of all of the Exchangeable Notes waive any past Default or Event of Default under the Indenture and its consequences.

 

No reference herein to the Indenture and no provision of this Exchangeable Note or of the Indenture shall alter or impair the obligation of the Issuer, which is absolute and unconditional, to pay the principal (including the Fundamental Change Repurchase Price, if applicable) of this Exchangeable Note at the place, at the respective times, in the amounts and, if applicable, in the lawful money herein prescribed, or the obligation of the Issuer and Hovnanian to deliver the consideration due upon exchange of this Exchangeable Note.

 

The Exchangeable Notes are issuable in registered form without coupons in denominations of $1,000 Principal Amount at Maturity and integral multiples thereof.  At the office or agency of the Issuer referred to on the face hereof, and in the manner and subject to the limitations provided in the Indenture, Exchangeable Notes may be exchanged for a like aggregate Principal Amount at Maturity of Exchangeable Notes of other authorized denominations, without payment of any service charge but, if required by the Issuer or Trustee, with payment of a sum sufficient to cover any transfer tax or similar governmental charge required by law or that may be imposed in connection therewith as a result of the name of the Holder of the new Exchangeable Notes issued upon such exchange of Exchangeable Notes being different from the name of the Holder of the old Exchangeable Notes surrendered for such exchange.

 

The Exchangeable Notes shall not be redeemable at the Issuer’s option.

 

Upon the occurrence of a Fundamental Change, the Holder has the right, at such Holder’s option, to require the Issuer to repurchase for cash all of such Holder’s Exchangeable Notes or any portion thereof (with a Principal Amount at Maturity of $1,000 or integral multiple thereof) on the Fundamental Change Repurchase Date at a price equal to the Fundamental Change Repurchase Price.

 

This Exchangeable Note shall be subject to the Section 382 Exchange Blocker (as defined in the Indenture), and any purported violation of the Section 382 Exchange Blocker shall be subject to the consequences provided in the Indenture.

 

Subject to the provisions of the Indenture, the Holder hereof has the right, at its option, during certain periods and upon the occurrence of certain conditions specified in the Indenture, prior to the close of business on the Business Day immediately preceding the Maturity Date, to irrevocably exchange any Exchangeable Notes or portion thereof that is $1,000 in Principal Amount at Maturity or an integral multiple thereof, into shares of Class A Common Stock (together with cash in lieu of any fractional share) at the Exchange Rate specified in the Indenture, as adjusted from time to time as provided in the Indenture.

 

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This Exchangeable Note has been issued with “original issue discount” (within the meaning of Section 1272 of the Internal Revenue Code of 1986, as amended). Upon written request to K. Hovnanian Enterprises, Inc. at the following address: 110 West Front Street, P.O. Box 500, Red Bank, New Jersey 07701, Attention: Secretary, the Issuer will promptly make available to any Holder of this Exchangeable Note the following information: (1) the issue price and issue date of the Exchangeable Note, (2) the amount of original issue discount on the Exchangeable Note and (3) the yield to maturity of the Exchangeable Note.

 

Terms used in this Exchangeable Note and defined in the Indenture are used herein as therein defined.

 

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GUARANTEE

 

Each of the Guarantors hereby unconditionally guarantees, jointly and severally, to each Holder and to the Trustee and its successors and assigns, irrespective of the validity and enforceability of the Indenture, the Exchangeable Notes or the obligations of the Issuer or Hovnanian hereunder or thereunder, that (i) the due and punctual payment of the principal of the Exchangeable Notes (including, without limitation, payment of the Fundamental Change Repurchase Price pursuant to Article 9 of the Supplemental Indenture, if applicable), and all other amounts owing with respect to the Exchangeable Notes, whether on the Maturity Date, by acceleration or otherwise, and all other obligations of the Issuer or Hovnanian to the Holders or the Trustee hereunder or thereunder, including, without limitation, the Exchange Obligation, shall be promptly paid in full when due or performed when required, as the case may be, in accordance with the terms of the Indenture and the Exchangeable Notes, and (ii) in case of any extension of time of payment or delivery or renewal of any Exchangeable Notes or any of such other obligations, the same shall be promptly paid in full when due or be performed when required, as the case may be, in accordance with the terms of the extension or renewal, whether at stated maturity, by acceleration, upon exchange pursuant to Article 8 of the Supplemental Indenture or otherwise (each such guarantee, a “Guarantee”).

 

No past, present or future stockholder, officer, director, employee or incorporator, as such, of any of the Guarantors shall have any liability under the Guarantee by reason of such Person’s status as stockholder, officer, director, employee or incorporator. Each Holder of an Exchangeable Note by accepting an Exchangeable 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 an Exchangeable Note by accepting an Exchangeable 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 shall not be valid or obligatory for any purpose until the certificate of authentication on the Exchangeable Notes upon which the Guarantee is noted shall have been executed by the Trustee under the Indenture by the manual signature of one of its authorized officers.

 

The Guarantee, and any claim, controversy or dispute arising under or related to the Guarantee, shall be governed by and construed in accordance with the laws of the State of New York.

 

In the event of any inconsistency between the provisions of this Guarantee and the provisions of the Indenture, the Indenture shall prevail.

 

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IN WITNESS WHEREOF, the Guarantors have caused this instrument to be executed.

 

 

	
Dated:
    	
 
    	
 
    	
 
    

 

ARBOR TRAILS, LLC

AUDDIE ENTERPRISES, L.L.C.

BUILDER SERVICES NJ, L.L.C.

BUILDER SERVICES PA, L.L.C.

DULLES COPPERMINE, L.L.C.

EASTERN NATIONAL TITLE AGENCY, LLC

EASTERN TITLE AGENCY, INC.

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

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

FOUNDERS TITLE AGENCY, INC.

GOVERNOR’S ABSTRACT CO., INC.

HOMEBUYERS FINANCIAL SERVICES, L.L.C.

HOVNANIAN DEVELOPMENTS OF FLORIDA, INC.

HOVNANIAN ENTERPRISES, INC. (PARENT COMPANY)

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

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

HOVNANIAN LAND INVESTMENT GROUP, L.L.C.

K. HOV IP, II, INC.

K. HOV IP, INC.

K. HOVNANIAN ACQUISITIONS, INC.

K. HOVNANIAN AT 4S, LLC

K. HOVNANIAN AT ACQUA VISTA, LLC

K. HOVNANIAN AT ALISO, LLC

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

K. HOVNANIAN AT ANDALUSIA, LLC

K. HOVNANIAN AT ARBOR HEIGHTS, LLC

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

K. HOVNANIAN AT BAKERSFIELD 463, L.L.C.

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

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

K. HOVNANIAN AT BELLA LAGO, LLC

K. HOVNANIAN AT BENSALEM, LLC

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

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

K. HOVNANIAN AT BRANCHBURG, L.L.C.

K. HOVNANIAN AT BRIDGEPORT, INC.

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

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

K. HOVNANIAN AT CAMERON CHASE, INC.

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

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

K. HOVNANIAN AT CARLSBAD, LLC

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

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

K. HOVNANIAN AT CHARTER WAY, LLC

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

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

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

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

 

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

K. HOVNANIAN AT CORTEZ HILL, LLC

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

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

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

K. HOVNANIAN AT DOMINGUEZ HILLS, INC.

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

K. HOVNANIAN AT EASTLAKE, LLC

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

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

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

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

K. HOVNANIAN AT EL DORADO RANCH II, L.L.C.

K. HOVNANIAN AT EL DORADO RANCH, L.L.C.

K. HOVNANIAN AT ENCINITAS RANCH, LLC

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

K. HOVNANIAN AT FIDDYMENT RANCH, LLC

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

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

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

K. HOVNANIAN AT FOREST MEADOWS, L.L.C.

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

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

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

K. HOVNANIAN AT FRESNO, LLC

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

K. HOVNANIAN AT GILROY, LLC

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 HAWTHORNE, L.L.C.

K. HOVNANIAN AT HERSHEY’S MILL, INC.

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

K. HOVNANIAN AT HOWELL, LLC

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

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

K. HOVNANIAN AT JACKSON, L.L.C.

K. HOVNANIAN AT JAEGER RANCH, LLC

K. HOVNANIAN AT JERSEY CITY IV, L.L.C.

K. HOVNANIAN AT JERSEY CITY V URBAN RENEWAL COMPANY, L.L.C.

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

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

K. HOVNANIAN AT LA COSTA, LLC

K. HOVNANIAN AT LA HABRA KNOLLS, LLC

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

K. HOVNANIAN AT LAKE RANCHO VIEJO, LLC

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

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

K. HOVNANIAN AT LEE SQUARE, L.L.C.

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

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

K. HOVNANIAN AT 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.

 

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K. HOVNANIAN AT LOWER MORELAND II, L.L.C.

K. HOVNANIAN AT MAHWAH VI, INC.

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

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

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

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

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

K. HOVNANIAN AT MANTECA, LLC

K. HOVNANIAN AT MAPLE AVENUE, 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 MELANIE MEADOWS, LLC

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

K. HOVNANIAN AT MENIFEE, LLC

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

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

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

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

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

K. HOVNANIAN AT MONROE II, INC.

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

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

K. HOVNANIAN AT MONTVALE II, LLC

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

K. HOVNANIAN AT MOSAIC, LLC

K. HOVNANIAN AT MUIRFIELD, LLC

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

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

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

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

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

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

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

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

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

K. HOVNANIAN AT NORTHERN WESTCHESTER, INC.

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

K. HOVNANIAN AT OCEAN TOWNSHIP, INC

K. HOVNANIAN AT OCEAN WALK, INC.

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

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

K. HOVNANIAN AT OLDE ORCHARD, LLC

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

K. HOVNANIAN AT PARK LANE, LLC

K. HOVNANIAN AT PARKSIDE, LLC

K. HOVNANIAN AT PARSIPPANY, L.L.C.

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

K. HOVNANIAN AT PIAZZA D’ORO,  L.L.C.

K. HOVNANIAN AT PIAZZA SERENA, L.L.C

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

K. HOVNANIAN AT PORT IMPERIAL URBAN RENEWAL IV, L.L.C.

K. HOVNANIAN AT PORT IMPERIAL URBAN RENEWAL V, L.L.C.

K. HOVNANIAN AT PORT IMPERIAL URBAN RENEWAL VI, L.L.C.

 

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K. HOVNANIAN AT PORT IMPERIAL URBAN RENEWAL VII, L.L.C.

K. HOVNANIAN AT PORT IMPERIAL URBAN RENEWAL VIII, L.L.C.

K. HOVNANIAN AT POSITANO, LLC

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

K. HOVNANIAN AT RANCHO SANTA MARGARITA, LLC

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

K. HOVNANIAN AT RAPHO, L.L.C

K. HOVNANIAN AT RIDGEMONT, L.L.C.

K. HOVNANIAN AT RIVERBEND, LLC

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

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

K. HOVNANIAN AT SAGE, L.L.C.

K. HOVNANIAN AT SANTA NELLA, LLC

K. HOVNANIAN AT SAWMILL, INC.

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

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

K. HOVNANIAN AT SEASONS LANDING, LLC

K. HOVNANIAN AT SHELDON GROVE, LLC

K. HOVNANIAN AT SHREWSBURY, LLC

K. HOVNANIAN AT SILVER SPRING, L.L.C.

K. HOVNANIAN AT SKYE ISLE, LLC

K. HOVNANIAN AT SMITHVILLE, INC.

K. HOVNANIAN AT SOMERS POINT, L.L.C.

K. HOVNANIAN AT SOUTH BRUNSWICK II, LLC

K. HOVNANIAN AT SOUTH BRUNSWICK, L.L.C.

K. HOVNANIAN AT STANTON, LLC

K. HOVNANIAN AT STATION SQUARE, L.L.C.

K. HOVNANIAN AT SUNRIDGE PARK, LLC

K. HOVNANIAN AT SYCAMORE, INC.

K. HOVNANIAN AT THE CROSBY, LLC

K. HOVNANIAN AT THE GABLES, LLC

K. HOVNANIAN AT THE MONARCH, L.L.C.

K. HOVNANIAN AT THE PRESERVE, LLC

K. HOVNANIAN AT THOMPSON RANCH, LLC

K. HOVNANIAN AT THORNBURY, INC.

K. HOVNANIAN AT TRAIL RIDGE, LLC

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

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

K. HOVNANIAN AT UPPER MAKEFIELD I, INC.

K. HOVNANIAN AT UPPER PROVIDENCE, LLC

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

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

K. HOVNANIAN AT VALLE DEL SOL, LLC

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

K. HOVNANIAN AT VICTORVILLE, L.L.C.

K. HOVNANIAN AT VINELAND, L.L.C.

K. HOVNANIAN AT VISTA DEL SOL, L.L.C.

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

K. HOVNANIAN AT WASHINGTON, L.L.C.

K. HOVNANIAN AT WATERSTONE, LLC

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

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

K. HOVNANIAN AT WEST VIEW ESTATES, L.L.C.

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

K. HOVNANIAN AT WESTSHORE, LLC

K. HOVNANIAN AT WHEELER RANCH, LLC

 

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

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

K. HOVNANIAN AT WINCHESTER, LLC

K. HOVNANIAN AT WOODCREEK WEST, LLC

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

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

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

K. HOVNANIAN CLASSICS, L.L.C.

K. HOVNANIAN COMMUNITIES, INC.

K. HOVNANIAN COMPANIES OF CALIFORNIA, INC.

K. HOVNANIAN COMPANIES OF MARYLAND, INC.

K. HOVNANIAN COMPANIES OF NEW YORK, INC.

K. HOVNANIAN COMPANIES OF PENNSYLVANIA, INC.

K. HOVNANIAN COMPANIES OF SOUTHERN CALIFORNIA, INC.

K. HOVNANIAN COMPANIES, LLC

K. HOVNANIAN CONSTRUCTION II, INC

K. HOVNANIAN CONSTRUCTION III, INC

K. HOVNANIAN CONSTRUCTION MANAGEMENT, INC.

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

K. HOVNANIAN 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 GEORGIA, INC.

K. HOVNANIAN DEVELOPMENTS OF ILLINOIS, INC.

K. HOVNANIAN DEVELOPMENTS OF KENTUCKY, INC.

K. HOVNANIAN DEVELOPMENTS OF MARYLAND, INC.

K. HOVNANIAN DEVELOPMENTS OF MINNESOTA, INC.

K. HOVNANIAN DEVELOPMENTS OF NEW JERSEY II, INC.

K. HOVNANIAN DEVELOPMENTS OF NEW JERSEY, INC.

K. HOVNANIAN DEVELOPMENTS OF NEW YORK, INC.

K. HOVNANIAN DEVELOPMENTS OF NORTH CAROLINA, INC.

K. HOVNANIAN DEVELOPMENTS OF OHIO, INC.

K. HOVNANIAN DEVELOPMENTS OF PENNSYLVANIA, INC.

K. HOVNANIAN DEVELOPMENTS OF SOUTH CAROLINA, INC.

K. HOVNANIAN DEVELOPMENTS OF TEXAS, INC.

K. HOVNANIAN DEVELOPMENTS OF VIRGINIA, INC.

K. HOVNANIAN DEVELOPMENTS OF WEST VIRGINIA, INC.

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

K. HOVNANIAN ENTERPRISES, INC.

K. HOVNANIAN FIRST HOMES, L.L.C.

K. HOVNANIAN FLORIDA REALTY, L.L.C.

K. HOVNANIAN FOUR SEASONS @ HISTORIC VIRGINIA, LLC

K. HOVNANIAN FOUR SEASONS AT GOLD HILL, LLC

K. HOVNANIAN GREAT WESTERN BUILDING COMPANY, LLC

K. HOVNANIAN GREAT WESTERN HOMES, LLC

K. HOVNANIAN HAMPTONS AT OAK CREEK II, L.L.C.

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

K. HOVNANIAN HOMES - DFW, L.L.C.

K. HOVNANIAN HOMES AT CAMERON STATION, LLC

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 GREENWAY FARM PARK TOWNS, L.L.C.

K. HOVNANIAN HOMES AT GREENWAY FARM, L.L.C.

K. HOVNANIAN HOMES AT JONES STATION 1, L.L.C.

 

12

 

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

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

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

K. HOVNANIAN HOMES AT THE HIGHLANDS, LLC

K. HOVNANIAN HOMES NORTHERN CALIFORNIA, INC.

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

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

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

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

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

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

K. HOVNANIAN HOMES OF NORTH CAROLINA, INC.

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

K. HOVNANIAN HOMES OF SOUTH CAROLINA, LLC

K. HOVNANIAN HOMES OF VIRGINIA, INC.

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

K. HOVNANIAN LIBERTY ON BLUFF CREEK, LLC

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

K. HOVNANIAN NORTH JERSEY ACQUISITIONS, L.L.C.

K. HOVNANIAN NORTHEAST SERVICES, L.L.C.

K. HOVNANIAN OF HOUSTON II, L.L.C.

K. HOVNANIAN OHIO REALTY, L.L.C.

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

K. HOVNANIAN PA REAL ESTATE, INC.

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

K. HOVNANIAN PORT IMPERIAL URBAN RENEWAL, INC.

K. HOVNANIAN PROPERTIES OF RED BANK, INC.

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

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

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

K. HOVNANIAN STANDING ENTITY, L.L.C.

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

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

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

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

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

K. HOVNANIAN T&C HOMES AT FLORIDA, L.L.C.

K. HOVNANIAN T&C HOMES AT ILLINOIS, L.L.C.

K. HOVNANIAN TIMBRES AT ELM CREEK, LLC

K. HOVNANIAN VENTURE I, L.L.C.

K. HOVNANIAN WINDWARD HOMES, LLC

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

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

K. HOVNANIAN’S FOUR SEASONS AT BEAUMONT, LLC

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

K. HOVNANIAN’S FOUR SEASONS AT HEMET, LLC

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

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

K. HOVNANIAN’S FOUR SEASONS AT LOS BANOS, LLC

K. HOVNANIAN’S FOUR SEASONS AT MORENO VALLEY, L.L.C.

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

K. HOVNANIAN’S FOUR SEASONS AT PALM SPRINGS, LLC

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

K. HOVNANIAN’S FOUR SEASONS AT RUSH CREEK II, LLC

K. HOVNANIAN’S FOUR SEASONS AT RUSH CREEK, L.L.C.

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

 

13

 

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

K. HOVNANIAN’S FOUR SEASONS, LLC

K. HOVNANIAN’S PARKSIDE AT TOWNGATE, L.L.C.

KHIP, L.L.C.

LANDARAMA, INC.

M&M AT CHESTERFIELD, LLC

M&M AT CRESCENT COURT, L.L.C.

M&M AT WEST ORANGE, L.L.C.

M&M AT WHEATENA URBAN RENEWAL, L.L.C.

MATZEL & MUMFORD AT EGG HARBOR, L.L.C.

MATZEL & MUMFORD AT SOUTH BOUND BROOK URBAN RENEWAL, L.L.C.

MCNJ, INC.

MIDWEST BUILDING PRODUCTS & CONTRACTOR SERVICES OF PENNSYLVANIA, L.L.C.

MIDWEST BUILDING PRODUCTS & CONTRACTOR SERVICES OF WEST VIRGINIA, L.L.C.

MIDWEST BUILDING PRODUCTS & CONTRACTOR SERVICES, L.L.C.

MMIP, L.L.C.

NEW LAND TITLE AGENCY, LLC

PADDOCKS, L.L.C.

PARK TITLE COMPANY, LLC

PINE AYR, LLC

RIDGEMORE UTILITY, L.L.C.

SEABROOK ACCUMULATION CORPORATION

STONEBROOK HOMES, INC.

TERRAPIN REALTY, L.L.C.

THE MATZEL & MUMFORD ORGANIZATION, INC

WASHINGTON HOMES AT COLUMBIA TOWN CENTER, L.L.C.

WASHINGTON HOMES, INC.

WESTMINSTER HOMES, INC.

WH PROPERTIES, INC.

WOODLAND LAKE CONDOMINIUMS AT BOWIE NEW TOWN, L.L.C.

 

 

	
 
    	
 
    	
By:
    	
 
    
	
 
    	
 
    	
 
    	
Name:
    
	
 
    	
 
    	
 
    	
Title:
    

 

14

 

ABBREVIATIONS

 

The following abbreviations, when used in the inscription of the face of this Exchangeable Note, shall be construed as though they were written out in full according to applicable laws or regulations:

 

TEN COM = as tenants in common

 

UNIF GIFT MIN ACT = Uniform Gifts to Minors Act

 

CUST = Custodian

 

TEN ENT = as tenants by the entireties

 

JT TEN  = joint tenants with right of survivorship and not as tenants in common

 

Additional abbreviations may also be used though not in the above list.

 

15

 

ATTACHMENT 1

 

[FORM OF NOTICE OF EXCHANGE]

 

To:  K. HOVNANIAN ENTERPRISES, INC.

 

The undersigned registered owner of this Exchangeable Note hereby exercises the option to exchange this Exchangeable Note, or the portion hereof (that is $1,000 Principal Amount at Maturity or an integral multiple thereof) below designated, into shares of Class A Common Stock (together with cash in lieu of any fractional share) in accordance with the terms of the Indenture referred to in this Exchangeable Note, and directs that any shares of Class A Common Stock issuable and deliverable upon such exchange, together with any cash for any fractional share of Class A Common Stock, and any Exchangeable Notes representing any unexchanged Principal Amount at Maturity hereof, be issued and delivered to the registered Holder of the Exchangeable Notes hereof unless a different name has been indicated below.  If any shares of Class A Common Stock or any portion of this Exchangeable Note not exchanged are to be issued in the name of a Person other than the undersigned, the undersigned will pay all transfer taxes or similar governmental charges in accordance with Section 8.02(d) or (e) of the Supplemental Indenture, as applicable.

 

	
Dated:
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
Signature(s)
    

 

 

	
 
    	
 
    	
 
    
	
Signature   Guarantee
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Signature(s) must   be guaranteed by an eligible Guarantor Institution (banks, stock brokers,   savings and loan associations and credit unions) with membership in an   approved signature guarantee medallion program pursuant to Securities and   Exchange Commission Rule 17Ad-15 if shares of Class A Common Stock   are to be issued, or Exchangeable Notes are to be delivered, other than to   and in the name of the registered holder.
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Fill in for   registration of shares if to be issued, and Exchangeable Notes if to be   delivered, other than to and in the name of the registered holder:
    	
 
    	
 
    

 

16

 

	
 
    	
 
    	
 
    
	
(Name)
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
(Street Address)
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
(City, State and   Zip Code)
    	
 
    	
 
    
	
Please print name   and address
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
Principal Amount   at Maturity to be exchanged (if less than all): $            ,000
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
NOTICE: The above   signature(s) of the Holder(s) hereof must correspond with the name   as written upon the face of the Exchangeable Note in every particular without   alteration or enlargement or any change whatever.
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
Social Security or   Other Taxpayer Identification Number
    

 

17

 

ATTACHMENT 2

 

[FORM OF FUNDAMENTAL CHANGE REPURCHASE NOTICE]

 

To: K. HOVNANIAN ENTERPRISES, INC.

 

The undersigned registered owner of this Exchangeable Note hereby acknowledges receipt of a notice from K. Hovnanian Enterprises, Inc. (the “Issuer”) as to the occurrence of a Fundamental Change and specifying the Fundamental Change Repurchase Date and requests and instructs the Issuer to pay to the registered holder hereof in accordance with the applicable provisions of the Indenture referred to in this Exchangeable Note  the Accreted Principal Amount, as of the calendar day immediately preceding such Fundamental Change Repurchase Date, corresponding to the entire Principal Amount at Maturity of this Exchangeable Note, or the portion thereof (that is $1,000 or an integral multiple thereof) below designated.

 

In the case of Physical Exchangeable Notes, the certificate numbers of the Exchangeable Notes to be repurchased are as set forth below:

 

	
Dated:
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
Signature(s)
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
Social Security or   Other Taxpayer Identification Number
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
Principal Amount   at Maturity to be repurchased (if less than all):   $            ,000
    

 

NOTICE:  The above signature(s) of the Holder(s) hereof must correspond with the name as written upon the face of the Exchangeable Note in every particular without alteration or enlargement or any change whatever.

 

 

ATTACHMENT 3

 

[FORM OF ASSIGNMENT AND TRANSFER]

 

For value received                                    hereby sell(s), assign(s) and transfer(s) unto                                                (Please insert Social Security or Taxpayer Identification Number of assignee) the within Exchangeable Note, and hereby irrevocably constitutes and appoints                                    attorney to transfer the said Exchangeable Note on the books of the Issuer, with full power of substitution in the premises.

 

 

	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
Signature(s)
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
Signature(s) must   be guaranteed by an institution which is a member of one of the following   recognized signature Guarantee Programs:
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
(i) The   Securities Transfer Agent Medallion Program (STAMP); (ii) The New York   Stock Exchange Medallion Program (MNSP); (iii) The Stock Exchange   Medallion Program (SEMP) or (iv) another guarantee program acceptable to   the Trustee.
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
Signature   Guarantee
    

 

 

ATTACHMENT 4

 

COMPONENT AMORTIZING NOTE

 

A-12

 

K. HOVNANIAN ENTERPRISES, INC.

 

11.00% SENIOR AMORTIZING NOTES DUE 2017

 

	
No. 1
    	
 
    	
Initial Number of   Amortizing Notes: 100,000
    

 

K. HOVNANIAN ENTERPRISES, INC., a California corporation (the “Issuer”, which term includes any successor under the Indenture hereinafter referred to), for value received, hereby promises to pay to CEDE & CO., as nominee of The Depository Trust Company, or registered assigns (the “Holder”), the initial principal amount of $231.49 for each of the number of Amortizing Notes set forth above, or such other number of Amortizing Notes reflected on the books and records of the Depositary and the Trustee, in accordance with the terms of the Indenture, but which number of Amortizing Notes, taken together with the number of all other outstanding Amortizing Notes, shall not exceed 100,000 Amortizing Notes at any time, in equal semi-annual installments (except for the first such payment) (each such payment, an “Installment Payment,” constituting a payment of interest at the rate per year of 11.00% and a partial repayment of principal) payable on each June 1 and December 1, commencing on June 1, 2013 (each such date, an “Installment Payment Date” and the period from, and including, October 2, 2012 to, but excluding, the first Installment Payment Date and each subsequent full semi-annual period from, and including, an Installment Payment Date to, but excluding, the immediately succeeding Installment Payment Date, an “Installment Payment Period”), all as set forth on the reverse hereof, with the final Installment Payment due and payable on December 1, 2017.

 

The Installment Payment on any Installment Payment Date shall be computed on the basis of a 360-day year consisting of twelve 30-day months. If an Installment Payment is payable for any period shorter or longer than a full Installment Payment Period, such Installment Payment shall be computed on the basis of the actual number of days elapsed per 30-day month. In the event that any Installment Payment Date is not a Business Day, then payment of the Installment Payment on such date shall be made on the next succeeding day that is a Business Day, and without any interest or other payment in respect of any such delay. However, if such Business Day is in the next succeeding calendar year, then such Installment Payment shall be made on the immediately preceding Business Day, in each case with the same force and effect as if made on the date when such Installment Payment was originally due. Installment Payments shall be paid to the Person in whose name the Amortizing Note is registered at the close of business on May 15 or November 15, as applicable (each, a “Regular Record Date”).  Installment Payments shall be payable at the office or agency of the Issuer maintained for that purpose in the Borough of Manhattan, The City of New York or in Delaware; provided, however, that payment of Installment Payments may be made at the option of the Issuer by check mailed to the registered Holder at such address as shall appear in the Security register or by wire transfer to an account appropriately designated by the Holder entitled to payment.

 

1

 

This Amortizing Note shall not be entitled to any benefit under the Indenture hereinafter referred to or be valid or obligatory for any purpose until the Certificate of Authentication shall have been manually signed by or on behalf of the Trustee.

 

Reference is hereby made to the further provisions of this Amortizing Note set forth on the reverse hereof, which will for all purposes have the same effect as if set forth at this place.

 

[SIGNATURES ON THE FOLLOWING PAGE]

 

2

 

IN WITNESS WHEREOF, the Issuer has caused this instrument to be duly executed.

 

 

	
Dated:
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
K. HOVNANIAN   ENTERPRISES, INC.
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
By:
    	
 
    
	
 
    	
 
    	
 
    	
Name:
    
	
 
    	
 
    	
 
    	
Title:
    

 

CERTIFICATE OF AUTHENTICATION

 

	
Wilmington Trust   Company, as Trustee, certifies that this is one of the Securities of the   series designated herein referred to in the within mentioned Indenture.
    	
 
    
	
 
    	
 
    
	
Dated:
    	
 
    
	
 
    	
 
    
	
WILMINGTON TRUST   COMPANY, as Trustee
    	
 
    
	
 
    	
 
    
	
By:
    	
 
    	
 
    
	
 
    	
Authorized   Signatory
    	
 
    

 

3

 

REVERSE OF AMORTIZING NOTE

K. HOVNANIAN ENTERPRISES, INC.

 

11.00% Senior Amortizing Notes due 2017

 

This Amortizing Note is one of a duly authorized series of Securities of the Issuer designated as its 11.00% Senior Amortizing Notes due 2017 (herein sometimes referred to as the “Amortizing  Notes”), issued under the Senior Indenture, dated as of February 14, 2011, among the Issuer, Hovnanian Enterprises, Inc. (“Hovnanian”), the other Guarantors from time to time party thereto and Wilmington Trust Company, as trustee (the “Trustee,” which term includes any successor trustee under the Indenture) (including any provisions of the TIA that are deemed incorporated therein) (the “Base Indenture”), as supplemented by the Fifth Supplemental Indenture, dated as of October 2, 2012 (the “Fifth Supplemental Indenture”), among the Issuer, Hovnanian, the other Guarantors from time to time party thereto, and the Trustee (the Base Indenture as supplemented by the Fifth Supplemental Indenture, the “Indenture”), to which Indenture reference is hereby made for a description of the rights, limitations of rights, obligations, duties and immunities thereunder of the Trustee, the Issuer and the Holders. The terms of other series of Securities issued under the Indenture may vary with respect to interest rates, issue dates, maturity, redemption, repayment, currency of payment and otherwise as provided in the Indenture. The Indenture further provides that Securities of a single series may be issued at various times, with different maturity dates and may bear interest at different rates. This series of Securities is limited in initial aggregate principal amount as specified in the Fifth Supplemental Indenture.

 

Each Installment Payment shall constitute a payment of interest (at a rate of 11.00% per annum) and a partial repayment of principal on the Amortizing Note, allocated as set forth in the schedule below:

 

	
Scheduled Installment Payment Date
    	
 
    	
Amount of Principal
    	
 
    	
Amount of Interest
    	
 
    
	
June 1, 2013 
    	
 
    	
$
    	
22.92
    	
 
    	
$
    	
16.91
    	
 
    
	
December 1, 2013 
    	
 
    	
$
    	
18.53
    	
 
    	
$
    	
11.47
    	
 
    
	
June 1, 2014 
    	
 
    	
$
    	
19.55
    	
 
    	
$
    	
10.45
    	
 
    
	
December 1, 2014 
    	
 
    	
$
    	
20.62
    	
 
    	
$
    	
9.38
    	
 
    
	
June 1, 2015 
    	
 
    	
$
    	
21.76
    	
 
    	
$
    	
8.24
    	
 
    
	
December 1, 2015 
    	
 
    	
$
    	
22.95
    	
 
    	
$
    	
7.05
    	
 
    
	
June 1, 2016 
    	
 
    	
$
    	
24.22
    	
 
    	
$
    	
5.78
    	
 
    
	
December 1, 2016 
    	
 
    	
$
    	
25.55
    	
 
    	
$
    	
4.45
    	
 
    
	
June 1, 2017 
    	
 
    	
$
    	
26.95
    	
 
    	
$
    	
3.05
    	
 
    
	
December 1, 2017 
    	
 
    	
$
    	
28.44
    	
 
    	
$
    	
1.56
    	
 
    

 

The Amortizing Notes shall not be subject to redemption at the option of the Issuer. However, a Holder shall have the right to require the Issuer to repurchase some or

 

4

 

all of its Amortizing Notes for cash at the Repurchase Price per Amortizing Note and on the Repurchase Date, upon the occurrence of certain events and subject to the conditions set forth in the Indenture.

 

This Amortizing Note is not entitled to the benefit of any sinking fund. The Indenture contains provisions for defeasance and covenant defeasance at any time of the indebtedness on this Amortizing Note upon compliance by the Issuer with certain conditions set forth therein, which provisions apply to this Amortizing Note.

 

If an Event of Default with respect to the Amortizing Notes shall have occurred and be continuing, then (unless no declaration of acceleration or notice is required for such Event of Default) either the Trustee or the Holders of not less than 25% in principal amount of the Amortizing Notes then outstanding may declare all future, scheduled Installment Payments on the Amortizing Notes to be due and payable immediately, in the manner, subject to the conditions and with the effect provided in the Indenture.

 

The Indenture permits, with certain exceptions as therein provided, the Issuer and the Trustee, with the consent of the Holders of not less than a majority in principal amount of the Securities at the time outstanding, to execute supplemental indentures for certain purposes as described therein.

 

No provision of this Amortizing Note or of the Indenture shall alter or impair the obligation of the Issuer, which is absolute and unconditional, to pay Installment Payments on this Amortizing Note at the time, place and rate, and in the coin or currency, herein and in the Indenture prescribed.

 

The Amortizing Notes are guaranteed, on a senior basis, by the Guarantors as set forth in the Indenture and the Guarantee endorsed hereon.

 

The Amortizing Notes are originally being issued as part of the 6.00% Exchangeable Note Units (the “Units”) issued by Hovnanian and the Issuer pursuant to that certain Units Agreement, dated as of October 2, 2012, among Hovnanian, the Issuer and Wilmington Trust Company, as Units Agent (the “Units Agreement”).  Reference is hereby made to the Units Agreement for a description of the terms thereof applicable to the Units.

 

As provided in the Indenture and subject to certain limitations therein set forth, the transfer of this Amortizing Note shall be registered on the Security register of the Issuer, upon due presentation of this Amortizing Note for registration of transfer at the office or agency of the Issuer in the Borough of Manhattan, The City of New York or in Delaware, duly endorsed by, or accompanied by a written instrument or instruments of transfer in form satisfactory to the Issuer and the Trustee duly executed by, the Holder hereof or by his attorney duly authorized in writing, and thereupon the Issuer shall execute and the Trustee shall authenticate and deliver in the name of the transferee or transferees a new Amortizing Note or Notes in authorized denominations and for a like aggregate principal amount.

 

5

 

The Amortizing Notes are initially issued in registered, global form without coupons in denominations initially equal to $231.49 and integral multiples in excess thereof.

 

The Issuer or Trustee may require payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in connection with any registration of transfer of this Amortizing Note.  No service charge shall be made for any such transfer or for any exchange of this Amortizing Note as contemplated by the Indenture.

 

The Issuer, the Trustee and any agent of the Issuer or the Trustee may deem and treat the Person in whose name this Amortizing Note is registered upon the Security register for the Amortizing Notes as the absolute owner of this Amortizing Note (whether or not this Amortizing Note shall be overdue and notwithstanding any notation of ownership or other writing thereon) for the purpose of receiving payment of or on account of the principal of and, subject to the provisions of the Indenture, interest, if any, on this Amortizing Note and for all other purposes; and neither the Issuer nor the Trustee nor any agent of the Issuer or the Trustee shall be affected by any notice to the contrary.

 

This Amortizing Note and the Indenture, and any claim, controversy or dispute arising under or related to the Indenture or this Amortizing Note, shall for all purposes be governed by, and construed in accordance with, the laws of the State of New York.

 

Capitalized terms used but not defined in this Amortizing Note shall have the meanings ascribed to such terms in the Indenture.

 

No recourse shall be had for the payment of any Installment Payment on this Amortizing Note, or for any claim based hereon, or upon any obligation, covenant or agreement of the Issuer in the Indenture, against any incorporator, stockholder, officer or director, past, present or future of the Issuer or of any predecessor or successor, either directly or through the Issuer or any successor, whether by virtue of any constitution, statute or rule of law, or by the enforcement of any assessment of penalty or otherwise; and all such personal liability is expressly released and waived as a condition of, and as part of the consideration for, the issuance of this Amortizing Note.

 

In the event of any inconsistency between the provisions of this Amortizing Note and the provisions of the Indenture, the Indenture shall prevail.

 

6

 

GUARANTEE

 

The undersigned (the “Guarantors”) hereby unconditionally guarantee, jointly and severally, to each Holder and to the Trustee and its successors and assigns, irrespective of the validity and enforceability of the Indenture, the Amortizing Notes or the obligations of the Issuer thereunder or under the Amortizing Notes, that (i) the due and punctual payment of the principal of, interest on (including, without limitation, Installment Payments and the Repurchase Price of any Amortizing Notes payable pursuant to Article 9 of the Fifth Supplemental Indenture, if applicable), and all other amounts owing with respect to the Amortizing Notes, whether on the Maturity Date, on any Repurchase Date or on any Installment Payment Date, by acceleration or otherwise, if lawful, and all other obligations of the Issuer to the Holders or the Trustee thereunder or under the Amortizing Notes shall be promptly paid in full when due or performed in accordance with the terms of the Indenture and the Amortizing Notes, including all amounts payable to the Trustee, and (ii) in case of any extension of time of payment or renewal of any Amortizing Notes or any of such other obligations, the same shall be promptly paid in full when due or shall be performed in accordance with the terms of the extension or renewal, whether on the applicable due dates, by acceleration or otherwise (each such guarantee, a “Guarantee”).

 

No past, present or future stockholder, officer, director, employee or incorporator, as such, of any of the Guarantors shall have any liability under the Guarantee by reason of such Person’s status as stockholder, officer, director, employee or incorporator. Each Holder of an Amortizing Note by accepting an Amortizing 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 an Amortizing Note by accepting an Amortizing 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 shall not be valid or obligatory for any purpose until the certificate of authentication on the Amortizing Notes upon which the Guarantee is noted shall have been executed by the Trustee under the Indenture by the manual signature of one of its authorized officers.

 

The Guarantee, and any claim, controversy or dispute arising under or related to the Guarantee, shall be governed by and construed in accordance with the laws of the State of New York.

 

In the event of any inconsistency between the provisions of this Guarantee and the provisions of the Indenture, the Indenture shall prevail.

 

7

 

IN WITNESS WHEREOF, the Guarantors have caused this instrument to be executed.

 

	
Dated:
    	
 
    	
 
    

 

ARBOR TRAILS, LLC

AUDDIE ENTERPRISES, L.L.C.

BUILDER SERVICES NJ, L.L.C.

BUILDER SERVICES PA, L.L.C.

DULLES COPPERMINE, L.L.C.

EASTERN NATIONAL TITLE AGENCY, LLC

EASTERN TITLE AGENCY, INC.

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

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

FOUNDERS TITLE AGENCY, INC.

GOVERNOR’S ABSTRACT CO., INC.

HOMEBUYERS FINANCIAL SERVICES, L.L.C.

HOVNANIAN DEVELOPMENTS OF FLORIDA, INC.

HOVNANIAN ENTERPRISES, INC. (PARENT COMPANY)

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

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

HOVNANIAN LAND INVESTMENT GROUP, L.L.C.

K. HOV IP, II, INC.

K. HOV IP, INC.

K. HOVNANIAN ACQUISITIONS, INC.

K. HOVNANIAN AT 4S, LLC

K. HOVNANIAN AT ACQUA VISTA, LLC

K. HOVNANIAN AT ALISO, LLC

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

K. HOVNANIAN AT ANDALUSIA, LLC

K. HOVNANIAN AT ARBOR HEIGHTS, LLC

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

K. HOVNANIAN AT BAKERSFIELD 463, L.L.C.

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

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

K. HOVNANIAN AT BELLA LAGO, LLC

K. HOVNANIAN AT BENSALEM, LLC

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

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

K. HOVNANIAN AT BRANCHBURG, L.L.C.

K. HOVNANIAN AT BRIDGEPORT, INC.

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

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

K. HOVNANIAN AT CAMERON CHASE, INC.

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

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

K. HOVNANIAN AT CARLSBAD, LLC

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

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

K. HOVNANIAN AT CHARTER WAY, LLC

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

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

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

 

8

 

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

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

K. HOVNANIAN AT CORTEZ HILL, LLC

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

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

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

K. HOVNANIAN AT DOMINGUEZ HILLS, INC.

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

K. HOVNANIAN AT EASTLAKE, LLC

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

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

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

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

K. HOVNANIAN AT EL DORADO RANCH II, L.L.C.

K. HOVNANIAN AT EL DORADO RANCH, L.L.C.

K. HOVNANIAN AT ENCINITAS RANCH, LLC

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

K. HOVNANIAN AT FIDDYMENT RANCH, LLC

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

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

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

K. HOVNANIAN AT FOREST MEADOWS, L.L.C.

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

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

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

K. HOVNANIAN AT FRESNO, LLC

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

K. HOVNANIAN AT GILROY, LLC

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 HAWTHORNE, L.L.C.

K. HOVNANIAN AT HERSHEY’S MILL, INC.

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

K. HOVNANIAN AT HOWELL, LLC

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

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

K. HOVNANIAN AT JACKSON, L.L.C.

K. HOVNANIAN AT JAEGER RANCH, LLC

K. HOVNANIAN AT JERSEY CITY IV, L.L.C.

K. HOVNANIAN AT JERSEY CITY V URBAN RENEWAL COMPANY, L.L.C.

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

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

K. HOVNANIAN AT LA COSTA, LLC

K. HOVNANIAN AT LA HABRA KNOLLS, LLC

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

K. HOVNANIAN AT LAKE RANCHO VIEJO, LLC

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

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

K. HOVNANIAN AT LEE SQUARE, L.L.C.

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

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

K. HOVNANIAN AT 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.

 

9

 

K. HOVNANIAN AT LOWER MORELAND I, L.L.C.

K. HOVNANIAN AT LOWER MORELAND II, L.L.C.

K. HOVNANIAN AT MAHWAH VI, INC.

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

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

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

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

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

K. HOVNANIAN AT MANTECA, LLC

K. HOVNANIAN AT MAPLE AVENUE, 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 MELANIE MEADOWS, LLC

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

K. HOVNANIAN AT MENIFEE, LLC

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

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

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

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

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

K. HOVNANIAN AT MONROE II, INC.

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

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

K. HOVNANIAN AT MONTVALE II, LLC

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

K. HOVNANIAN AT MOSAIC, LLC

K. HOVNANIAN AT MUIRFIELD, LLC

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

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

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

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

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

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

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

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

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

K. HOVNANIAN AT NORTHERN WESTCHESTER, INC.

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

K. HOVNANIAN AT OCEAN TOWNSHIP, INC

K. HOVNANIAN AT OCEAN WALK, INC.

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

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

K. HOVNANIAN AT OLDE ORCHARD, LLC

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

K. HOVNANIAN AT PARK LANE, LLC

K. HOVNANIAN AT PARKSIDE, LLC

K. HOVNANIAN AT PARSIPPANY, L.L.C.

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

K. HOVNANIAN AT PIAZZA D’ORO,  L.L.C.

K. HOVNANIAN AT PIAZZA SERENA, L.L.C

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

K. HOVNANIAN AT PORT IMPERIAL URBAN RENEWAL IV, L.L.C.

K. HOVNANIAN AT PORT IMPERIAL URBAN RENEWAL V, L.L.C.

 

10

 

 

K. HOVNANIAN AT PORT IMPERIAL URBAN RENEWAL VI, L.L.C.

K. HOVNANIAN AT PORT IMPERIAL URBAN RENEWAL VII, L.L.C.

K. HOVNANIAN AT PORT IMPERIAL URBAN RENEWAL VIII, L.L.C.

K. HOVNANIAN AT POSITANO, LLC

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

K. HOVNANIAN AT RANCHO SANTA MARGARITA, LLC

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

K. HOVNANIAN AT RAPHO, L.L.C

K. HOVNANIAN AT RIDGEMONT, L.L.C.

K. HOVNANIAN AT RIVERBEND, LLC

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

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

K. HOVNANIAN AT SAGE, L.L.C.

K. HOVNANIAN AT SANTA NELLA, LLC

K. HOVNANIAN AT SAWMILL, INC.

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

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

K. HOVNANIAN AT SEASONS LANDING, LLC

K. HOVNANIAN AT SHELDON GROVE, LLC

K. HOVNANIAN AT SHREWSBURY, LLC

K. HOVNANIAN AT SILVER SPRING, L.L.C.

K. HOVNANIAN AT SKYE ISLE, LLC

K. HOVNANIAN AT SMITHVILLE, INC.

K. HOVNANIAN AT SOMERS POINT, L.L.C.

K. HOVNANIAN AT SOUTH BRUNSWICK II, LLC

K. HOVNANIAN AT SOUTH BRUNSWICK, L.L.C.

K. HOVNANIAN AT STANTON, LLC

K. HOVNANIAN AT STATION SQUARE, L.L.C.

K. HOVNANIAN AT SUNRIDGE PARK, LLC

K. HOVNANIAN AT SYCAMORE, INC.

K. HOVNANIAN AT THE CROSBY, LLC

K. HOVNANIAN AT THE GABLES, LLC

K. HOVNANIAN AT THE MONARCH, L.L.C.

K. HOVNANIAN AT THE PRESERVE, LLC

K. HOVNANIAN AT THOMPSON RANCH, LLC

K. HOVNANIAN AT THORNBURY, INC.

K. HOVNANIAN AT TRAIL RIDGE, LLC

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

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

K. HOVNANIAN AT UPPER MAKEFIELD I, INC.

K. HOVNANIAN AT UPPER PROVIDENCE, LLC

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

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

K. HOVNANIAN AT VALLE DEL SOL, LLC

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

K. HOVNANIAN AT VICTORVILLE, L.L.C.

K. HOVNANIAN AT VINELAND, L.L.C.

K. HOVNANIAN AT VISTA DEL SOL, L.L.C.

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

K. HOVNANIAN AT WASHINGTON, L.L.C.

K. HOVNANIAN AT WATERSTONE, LLC

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

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

K. HOVNANIAN AT WEST VIEW ESTATES, L.L.C.

K. HOVNANIAN AT WEST WINDSOR, L.L.C.

K. HOVNANIAN AT WESTSHORE, LLC

 

11

 

K. HOVNANIAN AT WHEELER RANCH, LLC

K. HOVNANIAN AT WILDWOOD BAYSIDE, L.L.C.

K. HOVNANIAN AT WILLOW BROOK, L.L.C.

K. HOVNANIAN AT WINCHESTER, LLC

K. HOVNANIAN AT WOODCREEK WEST, LLC

K. HOVNANIAN AT WOOLWICH I, L.L.C.

K. HOVNANIAN CAMBRIDGE HOMES, L.L.C.

K. HOVNANIAN CENTRAL ACQUISITIONS, L.L.C.

K. HOVNANIAN CLASSICS, L.L.C.

K. HOVNANIAN COMMUNITIES, INC.

K. HOVNANIAN COMPANIES OF CALIFORNIA, INC.

K. HOVNANIAN COMPANIES OF MARYLAND, INC.

K. HOVNANIAN COMPANIES OF NEW YORK, INC.

K. HOVNANIAN COMPANIES OF PENNSYLVANIA, INC.

K. HOVNANIAN COMPANIES OF SOUTHERN CALIFORNIA, INC.

K. HOVNANIAN COMPANIES, LLC

K. HOVNANIAN CONSTRUCTION II, INC

K. HOVNANIAN CONSTRUCTION III, INC

K. HOVNANIAN CONSTRUCTION MANAGEMENT, INC.

K. HOVNANIAN CRAFTBUILT HOMES OF SOUTH CAROLINA, L.L.C.

K. HOVNANIAN 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 GEORGIA, INC.

K. HOVNANIAN DEVELOPMENTS OF ILLINOIS, INC.

K. HOVNANIAN DEVELOPMENTS OF KENTUCKY, INC.

K. HOVNANIAN DEVELOPMENTS OF MARYLAND, INC.

K. HOVNANIAN DEVELOPMENTS OF MINNESOTA, INC.

K. HOVNANIAN DEVELOPMENTS OF NEW JERSEY II, INC.

K. HOVNANIAN DEVELOPMENTS OF NEW JERSEY, INC.

K. HOVNANIAN DEVELOPMENTS OF NEW YORK, INC.

K. HOVNANIAN DEVELOPMENTS OF NORTH CAROLINA, INC.

K. HOVNANIAN DEVELOPMENTS OF OHIO, INC.

K. HOVNANIAN DEVELOPMENTS OF PENNSYLVANIA, INC.

K. HOVNANIAN DEVELOPMENTS OF SOUTH CAROLINA, INC.

K. HOVNANIAN DEVELOPMENTS OF TEXAS, INC.

K. HOVNANIAN DEVELOPMENTS OF VIRGINIA, INC.

K. HOVNANIAN DEVELOPMENTS OF WEST VIRGINIA, INC.

K. HOVNANIAN EASTERN PENNSYLVANIA, L.L.C.

K. HOVNANIAN ENTERPRISES, INC.

K. HOVNANIAN FIRST HOMES, L.L.C.

K. HOVNANIAN FLORIDA REALTY, L.L.C.

K. HOVNANIAN FOUR SEASONS @ HISTORIC VIRGINIA, LLC

K. HOVNANIAN FOUR SEASONS AT GOLD HILL, LLC

K. HOVNANIAN GREAT WESTERN BUILDING COMPANY, LLC

K. HOVNANIAN GREAT WESTERN HOMES, LLC

K. HOVNANIAN HAMPTONS AT OAK CREEK II, L.L.C.

K. HOVNANIAN HOLDINGS NJ, L.L.C.

K. HOVNANIAN HOMES - DFW, L.L.C.

K. HOVNANIAN HOMES AT CAMERON STATION, LLC

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 GREENWAY FARM PARK TOWNS, L.L.C.

K. HOVNANIAN HOMES AT GREENWAY FARM, L.L.C.

 

12

 

K. HOVNANIAN HOMES AT JONES STATION 1, 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 RUSSETT, L.L.C.

K. HOVNANIAN HOMES AT THE HIGHLANDS, LLC

K. HOVNANIAN HOMES NORTHERN CALIFORNIA, INC.

K. HOVNANIAN HOMES OF D.C., L.L.C.

K. HOVNANIAN HOMES OF DELAWARE, L.L.C.

K. HOVNANIAN HOMES OF GEORGIA, L.L.C.

K. HOVNANIAN HOMES OF HOUSTON, L.L.C.

K. HOVNANIAN HOMES OF MARYLAND, L.L.C.

K. HOVNANIAN HOMES OF MINNESOTA, L.L.C.

K. HOVNANIAN HOMES OF NORTH CAROLINA, INC.

K. HOVNANIAN HOMES OF PENNSYLVANIA, L.L.C.

K. HOVNANIAN HOMES OF SOUTH CAROLINA, LLC

K. HOVNANIAN HOMES OF VIRGINIA, INC.

K. HOVNANIAN HOMES OF WEST VIRGINIA, L.L.C.

K. HOVNANIAN LIBERTY ON BLUFF CREEK, LLC

K. HOVNANIAN NORTH CENTRAL ACQUISITIONS, L.L.C.

K. HOVNANIAN NORTH JERSEY ACQUISITIONS, L.L.C.

K. HOVNANIAN NORTHEAST SERVICES, L.L.C.

K. HOVNANIAN OF HOUSTON II, L.L.C.

K. HOVNANIAN OHIO REALTY, L.L.C.

K. HOVNANIAN OSTER HOMES, L.L.C.

K. HOVNANIAN PA REAL ESTATE, INC.

K. HOVNANIAN PENNSYLVANIA ACQUISITIONS, L.L.C.

K. HOVNANIAN PORT IMPERIAL URBAN RENEWAL, INC.

K. HOVNANIAN PROPERTIES OF RED BANK, INC.

K. HOVNANIAN SHORE ACQUISITIONS, L.L.C.

K. HOVNANIAN SOUTH JERSEY ACQUISITIONS, L.L.C.

K. HOVNANIAN SOUTHERN NEW JERSEY, L.L.C.

K. HOVNANIAN STANDING ENTITY, L.L.C.

K. HOVNANIAN SUMMIT HOLDINGS, L.L.C.

K. HOVNANIAN SUMMIT HOMES OF KENTUCKY, L.L.C.

K. HOVNANIAN SUMMIT HOMES OF PENNSYLVANIA, L.L.C.

K. HOVNANIAN SUMMIT HOMES OF WEST VIRGINIA, L.L.C.

K. HOVNANIAN SUMMIT HOMES, L.L.C.

K. HOVNANIAN T&C HOMES AT FLORIDA, L.L.C.

K. HOVNANIAN T&C HOMES AT ILLINOIS, L.L.C.

K. HOVNANIAN TIMBRES AT ELM CREEK, LLC

K. HOVNANIAN VENTURE I, L.L.C.

K. HOVNANIAN WINDWARD HOMES, LLC

K. HOVNANIAN’S FOUR SEASONS AT ASHBURN VILLAGE, L.L.C.

K. HOVNANIAN’S FOUR SEASONS AT BAKERSFIELD, L.L.C.

K. HOVNANIAN’S FOUR SEASONS AT BEAUMONT, LLC

K. HOVNANIAN’S FOUR SEASONS AT CHARLOTTESVILLE, L.L.C.

K. HOVNANIAN’S FOUR SEASONS AT HEMET, LLC

K. HOVNANIAN’S FOUR SEASONS AT KENT ISLAND CONDOMINIUMS, L.L.C.

K. HOVNANIAN’S FOUR SEASONS AT KENT ISLAND, L.L.C.

K. HOVNANIAN’S FOUR SEASONS AT LOS BANOS, LLC

K. HOVNANIAN’S FOUR SEASONS AT MORENO VALLEY, L.L.C.

K. HOVNANIAN’S FOUR SEASONS AT NEW KENT VINEYARDS, L.L.C.

K. HOVNANIAN’S FOUR SEASONS AT PALM SPRINGS, LLC

K. HOVNANIAN’S FOUR SEASONS AT RENAISSANCE, L.L.C.

K. HOVNANIAN’S FOUR SEASONS AT RUSH CREEK II, LLC

K. HOVNANIAN’S FOUR SEASONS AT RUSH CREEK, L.L.C.

 

13

 

K. HOVNANIAN’S FOUR SEASONS AT ST. MARGARETS LANDING, L.L.C.

K. HOVNANIAN’S FOUR SEASONS AT VINT HILL, L.L.C.

K. HOVNANIAN’S FOUR SEASONS, LLC

K. HOVNANIAN’S PARKSIDE AT TOWNGATE, L.L.C.

KHIP, L.L.C.

LANDARAMA, INC.

M&M AT CHESTERFIELD, LLC

M&M AT CRESCENT COURT, L.L.C.

M&M AT WEST ORANGE, L.L.C.

M&M AT WHEATENA URBAN RENEWAL, L.L.C.

MATZEL & MUMFORD AT EGG HARBOR, L.L.C.

MATZEL & MUMFORD AT SOUTH BOUND BROOK URBAN RENEWAL, L.L.C.

MCNJ, INC.

MIDWEST BUILDING PRODUCTS & CONTRACTOR SERVICES OF PENNSYLVANIA, L.L.C.

MIDWEST BUILDING PRODUCTS & CONTRACTOR SERVICES OF WEST VIRGINIA, L.L.C.

MIDWEST BUILDING PRODUCTS & CONTRACTOR SERVICES, L.L.C.

MMIP, L.L.C.

NEW LAND TITLE AGENCY, LLC

PADDOCKS, L.L.C.

PARK TITLE COMPANY, LLC

PINE AYR, LLC

RIDGEMORE UTILITY, L.L.C.

SEABROOK ACCUMULATION CORPORATION

STONEBROOK HOMES, INC.

TERRAPIN REALTY, L.L.C.

THE MATZEL & MUMFORD ORGANIZATION, INC

WASHINGTON HOMES AT COLUMBIA TOWN CENTER, L.L.C.

WASHINGTON HOMES, INC.

WESTMINSTER HOMES, INC.

WH PROPERTIES, INC.

WOODLAND LAKE CONDOMINIUMS AT BOWIE NEW TOWN, L.L.C.

 

14

 

	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Name:
    
	
 
    	
 
    	
Title:
    

 

15

 

ASSIGNMENT

 

FOR VALUE RECEIVED, the undersigned assigns and transfers this Amortizing Note to:

 

(Insert assignee’s social security or tax identification number)

 

(Insert address and zip code of assignee) 
 and irrevocably appoints

 

agent to transfer this Amortizing Note on the books of the Issuer. The agent may substitute another to act for him or her.

 

	
Date:
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
Signature:
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
Signature   Guarantee:
    

 

(Sign exactly as your name appears on the other side of this Amortizing Note)

 

16

 

SIGNATURE GUARANTEE

 

Signatures must be guaranteed by an “eligible guarantor institution” meeting the requirements of the Security registrar, which requirements include membership or participation in the Security Transfer Agent Medallion Program (“STAMP”) or such other “signature guarantee program” as may be determined by the Security registrar in addition to, or in substitution for, STAMP, all in accordance with the Securities Exchange Act of 1934, as amended.

 

	
By:
    	
 
    	
 
    	
 
    
	
 
    	
Name:
    	
 
    	
 
    
	
 
    	
Title:
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
as Trustee
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
By:
    	
 
    
	
 
    	
 
    	
 
    	
Name:
    
	
 
    	
 
    	
 
    	
Title:
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Attest
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
By:
    	
 
    	
 
    	
 
    
	
 
    	
Name:
    	
 
    	
 
    
	
 
    	
Title:
    	
 
    	
 
    

 

17

 

FORM OF REPURCHASE NOTICE

 

TO:                   K. HOVNANIAN ENTERPRISES, INC. 
 WILMINGTON TRUST COMPANY, as Trustee

 

The undersigned registered Holder hereby irrevocably acknowledges receipt of a notice from K. Hovnanian Enterprises, Inc. (the “Issuer”) regarding the right of Holders to elect to require the Issuer to repurchase the Amortizing Notes and requests and instructs the Issuer to pay, for each Amortizing Note designated below, the Repurchase Price for such Amortizing Notes (determined as set forth in the Indenture), in accordance with the terms of the Indenture and the Amortizing Notes, to the registered Holder hereof. Capitalized terms used herein but not defined shall have the meanings ascribed to such terms in the Indenture. The Amortizing Notes shall be repurchased by the Issuer as of the Repurchase Date pursuant to the terms and conditions specified in the Indenture.

 

 

	
Dated:
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
Signature:
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    

 

NOTICE: The above signature of the Holder hereof must correspond with the name as written upon the face of the Amortizing Notes in every particular without alteration or enlargement or any change whatever.

 

Amortizing Notes Certificate Number (if applicable):

 

Number of Amortizing Notes to be repurchased (if less than all, must be one Amortizing Note or integral multiples in excess thereof):

 

Social Security or Other Taxpayer Identification Number:

 

18

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