As filed with the Securities and Exchange Commission on May 6, 1998
Registration No. 333-_____
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_________________________
FORM S-3
REGISTRATION STATEMENT
Under
THE SECURITIES ACT OF 1933
_________________________
HOVNANIANK. HOVNANIAN
ENTERPRISES, INC. ENTERPRISES, INC.
(Exact name of Registrant as specified in its charter)
Delaware New Jersey
(State or other jurisdiction of incorporation)
22-1851059 22-2423583
(I.R.S. Employer Identification No.)
10 Highway 35 10 Highway 35
P.O. Box 500 P.O. Box 500
Red Bank, New Jersey 07701 Red Bank, New Jersey 07701
(732) 747-7800 (732) 747-7800
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
_________________________
J. Larry Sorsby
Hovnanian Enterprises, Inc.
10 Highway 35
P.O. Box 500
Red Bank, New Jersey 07701
(732) 747-7800
(Name, address, including zip code, and telephone number, including area
code, of agent for service)
_________________________
Copies to:
Vincent Pagano, Jr., Esq.
Simpson Thacher & Bartlett
425 Lexington Avenue
New York, New York 10017-3954
(212) 455-2000
<PAGE>
Approximate date of commencement of proposed sale to the public: From
time to time after the effective date of this registration statement.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the
following box. / /
If any of the securities being registered on this Form are to be offered
on a delayed or continuous basis pursuant to Rule 415 under the Securities
Act of 1933, other than securities offered only in connection with dividend
or interest reinvestment plans, check the following box./X/
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. / / _______________
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / / _______________
If delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box. / /
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
Proposed maximum Proposed maximum
Title of each class of Amount to be offering price per aggregate offering Amount of
securities to be registered registered unit price registration fee
- --------------------------- ------------ ----------------- ------------------ ----------------
<S> <C> <C> <C> <C>
Debt Securities, Common Stock
Preferred Stock, Warrants<F1> . . . . . . $300,000,000<F2> 100%<F3> $300,000,000<F2><F3> $59,000<F4>
Guarantees of Hovnanian Enterprises,
Inc. of Debt Securities and Warrants
of K. Hovnanian Enterprises, Inc. . . . . <F5> <F5> <F5> None
<FN>
<F1> The Debt Securities registered hereby include such additional amount as
may be necessary so that, if Debt Securities are issued with an original
issue discount, the aggregate initial offering prices of all Debt
Securities will equal $300,000,000. The Common Stock registered hereby
includes Preferred Stock Purchase Rights (the "Rights"). The Rights are
associated with and trade with the Common Stock. The value, if any,
attributable to the Rights is reflected in the market price of the
Common Stock. There are also being registered hereunder an indeterminate
number of shares of Common Stock as shall be issuable upon conversion or
redemption of Preferred Stock or Debt Securities registered hereby.
<F2> In no event will the aggregate initial offering price of all securities
issued from time to time pursuant to this Registration Statement exceed
$300,000,000. Any securities registered hereunder may be sold separately
or as units with other securities registered hereunder.
<F3> Estimated solely for the purpose of calculating the registration fee.
<F4> A filing fee of $62,500 was paid on April 29, 1993 in conjunction
with the $200,000,000 of Debt Securities registered on Form S-3 of K.
Hovnanian Enterprises, Inc., the remaining $100,000,000 of which is
included herein.
<F5> No separate consideration will be received for the Guarantees.
</TABLE>
<PAGE>
Pursuant to Rule 429 under the Securities Act of 1933, as amended, the
Prospectus herein also relates to the remaining $100,000,000 of Debt
Securities registered on Form S-3 (Registration No. 33-61778) of K. Hovnanian
Enterprises, Inc. This Registration Statement also constitutes Post-Effective
Amendment No. 2 to Registration Statement No. 33-61778, and upon the
effectiveness of such Post-Effective Amendment, this Registration Statement
and Registration Statement No. 33-61778 will relate to an aggregate of
$300,000,000 of Common Stock, Preferred Stock, Debt Securities and Warrants
to purchase Debt Securities of Hovnanian Enterprises, Inc., Debt Securities
guaranteed by Hovnanian Enterprises, Inc. of K. Hovnanian Enterprises, Inc.
and Warrants guaranteed by Hovnanian Enterprises, Inc. to purchase Debt
Securities of K. Hovnanian Enterprises, Inc.
The Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrant
shall file a further amendment which specifically states that this
Registration Statement shall thereafter become effective in accordance with
Section 8(a) of the Securities Act of 1933 or until this Registration
Statement shall become effective on such date as the Commission, acting
pursuant to said Section 8(a), may determine.
_______________________________________________________________________________
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement becomes
effective. This prospectus shall not constitute an offer to sell or the
solicitation of an offer to buy nor shall there be any sale of these securities
in any State in which such offer, solicitation or sale would be unlawful prior
to registration or qualification under the securities laws of any such State.
_______________________________________________________________________________
<PAGE>
Subject to Completion, dated May 6, 1998
PROSPECTUS
$300,000,000
Hovnanian Enterprises, Inc.
Preferred Stock
Common Stock
Warrants to Purchase Preferred Stock
Warrants to Purchase Common Stock
Debt Securities
Warrants to Purchase Debt Securities
K. Hovnanian Enterprises, Inc.
Guaranteed Debt Securities
Guaranteed Warrants to Purchase Debt Securities
_________________________
Hovnanian Enterprises, Inc. ("Hovnanian" or, when referred to together
with its consolidated subsidiaries, the "Company") may offer and sell from
time to time, in one or more series, (i) its preferred stock, par value $.01
per share (the "Preferred Stock"), (ii) its common stock, par value $.01 per
share (the "Common Stock"), (iii) unsecured debt securities consisting of
notes, debentures or other evidences of indebtedness (the "Hovnanian Debt
Securities") which may be senior ("Hovnanian Senior Debt Securities"), senior
subordinated ("Hovnanian Senior Subordinated Debt Securities") or subordinated
("Hovnanian Subordinated Debt Securities") and (iv) warrants to
purchase Preferred Stock, Common Stock or Hovnanian Debt Securities (the
"Hovnanian Warrants"), or any combination of the foregoing.
K. Hovnanian Enterprises, Inc. ("K. Hovnanian"), a wholly owned
subsidiary of Hovnanian, may offer and sell from time to time, in one or more
series, (i) its unsecured debt securities consisting of notes, debentures or
other evidences of indebtedness (the "K. Hovnanian Debt Securities," and
together with the Hovnanian Debt Securities, the "Debt Securities") which may
be senior ("K. Hovnanian Senior Debt Securities," and together with the
Hovnanian Senior Debt Securities, the "Senior Debt Securities"), senior
subordinated ("K. Hovnanian Senior Subordinated Debt Securities," and
together with the Hovnanian Senior Subordinated Debt Securities, the "Senior
Subordinated Debt Securities") or subordinated ("K. Hovnanian Subordinated
Debt Securities," and together with the Hovnanian Subordinated Debt
Securities, the "Subordinated Debt Securities") and which will be fully and
unconditionally guaranteed by Hovnanian (the "Debt Guarantee") and (ii)
warrants, which will be fully and unconditionally guaranteed by Hovnanian
(the "Warrant Guarantee," and together with the Debt Guarantee, the
"Guarantee") to purchase K. Hovnanian Debt Securities (the "K Hovnanian
<PAGE>
Warrants," and together with the Hovnanian Warrants, the "Warrants"), or any
combination of the foregoing.
Certain selling shareholders (the "Selling Shareholders") may offer and
sell from time to time shares of Common Stock.
The Preferred Stock, Common Stock, Debt Securities, Guarantee and
Warrants are collectively referred to as the "Securities" and may be offered
at an aggregate initial offering price not to exceed $300,000,000, at prices
and on terms to be determined at or prior to the time of sale.
Specific terms of the Securities in respect of which this Prospectus is
being delivered will be set forth in an accompanying Prospectus Supplement
("Prospectus Supplement"), together with the terms of the offering of the
Securities and the initial price and the net proceeds to Hovnanian, K.
Hovnanian or the Selling Shareholders, as the case may be, from the sale
thereof. The Prospectus Supplement will set forth with regard to the
particular Securities, without limitation, the following: (i) in the case of
Debt Securities, the specific designation, aggregate principal amount,
ranking as senior debt, senior subordinated debt or subordinated debt,
maturity, rate or rates (or method of determining the same) and time or times
for the payment of interest, if any, any terms for optional or mandatory
redemption or repurchase or sinking fund provisions and any conversion or
exchange rights, (ii) in the case of Preferred Stock, the designation, number
of shares, liquidation preference per share, initial public offering price,
dividend rate (or method of calculation thereof), dates on which dividends
shall be payable and dates from which dividends shall accrue, any redemption
or sinking fund provisions and any conversion or exchange rights, (iii) in
the case of Common Stock, the number of shares of Common Stock and the terms
of the offering and sale thereof and (iv) in the case of Warrants, the number
and terms thereof, the designation and the number of securities issuable upon
their exercise, the exercise price, the terms of the offering and sale
thereof and, where applicable, the duration and detachability thereof.
The Securities may be sold directly by Hovnanian, K. Hovnanian or the
Selling Shareholders to investors, through agents designated from time to
time or to or through underwriters or dealers. See "Plan of Distribution." If
any agents of Hovnanian, K. Hovnanian or the Selling Shareholders or any
underwriters are involved in the sale of any Securities in respect of which
this Prospectus is being delivered, the names of such agents or underwriters
and any applicable commissions or discounts will be set forth in the
Prospectus Supplement.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF
THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
_________________________
The date of this Prospectus is , 1998.
<PAGE>
AVAILABLE INFORMATION
As permitted by the rules and regulations of the Securities and Exchange
Commission (the "Commission"), this Prospectus does not contain all the
information set forth in the Registration Statement on Form S-3, as amended
(the "Registration Statement"), of which this Prospectus is a part.
Statements contained in this Prospectus as to the contents of any contract or
other document referred to herein are not necessarily complete, and in each
instance reference is made to the copy of such contract or other document
filed as an exhibit to the Registration Statement, or as previously filed
with the Commission and incorporated by reference, each such statement being
qualified in all respects by such reference. A copy of the Registration
Statement may be inspected by anyone without charge at the Commission's
principal office at 450 Fifth Street, N.W., Washington, D.C. 20549, and
copies of all or any part thereof may be obtained from the Commission upon
payment of certain fees prescribed by the Commission.
Hovnanian is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports, proxy statements and other information with the
Commission. Such reports, proxy statements and other information can be
inspected and copied at the public reference facilities of the Commission at
Room 1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549,
and at its regional offices located at 500 West Madison Street, 14th Floor,
Chicago, Illinois 60661 and 7 World Trade Center, Suite 1300, New York,
New York 10048. Copies of such material also can be obtained by mail from the
Public Reference Section of the Commission, at Room 1024, Judiciary Plaza,
450 Fifth Street, N.W., Washington, D.C. 20549, at the prescribed rates. The
Commission also maintains a website that contains reports, proxy and
information statements and other information. The website address is:
http://www.sec.gov. Hovnanian's Class A Common Stock is listed on the
American Stock Exchange, and reports, proxy statements and other information
also can be inspected at the offices of the American Stock Exchange, 86
Trinity Place, New York, New York 10006.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by Hovnanian with the Commission are
incorporated herein by reference: (i) Annual Report on Form 10-K for the
fiscal year ended October 31, 1997, (ii) Quarterly Report on Form 10-Q for
the quarter ended January 31, 1998 and (iii) the "Description of Registrants'
Securities to be Registered" contained in the Company's Registration
Statement on Form 8-A, dated August 23, 1983 (incorporating by reference the
"Description of Securities" in the Company's Registration Statement on Form
S-1, Registration No. 2-85198).
All reports and other documents filed by the Company pursuant to Section
13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent to the date of this
Prospectus and prior to the termination of the offering made by this
Prospectus shall be deemed to be incorporated by reference herein. Any
statement contained in a document incorporated or deemed to be incorporated
by reference herein shall be deemed to be modified or superseded for purposes
of this Prospectus to the extent that a statement contained herein or in any
other subsequently filed document which also is incorporated or deemed to be
incorporated by reference herein modifies or supersedes such statement. Any
such statement so modified or superseded shall not be deemed, except as so
modified or superseded, to constitute a part of this Prospectus.
<PAGE>
Hovnanian will provide without charge to each person, including any
beneficial owner, to whom a copy of this Prospectus is delivered, upon the
written or oral request of such person, a copy of any or all of the
information incorporated by reference in this Prospectus, other than exhibits
to such information (unless such exhibits are specifically incorporated by
reference into the information that this Prospectus incorporates). Requests
for such copies should be directed to Paul W. Buchanan, Senior Vice
President--Corporate Controller, Hovnanian Enterprises, Inc., 10 Highway 35,
P.O. Box 500, Red Bank, New Jersey 07701 (telephone: (732) 747-7800).
THE COMPANY
Hovnanian primarily designs, constructs and markets multi-family
attached condominium apartments and townhouses and single family detached
homes in planned residential developments in its Northeast Region (comprised
primarily of New Jersey, southern New York state, and eastern Pennsylvania),
southeastern Florida, North Carolina, Metro Washington, D.C. (northern
Virginia), southern California, and Poland. Operations in Poland began for
the first time during the year ended October 31, 1997. Hovnanian markets its
homes to first time buyers, first and second time move-up buyers and active
adult buyers and concentrates on the moderately priced segment of the housing
market. Hovnanian has diversified its business, on a limited scale, through
mortgage banking and title insurance activities. In addition, it has
developed and operates commercial properties as long-term investments in New
Jersey and, to a lesser extent, Florida but is exiting this business.
Hovnanian was originally incorporated in New Jersey in 1967 as successor
to a business founded in 1959 by Kevork S. Hovnanian and became a Delaware
corporation in August 1983. The Company maintains its executive offices at 10
Highway 35, P.O. Box 500, Red Bank, New Jersey 07701, and its telephone
number is (732) 747-7800. As of February 19, 1998, Kevork S. Hovnanian,
Chairman of the Board and Director of Hovnanian, and Ara K. Hovnanian, Mr. K.
Hovnanian's son and Chief Executive Officer, President and Director of
Hovnanian, beneficially owned approximately 62.5% of Hovnanian's Common
Stock, representing approximately 82.5% of the voting power of such Common
Stock.
K. Hovnanian was incorporated under the laws of the State of New Jersey
on November 1, 1982, as an indirect wholly-owned consolidated subsidiary of
Hovnanian. K. Hovnanian functions as a management company for the operating
subsidiaries of Hovnanian and borrows funds which it lends to such
subsidiaries. K. Hovnanian has essentially no independent operations and
generates no operating revenues. K. Hovnanian's principal executive offices
are located at 10 Highway 35, P.O. Box 500, Red Bank, New Jersey 07701, and
its telephone number is (732) 747-7800.
SELLING SHAREHOLDERS
Some or all of the shares of Common Stock of Hovnanian being offered
pursuant to this Prospectus may be offered by certain Selling Shareholders.
Identification of any such Selling Shareholders will be made in the
applicable Prospectus Supplement.
<PAGE>
USE OF PROCEEDS
Unless otherwise provided in the applicable Prospectus Supplement, the
net proceeds from the sale of the Securities offered by this Prospectus and
each Prospectus Supplement (the "Offered Securities") will be used for
general corporate purposes. The Company will not receive any net proceeds
from the sale of any shares of Common Stock offered by the Selling
Shareholders.
RATIOS OF EARNINGS TO FIXED CHARGES AND
EARNINGS TO COMBINED FIXED CHARGES AND PREFERRED STOCK DIVIDENDS
For purposes of computing the ratios of earnings to fixed charges and
earnings to combined fixed charges and preferred dividends, earnings consist
of earnings (loss) from continuing operations before income taxes, minority
interest, extraordinary items and cumulative effect of accounting changes,
plus fixed charges (interest charges and preferred share dividend
requirements of subsidiaries, adjusted to a pretax basis), less interest
capitalized, less preferred share dividend requirements of subsidiaries
adjusted to a pretax basis and less undistributed earnings of affiliates
whose debt is not guaranteed by the Company.
The following table sets forth the ratios of earnings to fixed charges
and earnings to combined fixed charges and preferred dividends for the
Company for the periods indicated:
<PAGE>
<TABLE>
<CAPTION>
Eight
Quarter Months
Ended Ended Years Ended
January 31, Years Ended October 31, October 31, February 28,
----------- ------------------------------------ --------- ----------------------
1998 1997 1996 1995 1994 1994 1993
----------- -------- -------- ------ --------- ------ ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Ratio of earnings to
fixed charges . . . . 2.8 <F1> 1.6 1.4 <F2> 1.8 1.5
Ratio of earnings to
combined fixed
charges and preferred
stock dividends . . . 2.8 <F1> 1.6 1.4 <F2> 1.8 1.5
<FN>
<F1> No ratio is presented for the year ended October 31, 1997 as
the earnings for such period were insufficient to cover
fixed charges by $9,197,000.
<F2> No ratio is presented for the eight months ended October 31,
1994 as the earnings for such period were insufficient to
cover fixed charges by $18,803,000.
</TABLE>
<PAGE>
DESCRIPTION OF DEBT SECURITIES
The K. Hovnanian Debt Securities will be unsecured senior, senior
subordinated or subordinated debt of K. Hovnanian and will be issued: in the
case of K. Hovnanian Senior Debt Securities, under a Senior Indenture (the
"K. Hovnanian Senior Debt Indenture") among K. Hovnanian, Hovnanian, as
guarantor, and the trustee specified in the applicable Prospectus Supplement;
in the case of K. Hovnanian Senior Subordinated Debt Securities, under a
Senior Subordinated Indenture (the "K. Hovnanian Senior Subordinated Debt
Indenture") among K. Hovnanian, Hovnanian, as guarantor, and the trustee
specified in the applicable Prospectus Supplement; and in the case of K.
Hovnanian Subordinated Debt Securities, under a Subordinated Indenture (the
"K. Hovnanian Subordinated Debt Indenture") among K. Hovnanian, Hovnanian, as
guarantor, and the trustee specified in the applicable Prospectus Supplement.
The K. Hovnanian Senior Debt Indenture, the K. Hovnanian Senior Subordinated
Debt Indenture and the K. Hovnanian Subordinated Debt Indenture are sometimes
hereinafter referred to individually as a "K. Hovnanian Indenture" and
collectively as the "K. Hovnanian Indentures." The Hovnanian Debt Securities
will be unsecured senior, senior subordinated or subordinated debt of
Hovnanian and will be issued: in the case of Hovnanian Senior Debt
Securities, under a Senior Indenture (the "Hovnanian Senior Debt Indenture")
between Hovnanian and the trustee specified in the applicable Prospectus
Supplement; in the case of Hovnanian Senior Subordinated Debt Securities,
under a Senior Subordinated Indenture (the "Hovnanian Senior Subordinated
Debt Indenture") between Hovnanian and the trustee specified in the
applicable Prospectus Supplement; and in the case of Hovnanian Subordinated
Debt Securities, under a Subordinated Indenture (the "Hovnanian Subordinated
Debt Indenture") between Hovnanian and the trustee specified in the
applicable Prospectus Supplement. The Hovnanian Senior Debt Indenture, the
Hovnanian Senior Subordinated Debt Indenture and the Hovnanian Subordinated
Debt Indenture are sometimes hereinafter referred to individually as a
"Hovnanian Indenture" and collectively as the "Hovnanian Indentures." The K.
Hovnanian Senior Indenture and the Hovnanian Senior Indenture are sometimes
collectively referred to individually as a "Senior Debt Indenture" and
collectively as the "Senior Debt Indentures." The K. Hovnanian Senior
Subordinated Debt Indenture and the Hovnanian Senior Subordinated Debt
Indenture are sometimes referred to individually as a "Senior Subordinated
Debt Indenture" and collectively as the "Senior Subordinated Debt
Indentures." The K. Hovnanian Subordinated Debt Indenture and the Hovnanian
Subordinated Debt Indenture are sometimes referred to individually as a
"Subordinated Debt Indenture" and collectively as the "Subordinated Debt
Indentures." The K. Hovnanian Indentures and the Hovnanian Indentures are
sometimes referred to individually as an "Indenture" and collectively as the
"Indentures."
None of the Indentures limits the amount of Debt Securities that may be
issued thereunder, and the Indentures provide that the Debt Securities may be
issued from time to time in one or more series. The Indentures permit the
appointment of a different trustee for each series of Debt Securities. The
Indentures are filed as exhibits to the Registration Statement, of which this
Prospectus is a part. The following summaries of certain provisions of the
Indentures and the Debt Securities do not purport to be complete, and, while
Hovnanian and K. Hovnanian believe the descriptions of the material
provisions of the Indentures and Debt Securities contained in this Prospectus
are accurate summaries of such material provisions, such summaries are
subject to the detailed provisions of the applicable Indenture to which
reference is hereby made for a full description of such provisions, including
<PAGE>
the definition of certain terms used herein. Section references in
parentheses below are to sections in each Indenture unless otherwise
indicated. Wherever particular sections or defined terms of the applicable
Indenture are referred to, such sections or defined terms are incorporated
herein by reference as part of the statement made, and the statement is
qualified in its entirety by such reference. The Indentures are substantially
identical, except for provisions relating to the Guarantee and to
subordination. For purposes of the summaries set forth below, the term
"Issuer" shall refer to K. Hovnanian in the case of the K. Hovnanian Debt
Securities and the K. Hovnanian Indentures, and to Hovnanian in the case of
the Hovnanian Debt Securities and the Hovnanian Indentures. The term
"Obligors" shall refer to Hovnanian in the case of the Hovnanian Debt
Securities and the Hovnanian Indentures, and K. Hovnanian and Hovnanian, as
guarantor (the "Guarantor"), in the case of the K. Hovnanian Debt Securities
and the K. Hovnanian Indentures.
Provisions Applicable to Senior, Senior Subordinated and Subordinated Debt
Securities
General. Hovnanian Debt Securities will be unsecured senior, senior
subordinated or subordinated obligations of Hovnanian, and K. Hovnanian Debt
Securities will be unsecured senior, senior subordinated or subordinated
obligations of K. Hovnanian, except that, under certain circumstances, K.
Hovnanian may be released from such obligations. See "--Condition for Release
of K. Hovnanian." Except to the extent set forth in the applicable Prospectus
Supplement, none of the Indentures limits the payment of dividends by or the
acquisition of stock of Hovnanian or K. Hovnanian. Except to the extent set
forth in any Prospectus Supplement, the Indentures do not, and the Debt
Securities will not, contain any covenants or other provisions that are
intended to afford holders of the Debt Securities special protection in the
event of either a change of control of Hovnanian or a highly leveraged
transaction by Hovnanian.
Reference is made to the Prospectus Supplement for the following terms
of and information relating to the Debt Securities being offered (the
"Offered Debt Securities") (to the extent such terms are applicable to such
Offered Debt Securities): (i) the title of the Offered Debt Securities; (ii)
classification as K. Hovnanian Senior Debt Securities, K. Hovnanian Senior
Subordinated Debt Securities, K. Hovnanian Subordinated Debt Securities,
Hovnanian Senior Debt Securities, Hovnanian Senior Subordinated Debt
Securities or Hovnanian Subordinated Debt Securities, aggregate principal
amount, purchase price and denomination; (iii) the date or dates on which the
Offered Debt Securities will mature; (iv) the method by which amounts payable
in respect of principal, premium, if any, or interest, if any, on or upon the
redemption of such Offered Debt Securities may be calculated; (v) the
interest rate or rates (or the method by which such will be determined) and
the date or dates from which such interest, if any, will accrue; (vi) the
date or dates on which such interest, if any, will be payable; (vii) the
place or places where and the manner in which the principal of, premium, if
any, and interest, if any, on the Offered Debt Securities will be payable and
the place or places where the Offered Debt Securities may be presented for
transfer; (viii) the right, if any, or obligation, if any, of the Company to
redeem, repay or purchase the Offered Debt Securities pursuant to any sinking
fund or analogous provisions or at the option of a holder thereof, and the
period or periods within which, the price or prices (or the method by which
such price or prices will be determined, or both) at which, the form or
method of payment therefor if other than in cash and the terms and conditions
upon which the Offered Debt Securities will be redeemed, repaid or purchased
pursuant to any such obligation; (ix) the terms for conversion or exchange,
if any, of the Offered Debt Securities; (x) any provision relating to the
<PAGE>
issuance of the Offered Debt Securities at an original issue discount; (xi)
if the amounts of payments of principal of, premium, if any, and interest, if
any, on the Offered Debt Securities are to be determined with reference to an
index, the manner in which such amounts shall be determined; (xii) any
applicable United States federal income tax consequences; (xiii) the currency
or currencies for which the Offered Debt Securities may be purchased and the
currency or currencies in which principal, premium, if any, and interest, if
any, may be payable; (xiv) the name of the trustee with respect to the series
of Offered Debt Securities; and (xv) any other specific terms of the Offered
Debt Securities, including any deleted, modified or additional events of
default or remedies or additional covenants provided with respect to such
Offered Debt Securities, and any terms that may be required by or advisable
under applicable laws or regulations.
Unless otherwise specified in any Prospectus Supplement, the Debt
Securities will be issuable in registered form and in denominations of $1,000
and any integral multiple thereof (Section 2.7). No service charge will be
made for any transfer or exchange of any Debt Securities but the Issuer may
require payment of a sum sufficient to cover any tax or other governmental
charge payable in connection therewith (Section 2.8).
Debt Securities may bear interest at a fixed rate or a floating rate.
Debt Securities bearing no interest or interest at a rate that at the time of
issuance is below the prevailing market rate may be sold at a discount below
their stated principal amount. Special United States federal income tax
considerations applicable to any such discounted Debt Securities or to
certain Debt Securities issued at par that are treated as having been issued
at a discount for United States federal income tax purposes will be described
in the applicable Prospectus Supplement.
In determining whether the holders of the requisite aggregate principal
amount of outstanding Debt Securities of any series have given any request,
demand, authorization, direction, notice, consent or waiver under the
Indentures, the principal amount of any series of Debt Securities originally
issued at a discount from their stated principal amount that will be deemed
to be outstanding for such purposes will be the amount of the principal
thereof that would be due and payable as of the date of such determination
upon a declaration of acceleration of the maturity thereof.
Description of Guarantee. Hovnanian will fully and unconditionally
guarantee, pursuant to the K. Hovnanian Indentures, the due and prompt
payment of the principal of (and premium, if any) and interest on the K.
Hovnanian Debt Securities when and as the same shall become due and payable,
whether at the Stated Maturity, by declaration of acceleration, call for
redemption or otherwise.
Payments with respect to the Guarantee of the K. Hovnanian Senior
Subordinated Debt Securities and K. Hovnanian Subordinated Debt Securities
will be subordinated in right of payment to the prior payment in full of all
Senior Indebtedness of the Guarantor to the same extent and manner that
payments with respect to the K. Hovnanian Senior Subordinated Debt Securities
and K. Hovnanian Subordinated Debt Securities are subordinated in right of
payment to the prior payment in full of all Senior Indebtedness of the Issuer
as described under "Provisions Applicable Solely to Senior Subordinated Debt
Securities and Subordinated Debt Securities" below.
Global Securities. The Debt Securities of a series may be issued in
whole or in part in the form of one or more global securities ("Global
Securities") that will be deposited with or on behalf of a depositary (the
"Depositary") identified in the Prospectus Supplement relating to such
series. Global Securities may be issued only in fully registered form and in
either temporary or permanent form. Unless and until it is exchanged in whole
or in part for the individual Debt Securities represented thereby, a Global
<PAGE>
Security (i) may not be transferred except as a whole and (ii) may only be
transferred (A) by the Depositary for such Global Security to its nominee,
(B) by a nominee of such Depositary to such Depositary or another nominee of
such Depositary or (C) by such Depositary or any such nominee to a successor
Depositary or nominee of such successor Depositary (Section 2.8).
The specific terms of the depositary arrangement with respect to a
series of Debt Securities will be described in the Prospectus Supplement
relating to such series. Hovnanian and K. Hovnanian anticipate that the
following provisions generally will apply to all depositary arrangements.
Upon the issuance of a Global Security, the Depositary for such Global
Security or its nominee will credit, on its book-entry registration and
transfer system, the respective principal amounts of the individual Debt
Securities represented by such Global Security to the accounts of persons
that have accounts with such Depositary. Such accounts shall be designated by
the dealers, underwriters or agents with respect to such Debt Securities or
by the Issuer if such Debt Securities are offered and sold directly by the
Issuer. Ownership of beneficial interests in a Global Security will be
limited to persons that have accounts with the applicable Depositary
("participants") or persons that may hold interests through participants.
Ownership of beneficial interests in such Global Security will be shown on,
and the transfer of that ownership will be effected only through, records
maintained by the applicable Depositary or its nominee (with respect to
interests of participants) and the records of participants (with respect to
interests of persons other than participants). The laws of some states
require that certain purchasers of securities take physical delivery of such
securities in definitive form. Such limits and such laws may impair the
ability to transfer beneficial interests in a Global Security.
As long as the Depositary for a Global Security or its nominee is the
registered owner of such Global Security, such Depositary or its nominee, as
the case may be, will be considered the sole owner or holder of the Debt
Securities of the series represented by such Global Security for all purposes
under the Indenture governing such Debt Securities. Except as provided below,
owners of beneficial interests in a Global Security will not be entitled to
have any of the individual Debt Securities of the series represented by such
Global Security registered in their names, will not receive or be entitled to
receive physical delivery of any such Debt Securities in definitive form and
will not be considered the owners or holders thereof under the Indenture
governing such Debt Securities.
Payment of principal of, premium, if any, and interest, if any, on
individual Debt Securities represented by a Global Security registered in the
name of a Depositary or its nominee will be made to the Depositary or its
nominee, as the case may be, as the registered owner of the Global Security
representing such Debt Securities. Hovnanian and K. Hovnanian expect that the
Depositary for a series of Debt Securities or its nominee, upon receipt of
any payment of principal, premium, if any, and interest, if any, in respect
of a Global Security representing any such Debt Securities, will immediately
credit participants' accounts with payments in amounts proportionate to their
respective beneficial interests in the principal amount of such Global
Security for such Securities as shown on the records of such Depositary or
its nominee. Hovnanian and K. Hovnanian also expect that payments by
participants to owners of beneficial interests in such Global Security held
through such participants will be governed by standing instructions and
customary practices, as is now the case with securities held for the accounts
of customers in bearer form or registered in "street name." Such payments
will be the responsibility of such participants. Neither Hovnanian, K.
Hovnanian, the trustee for such Debt Securities, any paying agent nor the
registrar for such Debt Securities will have any responsibility or liability
<PAGE>
for any aspect of the records relating to or payments made on account of
beneficial ownership interests of the Global Security for such Debt
Securities or for maintaining, supervising or reviewing any records relating
to such beneficial ownership interests.
If the Depositary for a series of Debt Securities is at any time
unwilling, unable or ineligible to continue as depositary and a successor
depositary is not appointed by the Issuer within 90 days, such Issuer will
issue individual Debt Securities of such series in exchange for the Global
Security representing such series of Debt Securities. In addition, an Issuer
may at any time and in its sole discretion, subject to any limitations
described in the Prospectus Supplement relating to such Debt Securities,
determine not to have any Debt Securities of a series represented by a Global
Security and, in such event, will issue individual Debt Securities of such
series in exchange for the Global Security representing such series of Debt
Securities. Further, if an Issuer so specifies with respect to the Debt
Securities of a series, an owner of a beneficial interest in a Global
Security representing Debt Securities of such series may, on terms acceptable
to such Issuer, the trustee and the Depositary for such Global Security,
receive individual Debt Securities of such series in exchange for such
beneficial interests, subject to any limitations described in the Prospectus
Supplement relating to such Debt Securities. In any such instance, an owner
of a beneficial interest in a Global Security will be entitled to physical
delivery of individual Debt Securities of the series represented by such
Global Security equal in principal amount to such beneficial interest and to
have such Debt Securities registered in its name. Individual Debt Securities
of such series so issued will be issued in registered form and in
denominations, unless otherwise specified in the applicable Prospectus
Supplement relating to such series of Debt Securities, of $1,000 and integral
multiples thereof.
Events of Default. Unless otherwise specified in the applicable
Prospectus Supplement, an Event of Default is defined under each Indenture
with respect to the Debt Securities of any series issued under such Indenture
as being: (a) default in the payment of principal of or premium, if any, with
respect to Debt Securities of such series when due; (b) default in the
payment of any installment of interest on any of the Debt Securities of such
series when due, continued for 30 days; (c) default in the payment or
satisfaction of any sinking fund or other purchase obligation with respect to
Debt Securities of such series when due; (d) default in the performance of
any other covenant of any of the Obligors applicable to Debt Securities of
such series, continued for 90 days after written notice to the Obligors by
the trustee or to the Obligors and the trustee, by the holders of at least
25% in aggregate principal amount of the Debt Securities of such series then
outstanding requiring the same to be remedied; and (e) certain events of
bankruptcy, insolvency or reorganization of the Company (Section 5.1).
If any Event of Default shall occur and be continuing, the trustee or
the holders of not less than 25% in aggregate principal amount of the Debt
Securities of such series then outstanding, by notice in writing to the
Obligors (and to the trustee, if given by the holders), may declare the
principal (or, in the case of any series of Debt Securities originally issued
at a discount from their stated principal amount, such portion of the
principal amount as may be specified in the terms of such series) of all of
the Debt Securities of such series and the interest, if any, accrued thereon
to be due and payable immediately; provided, however, that the holders of a
majority in aggregate principal amount of the Debt Securities of such series
then outstanding, by notice in writing to the Obligors and the trustee, may
rescind and annul such declaration and its consequences if all defaults under
such Indenture are cured or waived (Section 5.1).
<PAGE>
Each Indenture provides that no holder of any series of Debt Securities
then outstanding may institute any suit, action or proceeding with respect
to, or otherwise attempt to enforce, such Indenture, unless (i) such holder
previously shall have given to the trustee written notice of default and of
the continuance thereof, (ii) the holders of not less than 25% in aggregate
principal amount of such series of Debt Securities then outstanding shall
have made written request to the trustee to institute such suit, action or
proceeding and shall have offered to the trustee such reasonable indemnity as
it may require with respect thereto and (iii) 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;
provided that, subject to the subordination provisions applicable to the
Senior Subordinated Debt Securities and the Subordinated Debt Securities, the
right of any holder of any Debt Security to receive payment of the principal
of, premium, if any, or interest, if any, on such Debt Security, on or after
the respective due dates, or to institute suit for the enforcement of any
such payment shall not be impaired or affected without the consent of such
holder (Section 5.4). The holders of a majority in aggregate principal amount
of the Debt Securities of such series then outstanding may 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 Debt Securities of such series, provided that the trustee may
decline to follow such direction if the trustee determines that such action
or proceeding is unlawful or would involve the trustee in personal liability
(Section 5.7).
The Obligors are required to furnish to the trustee annually a
certificate as to compliance by the Obligors with all conditions and
covenants under each Indenture (Section 4.3).
Discharge and Defeasance. Unless otherwise specified in the applicable
Prospectus Supplement, the Obligors can discharge or defease their respective
obligations with respect to any series of Debt Securities as set forth below
(Article Ten).
The Obligors may discharge all of their obligations (except those set
forth below) to holders of any series of Debt Securities issued under any
Indenture that have not already been delivered to the trustee for
cancellation and that have either become due and payable, or are by their
terms due and payable within one year (or scheduled for redemption within one
year), by irrevocably depositing with the trustee cash or U.S. Government
Obligations (as defined in such Indenture), or a combination thereof, as
trust funds in an amount certified to be sufficient to pay when due the
principal of, premium, if any, and interest, if any, on all outstanding Debt
Securities of such series and to make any mandatory sinking fund payments, if
any, thereon when due.
Unless otherwise provided in the applicable Prospectus Supplement, the
Obligors may also elect at any time to (a) defease and be discharged from all
of their obligations (except those set forth below) to holders of any series
of Debt Securities issued under each Indenture ("defeasance") or (b) be
released from all of their obligations with respect to certain covenants
applicable to any series of Debt Securities issued under each Indenture
("covenant defeasance"), if, among other things: (i) the Obligors irrevocably
deposit with the trustee cash or U.S. Government Obligations, or a
combination thereof, as trust funds in an amount certified to be sufficient
to pay when due the principal of, premium, if any, and interest, if any, on
all outstanding Debt Securities of such series and to make any mandatory
sinking fund payments, if any, thereon when due and such funds have been so
deposited for 91 days; (ii) such deposit will not result in a breach or
violation of, or cause a default under, any agreement or instrument to which
<PAGE>
any of the Obligors is a party or by which it is bound; and (iii) the
Obligors deliver to the trustee an opinion of counsel to the effect that the
holders of such series of Debt Securities will not recognize income, gain or
loss for United States federal income tax purposes as a result of such
defeasance or covenant defeasance and that defeasance or covenant defeasance
will not otherwise alter the United States federal income tax treatment of
such holders' principal of and interest payments, if any, on such series of
Debt Securities. Such opinion in the case of defeasance under clause (a)
above must be based on a ruling of the Internal Revenue Service or a change
in United States federal income tax law occurring after the date of the
Indenture relating to the Debt Securities of such series, since such a result
would not occur under current tax law (Section 10.1).
Notwithstanding the foregoing, no discharge, defeasance or covenant
defeasance described above shall affect the following obligations to or
rights of the holders of any series of Debt Securities: (i) rights of
registration of transfer and exchange of Debt Securities of such series, (ii)
rights of substitution of mutilated, defaced, destroyed, lost or stolen Debt
Securities of such series, (iii) rights of holders of Debt Securities of such
series to receive payments of principal thereof, premium, if any, and
interest, if any, thereon, upon the original due dates therefor (but not upon
acceleration), and to receive mandatory sinking fund payments thereon when
due, if any, (iv) rights, obligations, duties and immunities of the trustee,
(v) rights of holders of Debt Securities of such series as beneficiaries with
respect to property so deposited with the trustee payable to all or any of
them and (vi) obligations of the Obligors to maintain an office or agency in
respect of Debt Securities of such series (Section 10.1).
The Obligors may exercise the defeasance option with respect to any
series of Debt Securities notwithstanding the prior exercise of the covenant
defeasance option with respect to any series of Debt Securities. If the
Obligors exercise the defeasance option with respect to any series of Debt
Securities, payment of such series of Debt Securities may not be accelerated
because of an Event of Default with respect to such series of Debt
Securities. If the Obligors exercise the covenant defeasance option with
respect to any series of Debt Securities, payment of such series of Debt
Securities may not be accelerated by reason of an Event of Default with
respect to the covenants to which such covenant defeasance is applicable.
However, if such acceleration were to occur by reason of another Event of
Default, the realizable value at the acceleration date of the cash and U.S.
Government Obligations in the defeasance trust could be less than the
principal of, premium, if any, and interest, if any, and any mandatory
sinking fund payments, if any, then due on such series of Debt Securities, in
that the required deposit in the defeasance trust is based upon scheduled
cash flow rather than market value, which will vary depending upon interest
rates and other factors.
Modification of the Indenture. Each Indenture provides that the Obligors
and the trustee may enter into supplemental indentures without the consent of
the holders of the Debt Securities to (a) evidence the assumption by a
successor entity of the obligations of any of the Obligors under such
Indenture, (b) add covenants or new events of default for the protection of
the holders of such Debt Securities, (c) cure any ambiguity or correct any
inconsistency in the Indenture, (d) establish the form and terms of Debt
Securities of any series, (e) evidence the acceptance of appointment by a
successor trustee, (f) in the case of Senior Debt Securities, secure such
Debt Securities, (g) designate a bank or trust company other than the trustee
specified in the applicable Prospectus Supplement to act as trustee for a
series of Debt Securities, (h) modify the existing covenants and events of
default solely in respect of, or add new covenants and events of default that
<PAGE>
apply solely to, Debt Securities not yet issued and outstanding on the date
of such supplemental indenture, (i) provide for the issuance of Debt
Securities of any series in coupon form and exchangeability of such Debt
Securities for fully registered Debt Securities, (j) modify, eliminate or add
to the provisions of such Indenture as necessary to effect the qualification
of such Indenture under the Trust Indenture Act of 1939 and to add certain
provisions expressly permitted by such Act and (k) modify the provisions to
provide for the denomination of Debt Securities in foreign currencies which
shall not adversely affect the interests of the holders of such Debt
Securities in any material respect. (Section 8.1).
Each Indenture also contains provisions permitting the Obligors and the
trustee, with the consent of the holders of not less than a majority in
aggregate principal amount of Debt Securities of each series then outstanding
and affected, to add any provisions to, or change in any manner or eliminate
any of the provisions of, such Indenture or any supplemental indenture or
modify in any manner the rights of the holders of the Debt Securities of such
series; provided that the Obligors and the trustee may not, without the
consent of the holder of each outstanding Debt Security affected thereby, (a)
extend the stated final maturity of any Debt Security, reduce the principal
amount thereof, reduce the rate or extend the time of payment of interest, if
any, thereon, reduce or alter the method of computation of any amount payable
on redemption, repayment or purchase by the Issuer, change the coin or
currency in which principal, premium, if any, and interest, if any, are
payable, reduce the amount of the principal of any original issue discount
security payable upon acceleration or provable in bankruptcy, impair or
affect the right to institute suit for the enforcement of any payment or
repayment thereof or, if applicable, adversely affect any right of prepayment
at the option of the holder or, in the case of K. Hovnanian Indentures, make
any change adverse to the interests of the holders in the terms and
conditions of the Guarantee or (b) reduce the aforesaid percentage in
aggregate principal amount of Debt Securities of any series issued under such
Indenture (Section 8.2).
Consolidation, Merger, Sale or Conveyance. Except as otherwise provided
in the applicable Prospectus Supplement, the K. Hovnanian Indentures provide
that K. Hovnanian or the Guarantor may, and the Hovnanian Indentures provide
that Hovnanian may, without the consent of the holders of Debt Securities,
consolidate with, merge into or transfer, exchange or dispose of all of its
properties to, any other corporation or partnership organized under the laws
of the United States, provided that (i) the successor corporation assumes all
obligations of K. Hovnanian or Hovnanian, as the case may be, by supplemental
indenture satisfactory in form to the applicable trustee executed and
delivered to such trustee, under the Indentures and the Debt Securities, (ii)
immediately after giving effect to such consolidation, merger, exchange or
other disposition, no Event of Default, and no event which, after notice or
lapse of time or both, would become an Event of Default, shall have occurred
and be continuing and (iii) certain other conditions are met. (Section 9.1).
Condition for Release of K. Hovnanian. Except as otherwise provided in
the applicable Prospectus Supplement, each K. Hovnanian Indenture provides
that K. Hovnanian may be released from its obligations under such K.
Hovnanian Indenture and the K. Hovnanian Debt Securities, without the consent
of the holders of the K. Hovnanian Debt Securities of any series, if
Hovnanian or any successor to Hovnanian has assumed the obligations of K.
Hovnanian under such K. Hovnanian Debt Securities. In the event of such
release, a taxable sale or exchange of a Debt Security for a new Debt
Security will be deemed to occur. As a result, a holder of a Debt Security
may recognize gain or loss on the sale or exchange and may be required to
<PAGE>
include in income different amounts during the remaining term of the Debt
Security than would have been included absent such release.
Certain Definitions. Except as otherwise provided in the applicable
Prospectus Supplement, the following definitions are applicable to the
discussions of the Indentures (Article One).
"Consolidated Net Tangible Assets" means the aggregate amount of
assets included on the most recent consolidated balance sheet of
Hovnanian and its Restricted Subsidiaries, less applicable reserves and
other properly deductible items and after deducting therefrom (a) all
current liabilities and (b) all goodwill, trade names, trademarks,
patents, unamortized debt discount and expense and other like
intangibles, all in accordance with generally accepted accounting
principles consistently applied.
"Indebtedness," with respect to any person, means, without
duplication:
(a)(i) the principal of, premium, if any, and interest, if any, on
indebtedness for money borrowed of such person, indebtedness of such
person evidenced by bonds, notes, debentures or similar obligations,
and any guaranty by such person of any indebtedness for money borrowed
or indebtedness evidenced by bonds, notes, debentures or similar
obligations of any other person, whether any such indebtedness or
guaranty is outstanding on the date of the Indenture or is thereafter
created, assumed or incurred, (ii) obligations of such person for the
reimbursement of any obligor on any letter of credit, banker's
acceptance or similar credit transaction, (iii) the principal of and
premium, if any, and interest, if any, on indebtedness incurred,
assumed or guaranteed by such person in connection with the
acquisition by it or any of its subsidiaries of any other businesses,
properties or other assets, (iv) lease obligations that such person
capitalized in accordance with Statement of Financial Accounting
Standards No. 13 promulgated by the Financial Accounting Standards
Board or such other generally accepted accounting principles as may be
from time to time in effect, (v) any indebtedness of such person
representing the balance deferred and unpaid of the purchase price of
any property or interest therein (except any such balance that
constitutes an accrued expense or trade payable) and any guaranty,
endorsement or other contingent obligation of such person in respect
of any indebtedness of another that is outstanding on the date of the
Indenture or is thereafter created, assumed or incurred by such person
and (vi) obligations of such person under interest rate, commodity or
currency swaps, caps, collars, options and similar arrangements; and
(b) any amendments, modifications, refundings, renewals or
extensions of any indebtedness or obligation described as Indebtedness
in clause (a) above.
"Restricted Subsidiary" means (a) any Subsidiary of Hovnanian other
than an Unrestricted Subsidiary, and (b) any Subsidiary of Hovnanian
which was an Unrestricted Subsidiary but which, subsequent to the date
of the Indentures, is designated by the Board of Directors of Hovnanian
to be a Restricted Subsidiary; provided, however, that Hovnanian may not
designate any such Subsidiary to be a Restricted Subsidiary if Hovnanian
would thereby breach any covenant or agreement contained in the
Indentures (on the assumptions that any outstanding Indebtedness of such
Subsidiary was incurred at the time of such designation).
"Subsidiary" of any specified Person means any corporation of which
such Person, or such Person and one or more Subsidiaries of such Person,
or any one or more Subsidiaries of such Person, directly or indirectly
own voting securities entitling any one or more of such Person and its
<PAGE>
Subsidiaries to elect a majority of the directors, either at all times,
or so long as there is no default or contingency which permits the
holders of any other class or classes of securities to vote for the
election of one or more directors.
"Unrestricted Subsidiary" means (a) any Subsidiary of Hovnanian
acquired or organized after the date of the Indentures, provided,
however, that such Subsidiary shall not be a successor, directly or
indirectly, to any Restricted Subsidiary and (b) any Subsidiary of
Hovnanian substantially all the assets of which consist of stock or
other securities of a Subsidiary or Subsidiaries of the character
described in clause (a) above, unless and until such Subsidiary shall
have been designated to be a Restricted Subsidiary.
Provisions Applicable Solely to Senior Debt Securities
General. Senior Debt Securities will be issued under a Senior Debt
Indenture and will rank pari passu with all other unsecured and
unsubordinated debt of the Issuer of such Senior Debt Securities.
Limitations on Liens. The Senior Debt Indentures provide that, so long
as any Senior Debt Securities are outstanding, Hovnanian will not, and will
not permit any Restricted Subsidiary to, pledge, mortgage, hypothecate or
grant a security interest in, or permit any mortgage, pledge, security
interest or other lien upon, any property or assets owned by Hovnanian or any
Restricted Subsidiary to secure any Indebtedness, without making effective
provision whereby outstanding Senior Debt Securities shall be equally and
ratably secured.
Under the terms of the Senior Debt Indentures, the foregoing limitation
does not apply to (a) any mortgage, pledge, security interest, lien or
encumbrance upon any property or assets created at the time of the
acquisition of such property or assets by Hovnanian or any Restricted
Subsidiary or within one year after such time to secure all or a portion of
the purchase price for such property or assets; (b) any mortgage, pledge,
security interest, lien or encumbrance upon any property or assets existing
thereon at the time of the acquisition thereof by Hovnanian or any Restricted
Subsidiary (whether or not the obligations secured thereby are assumed by
Hovnanian or any Restricted Subsidiary); (c) any mortgage, pledge, security
interest, lien or encumbrance upon any property or assets, whenever acquired,
of any corporation or other entity that becomes a Restricted Subsidiary after
the date of the Senior Debt Indenture, provided that (i) the instrument
creating such mortgage, pledge, security interest, lien or encumbrance shall
be in effect prior to the time such corporation or other entity becomes a
Restricted Subsidiary and (ii) such mortgage, pledge, security interest, lien
or encumbrance shall only apply to properties or assets owned by such
corporation or other entity at the time it becomes a Restricted Subsidiary or
thereafter acquired by it from sources other than Hovnanian or another
Restricted Subsidiary; (d) any mortgage, pledge, security interest, lien or
encumbrance in favor of Hovnanian or any wholly-owned Subsidiary of
Hovnanian; (e) any mortgage, pledge, security interest, lien or encumbrance
created or assumed by Hovnanian or a Restricted Subsidiary in connection with
the issuance of debt securities the interest on which is excludable from
gross income of the holder of such security pursuant to the Internal Revenue
Code of 1986, as amended, for the purpose of financing, in whole or in part,
the acquisition or construction of property or assets to be used by Hovnanian
or a Subsidiary; (f) any extension, renewal or refunding of any mortgage,
pledge, security interest, lien or encumbrance described in the foregoing
subparagraphs (a) through (e) on substantially the same property or assets
theretofore subject thereto; (g) any mortgage, pledge, security interest,
lien or encumbrance securing any Indebtedness in an amount which, together
<PAGE>
with all other Indebtedness secured by a mortgage, pledge, security interest,
lien or encumbrance that is not otherwise permitted by the foregoing
provisions, does not at the time of the incurrence of the Indebtedness so
secured exceed 20% of Consolidated Net Tangible Assets; (h) deposits or
pledges to secure the payment of workmen's compensation, unemployment
insurance or other social security benefits or obligations, or to secure the
performance of trade contracts, leases, public or statutory obligations,
surety or appeal bonds or other obligations of a like general nature incurred
in the ordinary course of business; (i) mechanics', materialmen's,
warehousemen's, carriers' or other like liens arising in the ordinary course
of business securing obligations which are not overdue for a period longer
than 30 days or which are being contested in good faith by appropriate
proceedings; (j) liens for taxes, assessments or other governmental charges
not yet payable or being contested in good faith and as to which adequate
reserves shall have been established in accordance with generally accepted
accounting principles; (k) non-recourse mortgages on Income Producing
Properties securing Indebtedness; (l) liens on assets of a Mortgage
Subsidiary to secure only a Warehouse Line of Credit provided to such
Subsidiary; (m) easements, rights-of-way, restrictions and other similar
encumbrances incurred in the ordinary course of business or (n) liens in
connection with capital leases or sale leaseback transactions not securing
any other indebtedness. For the purpose of this provision, "security
interest" will include the interest of the lessor under a lease with a term
of three years or more that should be, in accordance with generally accepted
accounting principles, recorded as a capital lease, and any such lease of
property or assets not acquired from Hovnanian or any Restricted Subsidiary
in contemplation of such lease shall be treated as though the lessee had
purchased such property or assets from the lessor. (Section 3.6 of the Senior
Debt Indentures).
Provisions Applicable Solely to Senior Subordinated Debt Securities and
Subordinated Debt Securities
Subordination. The Subordinated Debt Securities will be subordinate and
junior in right of payment, to the extent set forth in the Subordinated Debt
Indentures, to all Senior Indebtedness. The Senior Subordinated Debt
Securities will be subordinate and junior in right of payment, to the extent
set forth in the Senior Subordinated Debt Indentures, to all Senior
Indebtedness of the Issuer. The Senior Subordinated Debt Securities will rank
senior to all existing and future Indebtedness of the Issuer that is neither
Senior Indebtedness of the Issuer nor Senior Subordinated Indebtedness, and
only Indebtedness of the Issuer that is Senior Indebtedness of the Issuer
will rank senior to the Senior Subordinated Debt Securities in accordance
with the subordination provisions of the Senior Subordinated Debt Indentures.
"Senior Indebtedness" of the Issuer is defined in the Subordinated Debt
Indentures and the Senior Subordinated Debt Indentures as Indebtedness of the
Issuer outstanding at any time (other than the Indebtedness evidenced by the
Debt Securities of any series) except (a) any Indebtedness as to which, by
the terms of the instrument creating or evidencing the same, it is provided
that such Indebtedness is not senior or prior in right of payment to the Debt
Securities or is pari passu or subordinate by its terms in right of payment
to the Debt Securities, (b) renewals, extensions and modifications of any
such Indebtedness, (c) any Indebtedness of the Company to a wholly-owned
Subsidiary of the Issuer, (d) interest accruing after the filing of a
petition initiating certain events of bankruptcy or insolvency unless such
interest is an allowed claim enforceable against the Issuer in a proceeding
under federal or state bankruptcy laws and (e) trade payables.
<PAGE>
"Senior Subordinated Indebtedness" is defined in the Hovnanian Senior
Subordinated Debt Indenture as the Hovnanian Senior Subordinated Debt
Securities and any other Indebtedness of Hovnanian that ranks pari passu with
the Hovnanian Senior Subordinated Debt Securities. Any Indebtedness of
Hovnanian that is subordinate or junior by its terms in right of payment to
any other Indebtedness of Hovnanian shall be subordinate to Senior
Subordinated Indebtedness of Hovnanian unless the instrument creating or
evidencing the same or pursuant to which the same is outstanding specifically
provides that such Indebtedness (i) is to rank pari passu with other Senior
Subordinated Indebtedness of Hovnanian and (ii) is not subordinated by its
terms to any Indebtedness of Hovnanian which is not Senior Indebtedness of
Hovnanian.
"Senior Subordinated Indebtedness" is defined in the K. Hovnanian Senior
Subordinated Debt Indenture as the K. Hovnanian Senior Subordinated Debt
Securities, the Guarantee and any other Indebtedness of K. Hovnanian or the
Guarantor that ranks pari passu with the K. Hovnanian Senior Subordinated
Debt Securities. Any Indebtedness of K. Hovnanian or the Guarantor that is
subordinate or junior by its terms in right of payment to any other
Indebtedness of K. Hovnanian or the Guarantor shall be subordinate to Senior
Subordinated Indebtedness unless the instrument creating or evidencing the
same or pursuant to which the same is outstanding specifically provides that
such Indebtedness (i) is to rank pari passu with other Senior Subordinated
Indebtedness and (ii) is not subordinated by its terms to any Indebtedness of
K. Hovnanian or the Guarantor which is not Senior Indebtedness of K.
Hovnanian or Senior Indebtedness of the Guarantor.
"Subordinated Indebtedness" of the Obligors means the Senior
Subordinated Debt Securities, the Guarantees, any other Senior Subordinated
Indebtedness of such Obligor and any other Indebtedness that is subordinate
or junior in right of payment to Senior Indebtedness of such Obligor.
If (i) the Issuer should default in the payment of any principal of,
premium, if any, or interest, if any, on any Senior Indebtedness of the
Issuer when the same becomes due and payable, whether at maturity or at a
date fixed for prepayment or by declaration of acceleration or otherwise or
(ii) any other default with respect to Senior Indebtedness of the Issuer
shall occur and the maturity of the Senior Indebtedness has been accelerated
in accordance with its terms, then, upon written notice of such default to
the Issuer by the holders of such Senior Indebtedness or any trustee
therefor, unless and until such default shall have been cured or waived or
shall have ceased to exist or such acceleration shall have been rescinded, no
direct or indirect payment (in cash, property, securities, by set-off or
otherwise) will be made or agreed to be made for principal of, premium, if
any, or interest, if any, on any of the Senior Subordinated Debt Securities
or the Subordinated Debt Securities, or in respect of any redemption,
retirement, purchase or other acquisition of the Senior Subordinated Debt
Securities or the Subordinated Debt Securities other than those made in
capital stock of Hovnanian (or cash in lieu of fractional shares thereof)
(Sections 13.1 and 13.4 of the Senior Subordinated Debt Indentures and
Sections 13.1 and 13.4 of the Subordinated Debt Indentures).
If any default (other than a default described in the preceding
paragraph) occurs under the Senior Indebtedness of the Issuer, pursuant to
which the maturity thereof may be accelerated immediately or the expiration
of any applicable grace periods occurs (a "Senior Nonmonetary Default"),
then, upon the receipt by the Issuer and the trustee of written notice
thereof (a "Payment Notice") from or on behalf of holders of 25% or more of
the aggregate principal amount of Senior Indebtedness specifying an election
to prohibit such payment and other action by the Issuer in accordance with
the following provisions of this paragraph, the Issuer may not make any
<PAGE>
payment or take any other action that would be prohibited by the immediately
preceding paragraph during the period (the "Payment Blockage Period")
commencing on the date of receipt of such Payment Notice and ending on the
earlier of (i) the date, if any, on which the holders of such Senior
Indebtedness or their representative notify the trustee that such Senior
Nonmonetary Default is cured or waived or ceases to exist or the Senior
Indebtedness to which such Senior Nonmonetary Default relates is discharged
or (ii) the 179th day after the date of receipt of such Payment Notice.
Notwithstanding the provisions described in the immediately preceding
sentence, the Issuer may resume payments on the Senior Subordinated Debt
Securities and the Subordinated Debt Securities after such Payment Blockage
Period.
If (i) (A) without the consent of the Issuer a receiver, conservator,
liquidator or trustee of the Issuer or of any of its property is appointed by
the order or decree of any court or agency or supervisory authority having
jurisdiction, and such decree or order remains in effect for more than 60
days or (B) the Issuer is adjudicated bankrupt or insolvent or (C) any of its
property is sequestered by court order and such order remains in effect for
more than 60 days or (D) a petition is filed against the Issuer under any
state or federal bankruptcy, reorganization, arrangement, insolvency,
readjustment of debt, dissolution, liquidation or receivership law of any
jurisdiction whether now or hereafter in effect, and is not dismissed within
60 days after such filing; (ii) the Issuer (A) commences a voluntary case or
other proceeding seeking liquidation, reorganization, arrangement,
insolvency, readjustment of debt, dissolution, liquidation or other relief
with respect to itself or its debt or other liabilities under any bankruptcy,
insolvency or other similar law now or hereafter in effect or seeking the
appointment of a trustee, receiver, liquidator, custodian or other similar
official of it or any substantial part of its property, or (B) consents to
any such relief or to the appointment of or taking possession by any such
official in an involuntary case or other proceeding commenced against it, or
(C) fails generally to, or cannot, pay its debts generally as they become due
or (D) takes any corporate action to authorize or effect any of the
foregoing; or (iii) any Subsidiary of the Issuer takes, suffers or permits to
exist any of the events or conditions referred to in the foregoing clause (i)
or (ii), then all Senior Indebtedness of the Issuer (including any interest
thereon accruing after the commencement of any such proceedings) will first
be paid in full before any payment or distribution, whether in cash,
securities or other property, is made by the Issuer to any holder of Senior
Subordinated Debt Securities or Subordinated Debt Securities on account of
the principal of, premium, if any, or interest, if any, on such Senior
Subordinated Debt Securities or Subordinated Debt Securities, as the case may
be. Any payment or distribution, whether in cash, securities or other
property (other than securities of the Issuer or any other corporation
provided for by a plan of reorganization or readjustment the payment of which
is subordinate, at least to the extent provided in the subordination
provisions with respect to the indebtedness evidenced by the Senior
Subordinated Debt Securities or the Subordinated Debt Securities, to the
payment of all Senior Indebtedness of the Issuer then outstanding and to any
securities issued in respect thereof under any such plan of reorganization or
readjustment) that would otherwise (but for the subordination provisions) be
payable or deliverable in respect of the Senior Subordinated Debt Securities
or the Subordinated Debt Securities of any series will be paid or delivered
directly to the holders of Senior Indebtedness of the Issuer in accordance
with the priorities then existing among such holders until all Senior
Indebtedness of the Issuer (including any interest thereon accruing after the
commencement of any such proceedings) has been paid in full. In the event of
<PAGE>
any such proceeding, after payment in full of all sums owing with respect to
Senior Indebtedness of the Issuer, the holders of Senior Subordinated Debt
Securities, together with the holders of any obligations of the Issuer
ranking on a parity with the Senior Subordinated Debt Securities, will be
entitled to be repaid from the remaining assets of the Issuer the amounts at
that time due and owing on account of unpaid principal of, premium, if any,
or interest, if any, on the Senior Subordinated Debt Securities and such
other obligations before any payment or other distribution, whether in cash,
property or otherwise, shall be made on account of any capital stock or
obligations of the Issuer ranking junior to the Senior Subordinated Debt
Securities (including the Subordinated Debt Securities) and such other
obligations (Section 13.1 of the Senior Subordinated Debt Indentures and
Section 13.1 of the Subordinated Debt Indentures).
If any payment or distribution of any character, whether in cash,
securities or other property (other than securities of the Issuer or any
other corporation provided for by a plan of reorganization or readjustment
the payment of which is subordinate, at least to the extent provided in the
subordination provisions with respect to the Senior Subordinated Debt
Securities or the Subordinated Debt Securities, to the payment of all Senior
Indebtedness of the Issuer then outstanding and to any securities issued in
respect thereof under any such plan of reorganization or readjustment), shall
be received by the trustee, or any holder of any Senior Subordinated Debt
Securities or Subordinated Debt Securities in contravention of any of the
terms of the Senior Subordinated Debt Indenture or the Subordinated Debt
Indenture, as the case may be, such payment or distribution of securities
will be received in trust for the benefit of, and will be paid over or
delivered and transferred to, the holders of the Senior Indebtedness of the
Issuer then outstanding in accordance with the priorities then existing among
such holders for application to the payment of all Senior Indebtedness of the
Issuer remaining unpaid to the extent necessary to pay all such Senior
Indebtedness of the Issuer in full (Section 13.1 of the Senior Subordinated
Debt Indentures and Section 13.1 of the Subordinated Debt Indentures).
By reason of such subordination, in the event of the insolvency of the
Issuer, holders of Senior Indebtedness of the Issuer may receive more,
ratably, than holders of the Senior Subordinated Debt Securities or
Subordinated Debt Securities of the Issuer. Such subordination will not
prevent the occurrence of any Event of Default (as defined in the Indentures)
or limit the right of acceleration in respect of the Senior Subordinated Debt
Securities or Subordinated Debt Securities.
Concerning the Trustee
Information concerning the trustee for a series of Debt Securities will
be set forth in the Prospectus Supplement relating to such series of Debt
Securities. Any of the trustees under the Indentures may make loans to
Hovnanian or K. Hovnanian in the normal course of business.
<PAGE>
DESCRIPTION OF CAPITAL STOCK
The authorized capital stock of the Company is 100,100,000 shares
consisting of 87,000,000 shares of Class A Common Stock, par value $.01 per
share (the "Class A Common Stock"), 13,000,000 shares of Class B Common
Stock, par value $.01 per share (the "Class B Common Stock") and 100,000
shares of Preferred Stock, par value $.01 per share (the "Preferred Stock")
in such series and with such voting powers, designations, preferences and
relative, participating, optional or other special rights, and
qualifications, limitations or restrictions thereof, as may be fixed from
time to time by the Board of Directors for each series. The following summary
description of certain provisions of the Company's Restated Certificate of
Incorporation (the "Certificate of Incorporation") and By-laws does not
purport to be complete and is qualified in its entirety by reference to said
provisions.
Common Stock
As of March 2, 1998, 14,054,297 shares of Class A Common Stock and
7,734,963 shares of Class B Common Stock were issued and outstanding. The
Class A Common Stock is traded on the American Stock Exchange. There is no
established public trading market for the Class B Common Stock. In order to
trade Class B Common Stock, the shares must be converted into Class A Common
Stock on a one-for-one basis. The outstanding Common Stock is, and any Common
Stock offered pursuant to this Prospectus and any Prospectus Supplement when
issued and paid for will be, fully paid and non-assessable.
Dividends. Dividends on the Common Stock will be paid if, when and as
determined by the Board of Directors of the Company out of funds legally
available for this purpose. Certain debt instruments to which the Company is
a party contain restrictions on the payment of cash dividends. At October 31,
1997, $41,578,000 of retained earnings were free of such restrictions. The
amount of any regular cash dividend payable on a share of Class A Common
Stock will be an amount equal to 110% of the corresponding regular cash
dividend payable on a share of Class B Common Stock. The Company has never
paid dividends nor does it currently intend to pay dividends.
Voting Rights. Holders of Class A Common Stock are entitled to one vote
for each share held by them on all matters presented to shareholders. Holders
of Class B Common Stock are entitled to ten votes per share.
Liquidation Rights. After satisfaction of the preferential liquidation
rights of any Preferred Stock, the holders of the Class A Common Stock and
Class B Common Stock are entitled to share ratably as a single class in the
distribution of all remaining net assets.
Preemptive and Other Rights. The holders of Common Stock do not have
preemptive rights as to additional issues of Common Stock or conversion
rights. The shares of Common Stock are not subject to redemption or to any
further calls or assessments and are not entitled to the benefit of any
sinking fund provisions. The rights, preferences and privileges of holders of
Common Stock are subject to, and may be adversely affected by, the rights of
the holder of shares of any series of Preferred Stock which the Company may
designate and issue in the future.
Preferred Stock
The Certificate of Incorporation authorizes the Board of Directors to
issue from time to time up to 100,000 shares of Preferred Stock, in one or
more series, and with such voting powers, designations, preferences and
relative, participating, optional or other special rights, and
qualifications, limitations or restrictions thereof, as may be fixed from
<PAGE>
time to time by the Board of Directors for each series. No shares of
Preferred Stock have been issued and the Company has no present plans to
issue any shares of Preferred Stock. The Preferred Stock, however, could be
used without further action by the Board of Directors as an anti-takeover
device.
<PAGE>
DESCRIPTION OF WARRANTS
Hovnanian may issue Warrants, including Warrants to purchase Common
Stock or Preferred Stock and Warrants to purchase Hovnanian Debt Securities.
K. Hovnanian may issue Warrants to purchase K. Hovnanian Debt Securities. All
obligations of K. Hovnanian under the K. Hovnanian Warrants will be fully and
unconditionally guaranteed by Hovnanian. Warrants may be issued independently
of or together with any other Securities and may be attached to or separate
from such Securities. Each series of Warrants will be issued under a separate
Warrant Agreement (each a "Warrant Agreement") to be entered into between
Hovnanian and/or K. Hovnanian and a warrant agent (the "Warrant Agent"). The
Warrant Agent will act solely as an agent of Hovnanian and/or K. Hovnanian in
connection with the Warrants of such series and will not assume any
obligation or relationship of agency or trust for or with holders or
beneficial owners of Warrants. The following sets forth certain general terms
and provisions of the Warrants offered hereby. Further terms of the Warrants
and the applicable Warrant Agreement will be set forth in the applicable
Prospectus Supplement.
The applicable Prospectus Supplement will describe the following terms,
where applicable, of the Warrants in respect of which this Prospectus is
being delivered: (i) the title of such Warrants; (ii) the aggregate number of
such Warrants; (iii) the price or prices at which such Warrants will be
issued; (iv) the designation, aggregate principal amount and terms of the
securities purchasable upon exercise of such Warrants; (v) the designation
and terms of the Securities with which such Warrants are issued and the
number of such Warrants issued with each such security; (vi) if applicable,
the date on and after which such Warrants and the related securities will be
separately transferable; (vii) the price at which the securities purchasable
upon exercise of such Warrants may be purchased; (viii) the date on which the
right to exercise such Warrants shall commence and the date on which such
right shall expire; (ix) the minimum or maximum amount of such Warrants which
may be exercised at any one time; (x) information with respect to book-entry
procedures, if any; (xi) a discussion of certain United States Federal income
tax considerations; and (xii) any other terms of such Warrants, including
terms, procedures and limitations relating to the exchange and exercise of
such Warrants.
<PAGE>
PLAN OF DISTRIBUTION
Hovnanian, K. Hovnanian and the Selling Shareholders may sell the
Securities to or through underwriters or dealers, and also may sell the
Securities directly to one or more other purchasers or through agents. The
applicable Prospectus Supplement will set forth the names of any underwriters
or agents involved in the sale of the Offered Securities and any applicable
commissions or discounts.
Underwriters, dealers or agents may offer and sell the Offered
Securities at a fixed price or prices, which may be changed, or from time to
time at market prices prevailing at the time of sale, at prices related to
such prevailing market prices or at negotiated prices. In connection with the
sale of the Securities, underwriters or agents may be deemed to have received
compensation from Hovnanian, K. Hovnanian or the Selling Shareholders in the
form of underwriting discounts or commissions and may also receive
commissions from purchasers of the Securities for whom they may act as agent.
Underwriters or agents may sell the Securities to or through dealers, and
such dealers may receive compensation in the form of discounts, concessions
or commissions from the underwriters or commissions from the purchasers for
whom they may act as agent.
The Securities (other than the Common Stock), when first issued, will
have no established trading market. Any underwriters or agents to or through
whom Securities are sold by Hovnanian or K. Hovnanian for public offering and
sale may make a market in such Securities, but such underwriters or agents
will not be obligated to do so and may discontinue any market making at any
time without notice. No assurance can be given as to the liquidity of the
trading market for any Securities.
Any underwriters, dealers or agents participating in the distribution of
the Securities may be deemed to be underwriters, and any discounts and
commissions received by them and any profit realized by them on resale of the
Securities may be deemed to be underwriting discounts and commissions under
the Securities Act. Underwriters, dealers or agents may be entitled, under
agreements entered into with Hovnanian, K. Hovnanian or the Selling
Shareholders, to indemnification against or contribution toward certain civil
liabilities, including liabilities under the Securities Act.
If so indicated in the Prospectus Supplement, Hovnanian, K. Hovnanian or
the Selling Shareholders will authorize underwriters or other persons acting
as its agents to solicit offers by certain institutions to purchase
Securities from it pursuant to contracts providing for payment and delivery
on a future date. Institutions with which such contracts may be made include
commercial and savings banks, insurance companies, pension funds, investment
companies, educational and charitable institutions and others, but in all
cases will be subject to the condition that the purchase of the Securities
shall not at the time of delivery be prohibited under the laws of the
jurisdiction to which such purchaser is subject. The underwriters and such
agents will not have any responsibility in respect of the validity or
performance of such contracts.
LEGAL MATTERS
Certain legal matters with respect to the validity of the Securities
will be passed upon for Hovnanian and K. Hovnanian by Simpson Thacher &
Bartlett, New York, New York. Simpson Thacher & Bartlett will rely, as to
matters of New Jersey law, on the opinion of Peter S. Reinhart, Esq., Senior
Vice President and General Counsel for the Company. Certain legal matters in
<PAGE>
connection with the Securities may also be passed upon for any agents or
underwriters by counsel specified in the Prospectus Supplement.
EXPERTS
The consolidated financial statements of Hovnanian Enterprises, Inc.
appearing in the Company's Annual Report (Form 10-K) for the fiscal year
ended October 31, 1997, have been audited by Ernst & Young LLP, independent
auditors, as set forth in their report thereon included therein and
incorporated herein by reference. Such consolidated financial statements are
incorporated herein by reference in reliance upon such report given upon the
authority of such firm as experts in accounting and auditing.
<PAGE>
No dealer, salesperson or other person has been authorized to give any
information or to make any representations other than those contained in this
Prospectus and, if given or made, such information or representations must not
be relied upon as having been authorized. This Prospectus does not constitute
an offer to sell or a solicitation of an offer to buy the shares by anyone in
any jurisdiction in which such offer or solicitation is not authorized, or in
which the person making the offer or solicitation is not qualified to do so, or
to any person to whom it is unlawful to make such offer or solicitation.
Neither the delivery of this Prospectus nor any sale made hereunder shall
create any implication that the information contained herein is correct as of
any time subsequent to its date.
_________________________
TABLE OF CONTENTS
Available Information . . . . . . . . . . . . . . . . . . . . . . . .
Incorporation of Certain Documents by Reference . . . . . . . . . . .
The Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Selling Shareholders . . . . . . . . . . . . . . . . . . . . . . . .
Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . .
Ratios of Earnings to Fixed Charges and
Earnings to Combined Fixed Charges and Preferred Stock Dividends . .
Description of Debt Securities . . . . . . . . . . . . . . . . . . .
Description of Capital Stock . . . . . . . . . . . . . . . . . . . .
Description of Warrants . . . . . . . . . . . . . . . . . . . . . . .
Plan of Distribution . . . . . . . . . . . . . . . . . . . . . . . .
Legal Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Experts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Information not Required in Prospectus . . . . . . . . . . . . . . .
Signatures . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Power of Attorney . . . . . . . . . . . . . . . . . . . . . . . . . .
Signatures . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Power of Attorney . . . . . . . . . . . . . . . . . . . . . . . . . .
Index to Exhibits . . . . . . . . . . . . . . . . . . . . . . . . . .
<PAGE>
HOVNANIAN
ENTERPRISES, INC.
K. HOVNANIAN ENTERPRISES, INC.
______________________
PROSPECTUS
______________________
, 1998
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution.
The estimated expenses payable by the Company in
connection with the offering described in this
Registration Statement are as follows:
<TABLE>
<CAPTION>
<S> <C>
Registration Fee . . . . . . . . . $59,000
Legal fees and expenses . . . . . <F1>
Blue Sky fees and expenses . . . . <F1>
Accounting fees and expenses . . . <F1>
Printing and duplicating expenses . <F1>
Miscellaneous expenses . . . . . . <F1>
Total . . . . . . . . . . . . . . $ <F1>
<FN>
<F1> To be filed by amendment.
</TABLE>
Item 15. Indemnification of Directors and Officers.
Hovnanian is a Delaware corporation. Section 145 of the General Corporation
Law of the State of Delaware grants each corporation organized thereunder the
power to indemnify any person who is or was a director, officer, employee or
agent of another corporation or enterprise, against expenses (including
attorneys' fees), judgments, fines and amounts paid in settlement actually and
reasonably incurred by him in connection with any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative
or investigative (other than an action by or in the right of the corporation),
by reason of being or having been in any such capacity, if he acted in good
faith in a manner reasonably believed to be in or not opposed to the best
interests of the corporation, and, with respect to any criminal action or
proceeding, had no reasonable cause to believe his conduct was unlawful.
Section 102(b)(7) of the General Corporation Law of the State of Delaware
enables a corporation in its certificate of incorporation or an amendment
thereto validly approved by stockholders to limit or eliminate the personal
liability of the members of its board of directors for violations of the
directors' fiduciary duty care.
Article EIGHTH of Hovnanian's Restated Certificate of Incorporation contains
the following provisions with respect to indemnification:
No director of the Company shall be personally liable to the Company or its
stockholders for monetary damages for breach of fiduciary duty as a
director; provided, however, that this Article shall not eliminate or limit
the liability of a director (i) for any breach of the director's duty of
<PAGE>
loyalty to the Company or its stockholders, (ii) for acts or omissions not
in good faith or which involve intentional misconduct or a knowing violation
of law, (iii) under section 174 of the Delaware General Corporation Law, or
(iv) for any transaction from which the director derived an improper
personal benefit. This Article shall not eliminate or limit the liability of
a director for any act or omission occurring prior to the date on which this
Article becomes effective. Any repeal or modification of this Article Eighth
shall not adversely affect any right or protection of a director of the
Company existing hereunder with respect to any act or omission occurring
prior to the time of such repeal or modification.
Hovnanian maintains a liability insurance policy providing coverage for its
directors and officers in an amount up to an aggregate limit of $10,000,000 for
any single occurrence.
Item 16. Exhibits.
See Exhibit Index.
Item 17. Undertakings.
The undersigned registrants hereby undertake:
(1) To file, during any period in which offers or sales are being made, a
post effective amendment to this registration statement:
(i) To include any prospectus required by section 10(a)(3) of the
Securities Act of 1933, as amended (the "Securities Act");
(ii) To reflect in the prospectus any facts or events arising after the
effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the
registration statement. Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered) and any
deviation from the low or high end of the estimated maximum offering range
may be reflected in the from of prospectus filed with the Commission
pursuant to Rule 462(b) if, in the aggregate, the changes in volume and
price represent no more than 20 percent change in the maximum aggregate
offering price set forth in the "Calculation of Registration Fee" table in
the effective Registration Statement; and
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or any
material change to such information in the registration statement;
provided, however, that paragraphs (i) and (ii) do not apply if the information
required to be included in a post-effective amendment by those paragraphs is
contained in periodic reports filed by the Company pursuant to Section 13 or
Section 15(d) of the 1934 Act that are incorporated by reference in the
Registration Statement.
<PAGE>
(2) That, for the purpose of determining any liability under the Securities
Act, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination of
the offering.
The undersigned registrants hereby undertake that, for purposes of
determining any liability under the Securities Act, each filing of the
Hovnanian annual report pursuant to section 13(a) or section 15(d) of the
Exchange Act (and, where applicable, each filing of an employee benefit plan's
annual report pursuant to section 15(d) of the Exchange Act) that is
incorporated by reference in the registration statement shall be deemed to be a
new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the
registrants pursuant to the provisions set forth in response to Item 15, or
otherwise, the registrants have been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public
policy as expressed in the Securities Act and is, therefore, unenforceable. In
the event that a claim for indemnification against such liabilities (other than
the payment by the registrant of expenses incurred or paid by a director,
officer or controlling person of the registrant in the successful defense of
any action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered, the
registrants will, unless in the opinion of their counsel the matter has been
settled by controlling precedent, submit to a court of appropriate jurisdiction
the question whether such indemnification by it is against public policy as
expressed in the Securities Act and will be governed by the final adjudication
of such issue.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing on Form S-3 and has duly caused this
Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Red Bank, State of New Jersey, on
May 5, 1998.
Hovnanian Enterprises, Inc.
By /s/ Kevork S. Hovnanian
Kevork S. Hovnanian, Chairman of the Board
POWER OF ATTORNEY
Each person whose signature appears below hereby constitutes and
appoints J. Larry Sorsby and Paul W. Buchanan and each of them, the true and
lawful attorneys-in-fact and agents of the undersigned, with full power of
substitution and resubstitution, for and in the name, place and stead of the
undersigned, in any and all capacities, to sign any and all amendments
(including post-effective amendments) to this Registration Statement,
including any filings pursuant to rule 462(b) under the Securities Act of
1933, as amended, and to file the same, with all exhibits thereto, and other
documents in connection therewith, with the Securities and Exchange
Commission, and hereby grants to such attorneys-in-fact and agents, and each
of them, full power and authority to do and perform each and every act and
thing necessary to be done, as fully to all intents and purposes as the
undersigned might or could do in person, hereby ratifying and confirming all
that said attorneys-in-fact and agents, or any of them, or their or his
substitute, or substitutes, may lawfully do or cause to be done by virtue
hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities and on the dates indicated.
<PAGE>
Signature Title Date
/s/ Kevork S. Hovnanian Chairman of the May 5, 1998
Kevork S. Hovnanian Board
/s/ Ara K. Hovnanian Chief Executive May 5, 1998
Ara K. Hovnanian Officer, President
and Director
/s/ Paul W. Buchanan Senior Vice May 5, 1998
Paul W. Buchanan President--
Corporate
Controller and
Director
/s/ Peter S. Reinhart Senior Vice May 5, 1998
Peter S. Reinhart President,
General Counsel
and Director
Senior Vice
/s/ J. Larry Sorsby President, May 5, 1998
J. Larry Sorsby Treasurer, Chief
Financial Officer
and Director
/s/ William L. Carpitella Senior Vice
William L. Carpitella President, May 5, 1998
Organizational
Development
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, K. Hovnanian
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Red Bank, State of New Jersey, on May 5, 1998.
K. Hovnanian Enterprises, Inc.
By /s/ Kevork S. Hovnanian
Kevork S. Hovnanian, Chairman
of the Board
POWER OF ATTORNEY
Each person whose signature appears below hereby constitutes and
appoints J. Larry Sorsby and Paul W. Buchanan and each of them, the true and
lawful attorneys-in-fact and agents of the undersigned, with full power of
substitution and resubstitution, for and in the name, place and stead of the
undersigned, in any and all capacities, to sign any and all amendments
(including post-effective amendments) to this Registration Statement,
including any filings pursuant to rule 462(b) under the Securities Act of
1933, as amended, and to file the same, with all exhibits thereto, and other
documents in connection therewith, with the Securities and Exchange
Commission, and hereby grants to such attorneys-in-fact and agents, and each
of them, full power and authority to do and perform each and every act and
thing necessary to be done, as fully to all intents and purposes as the
undersigned might or could do in person, hereby ratifying and confirming all
that said attorneys-in-fact and agents, or any of them, or their or his
substitute, or substitutes, may lawfully do or cause to be done by virtue
hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities and on the dates indicated.
<PAGE>
Signature Title Date
/s/ Kevork S. Hovnanian Chairman of the Board May 5, 1998
Kevork S. Hovnanian
/s/ Ara K. Hovnanian Chief Executive May 5, 1998
Ara K. Hovnanian Officer, President
and Director
/s/ Paul W. Buchanan Senior Vice May 5, 1998
Paul W. Buchanan President--Corporate
Controller and Director
/s/ Peter S. Reinhart Senior Vice May 5, 1998
Peter S. Reinhart President,
General Counsel and
Director
/s/ J. Larry Sorsby Senior Vice
J. Larry Sorsby President, May 5, 1998
Treasurer, Chief
Financial Officer
and Director
/s/ William L. Carpitella Senior Vice President, May 5, 1998
William L. Carpitella Organizational
Development
<PAGE>
INDEX TO EXHIBITS
Exhibit
Number Description of Exhibits
<F3>1.1 - Underwriting Agreement (Hovnanian Debt
Securities and Warrants to Purchase
Hovnanian Debt Securities).
<F3>1.2 - Underwriting Agreement (K. Hovnanian
Debt Securities and Warrants to
Purchase K. Hovnanian Debt
Securities).
<F3>1.3 - Underwriting Agreement (Equity
Securities and Warrants to Purchase
Equity Securities).
<F2>4.1 - Form of Hovnanian Debt Securities.
<F2>4.2 - Form of K. Hovnanian Debt Securities.
<F2>4.3 - Form of Hovnanian Senior Debt
Indenture.
<F2>4.4 - Form of Hovnanian Senior Subordinated
Debt Indenture.
<F2>4.5 - Form of Hovnanian Subordinated Debt
Indenture.
<F2>4.6 - Form of K. Hovnanian Senior Debt
Indenture.
<F2>4.7 - Form of K. Hovnanian Senior
Subordinated Debt Indenture.
<F2>4.8 - Form of K. Hovnanian Subordinated Debt
Indenture.
<F2>4.9 - Form of Warrant Agreement for Preferred
Stock and Common Stock (including Form
of Warrant Certificate).
<F2>4.10 - Form of Warrant Agreement for Hovnanian
Debt Securities (including form of
Warrant Certificate).
<F2>4.11 - Form of Warrant Agreement for K.
Hovnanian Debt Securities (including
form of Warrant Certificate).
<F2>5.1 - Opinion of Simpson Thacher & Bartlett.
<F1>12.1 - Computation of Ratio of Earnings to
Combined Fixed Charges and Preferred
Dividends.
<F1>23.1 - Consent of Ernst & Young LLP.
<PAGE>
<F2>23.2 - Consent of Simpson Thacher & Bartlett
(included in Exhibit 5.1).
<F1>24.1 - Powers of Attorney of Board of
Directors of Hovnanian (included on
signature page).
<F4>25.1 - Statement of Eligibility of Trustee
under the Hovnanian Senior Debt
Indenture.
<F4>25.2 - Statement of Eligibility of Trustee
under the Hovnanian Senior
Subordinated Debt Indenture.
<F4>25.3 - Statement of Eligibility of Trustee
under the Hovnanian Subordinated Debt
Indenture.
<F4>25.4 - Statement of Eligibility of Trustee
under K. Hovnanian Senior Debt
Indenture.
<F4>25.5 - Statement of Eligibility of Trustee
under K. Hovnanian Senior Subordinated
Debt Indenture.
<F4>25.6 - Statement of Eligibility of Trustee
under K. Hovnanian Subordinated Debt
Indenture.
[FN]
<F1> Filed herewith.
<F2> To be filed by amendment.
<F3> To be incorporated by reference, as necessary,
as an exhibit to one or more reports on Form 8-K.
<F4> To be provided in accordance with Section
305(b)(2) of the Trust Indenture Act of 1939.
Exhibit 12.1
HOVNANIAN ENTERPRISES, INC.
Statement setting forth computation showing the ratio
of earnings to fixed charges and
pro forma ratio of earnings to fixed charges, including
wholly owned
mortgage banking and finance subsidiaries.
(Dollars in Thousands)
<TABLE>
<CAPTION>
Eight
Quarter Year Year Year Months Year Year
Ended Ended Ended Ended Ended Ended Ended
Jan. 31, Oct. 31, Oct. 31, Oct. 31, Oct. 31, Feb. 28, Feb. 28,
1998 1997 1996 1995 1994 1994 1993
Actual Actual Actual Actual Actual Actual Actual
<S> <C> <C> <C> <C> <C> <C>
Net income (loss) . . . . . . . . . 5,913 (6,970) 17,287 14,128 (10,430) 18,645 9,790
Add:
Federal and State Income Taxes 3,105 (5,154) 7,719 7,526 (5,075) 9,229 4,735
Extraordinary Loss . . . . . . 1,277
Interest Expensed Res & Comm . 12,576 37,704 32,157 30,744 15,668 22,530 22,269
Interest Expensed
Mortgage &
Finance
Subsidiaries . . . . . 622 1,778 2,354 2,836 2,436 4,442 5,162
Amortization of Bond
Prepaid
Exp . . . . . . . . . 156 636 671 671 447 598 793
Total Earnings . . . 22,372 27,994 60,188 55,905 3,046 56,721 42,749
Fixed Charges:
Interest Incurred Res & Comm . 7,321 34,777 35,551 37,828 18,966 25,968 22,155
<PAGE>
Interest Incurred
Mortgage &
Finance
Subsidiaries . . . . . 622 1,778 2,354 2,836 2,436 4,442 5,162
Amortization of Bond Prepaid
Exp . . . . . . . . . 156 636 671 671 447 598 793
Total Fixed Charges 8,099 37,191 38,576 41,335 21,849 31,008 28,110
Ratio 2.8 <FN1> 1.6 1.4 <FN2> 1.8 1.5
____________________
<FN>
<F1> Earnings for the year ended October 31, 1997 were insufficient to
cover fixed charges for such period by $9,197,000.
<F2> Earnings for the eight months ended October 31, 1994 were insufficient
to cover fixed charges for such period by $18,803.00.
</TABLE>
Exhibit 23.1
Consent of Independent Auditors
We consent to the reference to our firm under the caption
"Experts" in the
Registration Statement (Form S-3) and related Prospectus of
Hovnanian
Enterprises, Inc. (the "Company") for the registration of
$300,000,000 of
preferred stock, common stock, preferred stock warrants, common
stock
warrants, debt securities and debt security warrants and to the
incorporation
by reference therein of our report dated December 19, 1997, with
respect to
the consolidated financial statements and schedules of the
Company included
in its Annual Report (Form 10-K) for the fiscal year ended
October 31, 1997,
filed with the Securities and Exchange Commission.
Ernst & Young LLP
New York, New York
May 6, 1998
