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Exhibit 1.1
K. HOVNANIAN ENTERPRISES, INC.
as ISSUER
HOVNANIAN ENTERPRISES, INC.
and CERTAIN OF ITS SUBSIDIARIES
as GUARANTORS
$150,000,000
10.5% Series A Senior Notes due 2007
Purchase Agreement
September 27, 2000
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
SALOMON SMITH BARNEY INC.
PNC CAPITAL MARKETS, INC.
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$150,000,000
K. Hovnanian Enterprises, Inc.
10.5% Series A Senior Notes due 2007
Guaranteed by
Hovnanian Enterprises, Inc.
and certain of its Subsidiaries
PURCHASE AGREEMENT
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September 27, 2000
DONALDSON, LUFKIN& JENRETTE
SECURITIES CORPORATION
SALOMON SMITH BARNEY INC.
PNC CAPITAL MARKETS, INC.
c/o Donaldson, Lufkin & Jenrette Securities Corporation
277 Park Avenue
New York, New York 10172
Dear Sirs:
K. Hovnanian Enterprises, Inc., a New Jersey corporation (the "Company"),
proposes to issue and sell to Donaldson, Lufkin & Jenrette Securities
Corporation ("DLJ"), Salomon Smith Barney Inc. and PNC Capital Markets, Inc.
(each an "Initial Purchaser" and collectively the "Initial Purchasers") an
aggregate of $150 million in principal amount of its 10.5% Series A Senior Notes
due 2007 (the "Series A Notes") guaranteed (the " Guarantees") by Hovnanian
Enterprises, Inc., a Delaware corporation (" Hovnanian") and the subsidiary
guarantors listed on Schedule A hereto (together with Hovnanian, the
"Guarantors"). The Series A Notes are to be issued pursuant to the provisions of
an Indenture to be dated as of the Closing Date (as amended, the "Indenture")
among the Company, the Guarantors and First Union National Bank, as Trustee (the
"Trustee"). Capitalized terms used
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but not defined herein shall have the meanings given to such terms in the
Indenture.
Section 1. Offering Memorandum. The Series A Notes will be offered and
sold to the Initial Purchasers pursuant to one or more exemptions from the
registration requirements under the Securities Act of 1933, as amended (the
"Act"). The Company and the Guarantors have prepared a preliminary offering
memorandum, dated September 20, 2000 (the "Preliminary Offering Memorandum") and
a final offering memorandum, dated September 27, 2000 (the "Offering
Memorandum"), relating to the Series A Notes and the Guarantees.
Upon original issuance thereof, and until such time as the same is no
longer required pursuant to the Indenture, the Series A Notes (and all
securities issued in exchange therefor, in substitution thereof or upon
conversion thereof) shall bear the following legend:
"THIS NOTE (OR ITS PREDECESSOR) HAS NOT BEEN REGISTERED UNDER THE U.S.
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND,
ACCORDINGLY, MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED
WITHIN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S.
PERSONS, EXCEPT AS SET FORTH IN THE NEXT SENTENCE. BY ITS ACQUISITION
HEREOF OR OF A BENEFICIAL INTEREST HEREIN, THE HOLDER:
(1) REPRESENTS THAT (A) IT IS A "QUALIFIED INSTITUTIONAL BUYER"
(AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT)(A "QIB"), (B) IT
HAS ACQUIRED THIS NOTE IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH
REGULATION S UNDER THE SECURITIES ACT OR (C) IT IS AN INSTITUTIONAL
"ACCREDITED INVESTOR" (AS DEFINED IN RULE 501(A)(1), (2), (3) OR (7)
OF REGULATION D UNDER THE SECURITIES ACT (AN "IAI"),
(2) AGREES THAT IT WILL NOT RESELL OR OTHERWISE TRANSFER THIS
NOTE OR ANY BENEFICIAL INTEREST HEREIN EXCEPT (A) TO THE COMPANY OR
ANY OF ITS SUBSIDIARIES, (B) TO A PERSON WHOM THE SELLER REASONABLY
BELIEVES IS A QIB PURCHASING FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF
A QIB IN A TRANSACTION MEETING THE REQUIREMENTS OF
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RULE 144A, (C) IN AN OFFSHORE TRANSACTION MEETING THE REQUIREMENTS OF
RULE 903 OR 904 OF THE SECURITIES ACT, (D) IN A TRANSACTION MEETING
THE REQUIREMENTS OF RULE 144 UNDER THE SECURITIES ACT, (E) TO AN IAI
THAT, PRIOR TO SUCH TRANSFER, FURNISHES THE TRUSTEE A SIGNED LETTER
CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS RELATING TO THE
TRANSFER OF THIS NOTE (THE FORM OF WHICH CAN BE OBTAINED FROM THE
TRUSTEE) AND, IF SUCH TRANSFER IS IN RESPECT OF AN AGGREGATE PRINCIPAL
AMOUNT OF NOTES LESS THAN $250,000, AN OPINION OF COUNSEL ACCEPTABLE
TO THE COMPANY THAT SUCH TRANSFER IS IN COMPLIANCE WITH THE SECURITIES
ACT, (F) IN ACCORDANCE WITH ANOTHER EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT (AND BASED UPON AN OPINION OF
COUNSEL ACCEPTABLE TO THE COMPANY) OR (G) PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT AND, IN EACH CASE, IN ACCORDANCE WITH THE
APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR ANY
OTHER APPLICABLE JURISDICTION AND
(3) AGREES THAT IT WILL DELIVER TO EACH PERSON TO WHOM THIS NOTE
OR AN INTEREST HEREIN IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE
EFFECT OF THIS LEGEND.
AS USED HEREIN, THE TERMS "OFFSHORE TRANSACTION" AND "UNITED STATES"
HAVE THE MEANINGS GIVEN TO THEM BY RULE 902 OF REGULATION S UNDER THE
SECURITIES ACT. THE INDENTURE CONTAINS A PROVISION REQUIRING THE TRUSTEE TO
REFUSE TO REGISTER ANY TRANSFER OF THIS NOTE IN VIOLATION OF THE
FOREGOING."
Section 2. Agreements to Sell and Purchase. On the basis of the
representations and warranties contained in this Agreement, and subject to its
terms and conditions, the Company agrees to issue and sell to the Initial
Purchasers, and each Initial Purchaser agrees, severally and not jointly, to
purchase from the Company the principal amount of Series A Notes set forth
opposite the name of such Initial Purchaser on Schedule B hereto at a purchase
price equal to 96.475% of the principal amount thereof (the "Purchase Price").
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Section 3. Terms of Offering. The Initial Purchasers have advised the
Company that the Initial Purchasers will make offers (the "Exempt Resales") of
the Series A Notes purchased hereunder on the terms set forth in the Offering
Memorandum, as amended or supplemented, solely to (i) persons whom the Initial
Purchasers reasonably believe to be "qualified institutional buyers" as defined
in Rule 144A under the Act ("QIBs") and (ii) persons permitted to purchase the
Series A Notes in offshore transactions in reliance upon Regulation S under the
Act (each, a "Regulation S Purchaser") (such persons specified in clauses (i)
and (ii) being referred to herein as the "Eligible Purchasers"). The Initial
Purchasers will offer the Series A Notes to Eligible Purchasers initially at a
price equal to 97.6% of the principal amount thereof. Such price may be changed
at any time without notice.
Holders (including subsequent transferees) of the Series A Notes will have
the registration rights set forth in the registration rights agreement (the
"Registration Rights Agreement"), to be dated the Closing Date, in substantially
the form of Exhibit A hereto, for so long as such Series A Notes constitute
"Transfer Restricted Securities" (as defined in the Registration Rights
Agreement). Pursuant to the Registration Rights Agreement, the Company and the
Guarantors will agree to file with the Securities and Exchange Commission (the
"Commission") under the circumstances set forth therein, (i) a registration
statement under the Act (the "Exchange Offer Registration Statement") relating
to the Company's 10.5% Series B Senior Notes due 2007 (the "Series B Notes"), to
be offered in exchange for the Series A Notes (such offer to exchange being
referred to as the "Exchange Offer") and the Guarantees thereof and (ii) a shelf
registration statement pursuant to Rule 415 under the Act (the "Shelf
Registration Statement" and, together with the Exchange Offer Registration
Statement, the "Registration Statements") relating to the resale by certain
holders of the Series A Notes and to use its best efforts to cause such
Registration Statements to be declared and remain effective and usable for the
periods specified in the Registration Rights Agreement and to consummate the
Exchange Offer. This Agreement, the Indenture, the Notes, the Guarantees and the
Registration Rights Agreement are hereinafter sometimes referred to collectively
as the "Operative Documents."
Section 4. Deliver and Payment.
(a) Delivery of, and payment of the Purchase Price for, the Series A
Notes shall be made at the offices of Simpson Thacher & Bartlett, 425
Lexington Avenue, New York, NY 10017 or such other location as may be
mutually acceptable. Such delivery and payment shall be made at 9:30 a.m.
New York City time, on October 2, 2000 or at such other time on the same
date or such other date as shall be agreed upon by the Initial
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Purchasers and the Company in writing. The time and date of such delivery
and the payment for the Series A Notes are herein called the
"Closing Date."
(b) One or more of the Series A Notes in definitive global form,
registered in the name of Cede & Co., as nominee of the Depository Trust
Company ("DTC"), having an aggregate principal amount corresponding to the
aggregate principal amount of the Series A Notes (collectively, the
"Global Note"), shall be delivered by the Company to the Initial Purchasers
(or as the Initial Purchasers direct) in each case with any transfer taxes
thereon duly paid by the Company against payment by the Initial Purchasers
of the Purchase Price thereof by wire transfer in same day funds to the
order of the Company. The Global Note shall be made available to the
Initial Purchasers for inspection not later than 9:30 a.m., New York City
time, on the business day immediately preceding the Closing Date.
Section 5. Agreements of the Company and Hovnanian. Company and Hovnanian
agree with the Initial Purchasers as follows:
(a) To advise the Initial Purchasers promptly and, if requested by the
Initial Purchasers, confirm such advice in writing, (A) of the issuance by any
state securities commission of any stop order suspending the qualification or
exemption from qualification of any Series A Notes for offering or sale in any
jurisdiction designated by the Initial Purchasers pursuant to Section 5(e)
hereof, or the initiation of any proceeding by any state securities commission
or any other federal or state regulatory authority for such purpose and (B) of
the happening of any event during the period referred to in Section 5(c) below
that makes any statement of a material fact made in the Preliminary Offering
Memorandum or the Offering Memorandum untrue or that requires any additions to
or changes in the Preliminary Offering Memorandum or the Offering Memorandum in
order to make the statements therein not misleading. The Company and the
Guarantors shall use their best efforts to prevent the issuance of any stop
order or order suspending the qualification or exemption of any Series A Notes
under any state securities or Blue Sky laws and, if at any time any state
securities commission or other federal or state regulatory authority shall issue
an order suspending the qualification or exemption of any Series A Notes under
any state securities or Blue Sky laws, the Company and the Guarantors shall use
their best efforts to obtain the withdrawal or lifting of such order at the
earliest possible time.
(b) To furnish the Initial Purchasers and those persons identified by the
Initial Purchasers to the Company as many copies of the Preliminary Offering
Memorandum and the Offering Memorandum, and any amendments or
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supplements thereto, as the Initial Purchasers may reasonably request for the
time period specified in Section 5(c). Subject to the Initial Purchasers'
compliance with their representations and warranties and agreements set forth in
Section 7 hereof, the Company consents to the use of the Preliminary Offering
Memorandum and the Offering Memorandum, and any amendments and supplements
thereto required pursuant hereto, by the Initial Purchasers in connection with
Exempt Resales.
(c) During such period as in the opinion of counsel for the Initial
Purchasers an Offering Memorandum is required by law to be delivered in
connection with Exempt Resales by the Initial Purchasers, (A) not to make any
amendment or supplement to the Offering Memorandum of which the Initial
Purchasers shall not previously have been advised or to which the Initial
Purchasers shall reasonably object after being so advised and (B) to prepare
promptly upon the Initial Purchasers' reasonable request, any amendment or
supplement to the Offering Memorandum which may be necessary or advisable in
connection with such Exempt Resales.
(d) If, during the period referred to in Section 5(c) above, any event
shall occur or condition shall exist as a result of which, in the opinion of
counsel to the Initial Purchasers, it becomes necessary to amend or supplement
the Offering Memorandum in order to make the statements therein, in the light of
the circumstances when such Offering Memorandum is delivered to an Eligible
Purchaser, not misleading, or if, in the opinion of counsel to the Initial
Purchasers, it is necessary to amend or supplement the Offering Memorandum to
comply with any applicable law, forthwith to prepare an appropriate amendment or
supplement to such Offering Memorandum so that the statements therein, as so
amended or supplemented, will not, in the light of the circumstances when it is
so delivered, be misleading, or so that such Offering Memorandum will comply
with applicable law, and to furnish to the Initial Purchasers and such other
persons as the Initial Purchasers may designate such number of copies thereof as
the Initial Purchasers may reasonably request.
(e) Prior to the sale of all Series A Notes pursuant to Exempt Resales as
contemplated hereby, to cooperate with the Initial Purchasers and counsel to the
Initial Purchasers in connection with the registration or qualification of the
Series A Notes for offer and sale to the Initial Purchasers and pursuant to
Exempt Resales under the securities or Blue Sky laws of such jurisdictions as
the Initial Purchasers may request and to continue such registration or
qualification in effect so long as required for Exempt Resales and to file such
consents to service of process or other documents as may be necessary in order
to effect such registration or qualification; provided, however, that neither
the Company nor any Guarantor shall be required in connection therewith to
qualify as a foreign
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corporation in any jurisdiction in which it is not now so qualified or to take
any action that would subject it to general consent to service of process or
taxation other than as to matters and transactions relating to the Preliminary
Offering Memorandum, the Offering Memorandum or Exempt Resales, in any
jurisdiction in which it is not now so subject.
(f) So long as the Notes are outstanding, to furnish to the Initial
Purchasers as soon as available copies of all reports or other communications
furnished by the Company or any of the Guarantors to its security holders or
furnished to or filed with the Commission or any national securities exchange on
which any class of securities of the Company or any of the Guarantors is listed
and such other publicly available information concerning the Company, Hovnanian
and/or its subsidiaries as the Initial Purchasers may reasonably request.
(g) So long as any of the Series A Notes remain outstanding and during any
period in which the Company and the Guarantors are not subject to Section 13 or
15(d) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"),
to make available to any holder of Series A Notes in connection with any sale
thereof and any prospective purchaser of such Series A Notes from such holder,
the information ("Rule 144A Information") required by Rule 144A(d)(4) under the
Act.
(h) Whether or not the transactions contemplated in this Agreement are
consummated or this Agreement is terminated, to pay or cause to be paid all
expenses incident to the performance of the obligations of the Company and the
Guarantors under this Agreement, including: (A) the fees, disbursements and
expenses of counsel to the Company and the Guarantors and accountants of the
Company and the Guarantors in connection with the sale and delivery of the
Series A Notes to the Initial Purchasers and pursuant to Exempt Resales, and all
other fees and expenses in connection with the preparation, printing and
distribution of the Preliminary Offering Memorandum, the Offering Memorandum and
all amendments and supplements to any of the foregoing (including financial
statements), including the mailing and delivering of copies thereof to the
Initial Purchasers and persons designated by them in the quantities specified
herein, (B) all costs and expenses related to the transfer and delivery of the
Series A Notes to the Initial Purchasers and pursuant to Exempt Resales,
including any transfer or other taxes payable thereon, (C) all costs of printing
or producing this Agreement, the other Operative Documents and any other
agreements or documents in connection with the offering, purchase, sale or
delivery of the Series A Notes, (D) all expenses in connection with the
registration or qualification of the Series A Notes and the Guarantees for offer
and sale under the securities or Blue Sky laws of the several states and all
costs of printing or producing any preliminary and
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supplemental Blue Sky memoranda in connection therewith (including the filing
fees and fees and disbursements of counsel for the Initial Purchasers in
connection with such registration or qualification and memoranda relating
thereto), (E) the cost of printing certificates representing the Series A Notes
and the Guarantees, (F) all expenses and listing fees in connection with the
application for quotation of the Series A Notes in the National Association of
Securities Dealers, Inc. ("NASD") Automated Quotation System -PORTAL ("PORTAL"),
(G) the fees and expenses of the Trustee and the Trustee's counsel in connection
with the Indenture, the Notes and the Guarantees, (H) the costs and charges of
any transfer agent, registrar and/or depositary (including DTC), (I) any fees
charged by rating agencies for the rating of the Notes, (J) all costs and
expenses of the Exchange Offer and any Registration Statement, as set forth in
the Registration Rights Agreement, and (K) and all other costs and expenses
incident to the performance of the obligations of the Company and the Guarantors
hereunder for which provision is not otherwise made in this Section.
(i) To use its best efforts to effect the inclusion of the Series A Notes
in PORTAL and to maintain the listing of the Series A Notes on PORTAL for so
long as the Series A Notes are outstanding.
(j) To obtain the approval of DTC for "book-entry" transfer of the Notes,
and to comply with all of its agreements set forth in the representation letters
of the Company and the Guarantors to DTC relating to the approval of the Notes
by DTC for "book-entry" transfer.
(k) During the period beginning on the date hereof and continuing to and
including the Closing Date, not to offer, sell, contract to sell or otherwise
transfer or dispose of any debt securities of the Company or any Guarantor or
any warrants, rights or options to purchase or otherwise acquire debt securities
of the Company or any Guarantor substantially similar to the Notes and the
Guarantees (other than (A) the Notes and the Guarantees and (B) commercial paper
issued in the ordinary course of business), without the prior written consent of
DLJ.
(l) Not to sell, offer for sale or solicit offers to buy or otherwise
negotiate in respect of any security (as defined in the Act) that would be
integrated with the sale of the Series A Notes to the Initial Purchasers or
pursuant to Exempt Resales in a manner that would require the registration of
any such sale of the Series A Notes under the Act.
(m) Not to voluntarily claim, and to actively resist any attempts to claim,
the benefit of any usury laws against the holders of any Notes and the related
Guarantees.
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(n) To cause the Exchange Offer to be made in the appropriate form to
permit Series B Notes and guarantees thereof by the Guarantors registered
pursuant to the Act to be offered in exchange for the Series A Notes and the
Subsidiary Guarantees and to comply with all applicable federal and state
securities laws in connection with the Exchange Offer.
(o) To comply with all of its agreements set forth in the Registration
Rights Agreement.
(p) To use its best efforts to do and perform all things required or
necessary to be done and performed under this Agreement by it prior to the
Closing Date and to satisfy all conditions precedent to the delivery of the
Series A Notes and the Guarantees.
SECTION 6. Representations and Warranties of the Company and
Hovnanian. The Company and Hovnanian represent and warrant to each of the
Initial Purchasers that:
(a) The Preliminary Offering Memorandum and the Offering Memorandum do not,
and any supplement or amendment to them will not, contain any untrue statement
of a material fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading, except that the
representations and warranties contained in this Section 6(a) shall not apply to
statements in or omissions from the Preliminary Offering Memorandum or the
Offering Memorandum (or any supplement or amendment thereto) based upon
information relating to the Initial Purchasers furnished to the Company in
writing by the Initial Purchasers expressly for use therein. No stop order
preventing the use of the Preliminary Offering Memorandum or the Offering
Memorandum, or any amendment or supplement thereto, or any order asserting that
any of the transactions contemplated by this Agreement are subject to the
registration requirements of the Act, has been issued.
(b) Each of the Company, Hovnanian and its subsidiaries has been duly
incorporated, is validly existing as a corporation in good standing under the
laws of its jurisdiction of incorporation and has the corporate power and
authority to carry on its business as described in the Preliminary Offering
Memorandum and the Offering Memorandum and to own, lease and operate its
properties, and each is duly qualified and is in good standing as a foreign
corporation authorized to do business in each jurisdiction in which the nature
of its business or its ownership or leasing of property requires such
qualification, except where the failure to be so qualified would not have a
material adverse effect on the business, prospects,
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financial condition or results of operations of Hovnanian and its subsidiaries,
taken as a whole (a "Material Adverse Effect").
(c) All outstanding shares of capital stock of the Company and Hovnanian
have been duly authorized and validly issued and are fully paid, non-assessable
and not subject to any preemptive or similar rights.
(d) All of the outstanding shares of capital stock of each of Hovnanian's
subsidiaries have been duly authorized and validly issued and are fully paid and
non-assessable, and are owned by Hovnanian, directly or indirectly through one
or more subsidiaries, free and clear of any security interest, claim, lien,
encumbrance or adverse interest of any nature (each, a "Lien").
(e) This Agreement has been duly authorized, executed and delivered by the
Company and Hovnanian.
(f) The Indenture has been duly authorized by the Company and each of the
Guarantors and, on the Closing Date, will have been validly executed and
delivered by the Company and each of the Guarantors. When the Indenture has been
duly executed and delivered by the Company and each of the Guarantors, and,
assuming the Indenture is a valid and binding obligation of the Trustee, the
Indenture will be a valid and binding agreement of the Company and each
Guarantor, enforceable against the Company and each Guarantor in accordance with
its terms except as the enforceability thereof may be limited by the effects of
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and
other similar laws relating to or affecting creditors' rights generally, general
equitable principles (whether considered in a proceeding in equity or at law)
and an implied covenant of good faith and fair dealing. On the Closing Date, the
Indenture will conform in all material respects to the requirements of the Trust
Indenture Act of 1939, as amended (the "TIA" or "Trust Indenture Act"), and the
rules and regulations of the Commission applicable to an indenture which is
qualified thereunder.
(g) The Series A Notes have been duly authorized and, on the Closing Date,
will have been validly executed and delivered by the Company. When the Series A
Notes have been issued, executed and authenticated in accordance with the
provisions of the Indenture and delivered to and paid for by the Initial
Purchasers in accordance with the terms of this Agreement, the Series A Notes
will be entitled to the benefits of the Indenture and will be valid and binding
obligations of the Company, enforceable in accordance with their terms except as
the enforceability thereof may be limited by the effects of bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium and other similar
laws relating to or affecting creditors' rights generally, general equitable
principles (whether
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considered in a proceeding in equity or at law) and an implied covenant of good
faith and fair dealing. On the Closing Date, the Series A Notes will conform as
to legal matters to the description thereof contained in the Offering
Memorandum.
(h) On the Closing Date, the Series B Notes will have been duly authorized
by the Company. When the Series B Notes are issued, executed and authenticated
in accordance with the terms of the Exchange Offer and the Indenture, the Series
B Notes will be entitled to the benefits of the Indenture and will be the valid
and binding obligations of the Company, enforceable against the Company in
accordance with their terms, except as the enforceability thereof may be limited
by the effects of bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and other similar laws relating to or affecting creditors' rights
generally, general equitable principles (whether considered in a proceeding in
equity or at law) and an implied covenant of good faith and fair dealing.
(i) The Guarantee to be endorsed on the Series A Notes by each Guarantor
has been duly authorized by such Guarantor and, on the Closing Date, will have
been duly executed and delivered by each such Guarantor. When the Series A Notes
have been issued, executed and authenticated in accordance with the Indenture
and delivered to and paid for by the Initial Purchasers in accordance with the
terms of this Agreement, the Guarantee of each Guarantor endorsed thereon will
be entitled to the benefits of the Indenture and will be the valid and binding
obligation of such Guarantor, enforceable against such Guarantor in accordance
with its terms, except as the enforceability thereof may be limited by the
effects of bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and other similar laws relating to or affecting creditors' rights
generally, general equitable principles (whether considered in a proceeding in
equity or at law) and an implied covenant of good faith and fair dealing. On the
Closing Date, the Guarantees to be endorsed on the Series A Notes will conform
as to legal matters to the description thereof contained in the Offering
Memorandum.
(j) The Guarantee to be endorsed on the Series B Notes by each Guarantor
has been duly authorized by such Guarantor and, when issued, will have been duly
executed and delivered by each such Guarantor. When the Series B Notes have been
issued, executed and authenticated in accordance with the terms of the Exchange
Offer and the Indenture, the Guarantee of each Guarantor endorsed thereon will
be entitled to the benefits of the Indenture and will be the valid and binding
obligation of such Guarantor, enforceable against such Guarantor in accordance
with its terms, except as the enforceability thereof may be limited by the
effects of bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and other similar laws relating to or affecting
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creditors' rights generally, general equitable principles (whether considered in
a proceeding in equity or at law) and an implied covenant of good faith and fair
dealing. When the Series B Notes are issued, authenticated and delivered, the
Guarantees to be endorsed on the Series B Notes will conform as to legal matters
to the description thereof contained in the Offering Memorandum.
(k) The Registration Rights Agreement has been duly authorized by the
Company and each of the Guarantors and, on the Closing Date, will have been duly
executed and delivered by the Company and each of the Guarantors. When the
Registration Rights Agreement has been duly executed and delivered, the
Registration Rights Agreement will be a valid and binding agreement of the
Company and each of the Guarantors, enforceable against the Company and each
Guarantor in accordance with its terms except as the enforceability thereof may
be limited by the effects of bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and other similar laws relating to or affecting
creditors' rights generally, general equitable principles (whether considered in
a proceeding in equity or at law) and an implied covenant of good faith and fair
dealing. On the Closing Date, the Registration Rights Agreement will conform as
to legal matters to the description thereof in the Offering Memorandum.
(l) Neither the Company, Hovnanian nor any of its subsidiaries is in
violation of its respective charter or by-laws or in default in the performance
of any obligation, agreement, covenant or condition contained in any indenture,
loan agreement, mortgage, lease or other agreement or instrument that is
material to the Company, Hovnanian and its subsidiaries, taken as a whole, to
which the Company, Hovnanian or any of its subsidiaries is a party or by which
the Company, Hovnanian or any of its subsidiaries or their respective property
is bound.
(m) The execution, delivery and performance of this Agreement and the other
Operative Documents by the Company and each of the Guarantors, as applicable,
compliance by the Company and each of the Guarantors with all provisions hereof
and thereof and the consummation of the transactions contemplated hereby and
thereby will not (A) require any consent, approval, authorization or other order
of, or qualification with, any court or governmental body or agency (except such
consents as may be required under the securities or Blue Sky laws of the various
states), (B) conflict with or constitute a breach of any of the terms or
provisions of, or a default under, the charter or by-laws of the Company or any
Guarantor or any indenture, loan agreement, mortgage, lease or other agreement
or instrument that is material to the Company or Hovnanian and its subsidiaries,
taken as a whole, to which the Company or the Guarantors is a party or by which
the Company or the Guarantors or their respective property is bound, (C) violate
or conflict with any applicable law or any rule, regulation,
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judgment, order or decree of any court or any governmental body or agency having
jurisdiction over the Company, Hovnanian or any of its subsidiaries or their
respective property, (D) result in the imposition or creation of (or the
obligation to create or impose) a Lien under, any agreement or instrument to
which the Company, Hovnanian or any of its subsidiaries is a party or by which
the Company, Hovnanian or any of its subsidiaries or their respective property
is bound, or (E) result in the termination, suspension or revocation of any
Authorization (as defined below) of the Company, Hovnanian or any of its
subsidiaries or result in any other impairment of the rights of the holder of
any such Authorization; except where the failure to be valid and in full force
and effect or to be in compliance, the occurrence of any such event or the
presence of any such restriction or to have any such Authorization would not,
singly or in the aggregate have a Material Adverse Effect;
(n) The execution, delivery and performance of the Merger Agreement by the
Company and Hovnanian, compliance by the Company and Hovnanian with all
provisions hereof and thereof and the consummation of the transactions
contemplated hereby and thereby will not (A) to the knowledge of the Company or
Hovnanian, require any consent, approval, authorization or other order of, or
qualification with, any court or governmental body or agency (except such
consents (i) listed in the Merger Agreement and (ii) as may be required under
the securities or Blue Sky laws of the various states), (B) conflict with or
constitute a breach of any of the terms or provisions of, or a default under,
the charter or bylaws of the Company or Hovnanian or any indenture, loan
agreement, mortgage, lease or other agreement or instrument that is material to
the Company or Hovnanian and its subsidiaries, taken as a whole, to which the
Company or Hovnanian is a party or by which the Company or Hovnanian or their
respective property is bound, ir (C) violate or conflict with any applicable law
or any rule, regulation, judgment, order or decree of any court or any
governmental body or agency having jurisdiction over the Company, Hovnanian or
any of its subsidiaries or their respective property;
(o) There are no legal or governmental proceedings pending or threatened to
which the Company, Hovnanian or any of its subsidiaries is or could be a party
or to which any of their respective property is or could be subject, which might
result, singly or in the aggregate, in a Material Adverse Effect.
(p) Except as disclosed in the Offering Memorandum, neither the Company,
Hovnanian nor any of its subsidiaries has violated any foreign, federal, state
or local law or regulation relating to the protection of human health and
safety, the environment or hazardous or toxic substances or wastes, pollutants
or contaminants ("Environmental Laws"), any provisions of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), or any
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provisions of the Foreign Corrupt Practices Act or the rules and regulations
promulgated thereunder, except for such violations which, singly or in the
aggregate, would not have a Material Adverse Effect.
(q) Except as disclosed in the Offering Memorandum, each of the Company,
Hovnanian and its subsidiaries has such permits, licenses, consents, exemptions,
franchises, authorizations and other approvals (each, an "Authorization") of,
and has made all filings with and notices to, all governmental or regulatory
authorities and self-regulatory organizations and all courts and other
tribunals, including without limitation, under any applicable Environmental
Laws, as are necessary to own, lease, license and operate its respective
properties and to conduct its business, except where the failure to have any
such Authorization or to make any such filing or notice would not, singly or in
the aggregate, have a Material Adverse Effect. Each such Authorization is valid
and in full force and effect and each of the Company, Hovnanian and its
subsidiaries is in compliance with all the terms and conditions thereof and with
the rules and regulations of the authorities and governing bodies having
jurisdiction with respect thereto; and no event has occurred (including, without
limitation, the receipt of any notice from any authority or governing body)
which allows or, after notice or lapse of time or both, would allow, revocation,
suspension or termination of any such Authorization or results or, after notice
or lapse of time or both, would result in any other impairment of the rights of
the holder of any such Authorization; except where such failure to be valid and
in full force and effect or to be in compliance, the occurrence of any such
event or the presence of any such restriction would not, singly or in the
aggregate, have a Material Adverse Effect.
(r) The accountants, Ernst & Young LLP and Deloitte & Touche, that have
certified the financial statements and supporting schedules included in the
Preliminary Offering Memorandum and the Offering Memorandum are independent
public accountants with respect to the Company and the Guarantors and Washington
Homes, Inc., as applicable, as required by the Act and the Exchange Act.
(s) The historical financial statements, together with related schedules
and notes forming part of the Offering Memorandum (and any amendment or
supplement thereto), present fairly the consolidated financial position, results
of operations and changes in financial position of Hovnanian and its
subsidiaries and Washington Homes, Inc. and its subsidiaries, on the basis
stated in the Offering Memorandum at the respective dates or for the respective
periods to which they apply; such statements and related schedules and notes
have been prepared in accordance with generally accepted accounting principles
consistently applied throughout the periods involved, except as disclosed
therein; and the other
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financial and statistical information and data set forth in the Offering
Memorandum (and any amendment or supplement thereto) are, in all material
respects, accurately presented and prepared on a basis consistent with such
financial statements and the books and records of Hovnanian and Washington
Homes, Inc., as applicable.
(t) The pro forma financial statements included in the Preliminary
Offering Memorandum and the Offering Memorandum have been prepared on a basis
consistent with the historical financial statements of Hovnanian and its
subsidiaries and give effect to assumptions used in the preparation thereof on a
reasonable basis and in good faith and present fairly the historical and
proposed transactions contemplated by the Preliminary Offering Memorandum and
the Offering Memorandum. The other pro forma financial and statistical
information and data included in the Offering Memorandum are, in all material
respects, accurately presented and prepared on a basis consistent with the pro
forma financial statements.
(u) The Company and Hovnanian are not and, after giving effect to the
offering and sale of the Series A Notes and the application of the net proceeds
thereof as described in the Offering Memorandum, will not be, an "investment
company," as such term is defined in the Investment Company Act of 1940, as
amended.
(v) There are no contracts, agreements or understandings between the
Company or Hovnanian and any person granting such person the right to require
the Company or Hovnanian to file a registration statement under the Act with
respect to any securities of the Company or Hovnanian or to require the Company
or Hovnanian to include such securities with the Notes and Guarantees registered
pursuant to any Registration Statement.
(w) Neither the Company, Hovnanian nor any of its subsidiaries nor any
agent thereof acting on the behalf of them has taken, and none of them will
take, any action that might cause this Agreement or the issuance or sale of the
Series A Notes to violate Regulation G (12 C.F.R. Part 207), Regulation T (12
C.F.R. Part 220), Regulation U (12 C.F.R. Part 221) or Regulation X (12 C.F.R.
Part 224) of the Board of Governors of the Federal Reserve System.
(x) No "nationally recognized statistical rating organization" as such term
is defined for purposes of Rule 436(g)(2) under the Act has indicated to the
Company or Hovnanian that it is considering (1) the downgrading, suspension, or
withdrawal of, or any review for a possible change that does not indicate the
direction of the possible change in, any rating so assigned or (2) any change in
the
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outlook for any rating of the Company, any Guarantor or any securities of the
Company or Hovnanian;
(y) Since the respective dates as of which information is given in the
Offering Memorandum other than as set forth in the Offering Memorandum
(exclusive of any amendments or supplements thereto subsequent to the date of
this Agreement), (A) there has not occurred any material adverse change or any
development involving a prospective material adverse change in the condition,
financial or otherwise, or the earnings, business, management or operations of
the Company, Hovnanian and its subsidiaries, taken as a whole, (B) there has not
been any material adverse change or any development involving a prospective
material adverse change in the capital stock or in the long-term debt of the
Company, Hovnanian or any of its subsidiaries and (C) neither the Company,
Hovnanian nor any of its subsidiaries has incurred any material liability or
obligation, direct or contingent.
(z) Each of the Preliminary Offering Memorandum and the Offering
Memorandum, as of its date, contains all the information specified in, and
meeting the requirements of, Rule 144A(d)(4) under the Act.
(aa) When the Series A Notes and the Guarantees are issued and delivered
pursuant to this Agreement, neither the Series A Notes nor the Guarantees will
be of the same class (within the meaning of Rule 144A under the Act) as any
security of the Company or Hovnanian that is listed on a national securities
exchange registered under Section 6 of the Exchange Act or that is quoted in a
United States automated inter-dealer quotation system.
(bb) No form of general solicitation or general advertising (as defined in
Regulation D under the Act) was used by the Company, Hovnanian or any of their
respective representatives (other than the Initial Purchasers, as to whom the
Company and Hovnanian make no representation) in connection with the offer and
sale of the Series A Notes contemplated hereby, including, but not limited to,
articles, notices or other communications published in any newspaper, magazine,
or similar medium or broadcast over television or radio, or any seminar or
meeting whose attendees have been invited by any general solicitation or general
advertising. No securities of the same class as the Series A Notes have been
issued and sold by the Company within the six-month period immediately prior to
the date hereof.
(cc) Prior to the effectiveness of any Registration Statement, the
Indenture is not required to be qualified under the TIA.
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(dd) None of the Company, Hovnanian nor any of their respective affiliates
or any person acting on its or their behalf (other than the Initial
Purchasers, as to whom the Company and Hovnanian make no representation) has
engaged or will engage in any directed selling efforts within the meaning of
Regulation S under the Act ("Regulation S") with respect to the Series A Notes
or the Guarantees.
(ee) The Company, Hovnanian and their respective affiliates and all persons
acting on their behalf (other than the Initial Purchasers, as to whom the
Company and the Guarantors make no representation) have complied with and will
comply with the offering restrictions requirements of Regulation S in connection
with the offering of the Series A Notes outside the United States and, in
connection therewith, the Offering Memorandum will contain the disclosure
required by Rule 902(h).
(ff) Each of the Company and Hovnanian is a "reporting issuer", as defined
in Rule 902 under the Act.
(gg) The Series A Notes offered and sold by the Company or Hovnanian in
reliance on Regulation S have been and will be offered and sold only in offshore
transactions.
(hh) The sale of the Series A Notes by the Company or Hovnanian pursuant to
Regulation S is not part of a plan or scheme to evade the registration
provisions of the Act.
(ii) No registration under the Act of the Series A Notes or the Guarantees
is required for the sale of the Series A Notes and the Guarantees to the Initial
Purchasers as contemplated hereby or for the Exempt Resales assuming the
accuracy of the Initial Purchasers' representations and warranties and
agreements set forth in Section 7 hereof.
The Company acknowledges that the Initial Purchasers and, for purposes of
the opinions to be delivered to the Initial Purchaser pursuant to Section 9
hereof, counsel to the Company and the Guarantors and counsel to the Initial
Purchasers will rely upon the accuracy and truth of the foregoing
representations and hereby consents to such reliance.
Section 7. Initial Purchasers' Representations and Warranties. Each of the
Initial Purchasers, severally and not jointly, represents and warrants to the
Company and the Guarantors, and agrees that:
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(a) Such Initial Purchaser is a QIB with such knowledge and experience in
financial and business matters as is necessary in order to evaluate the merits
and risks of an investment in the Series A Notes.
(b) Such Initial Purchaser (A) is not acquiring the Series A Notes with a
view to any distribution thereof or with any present intention of offering or
selling any of the Series A Notes in a transaction that would violate the Act or
the securities laws of any state of the United States or any other applicable
jurisdiction and (B) will be reoffering and reselling the Series A Notes only to
(x) QIBs in reliance on the exemption from the registration requirements of the
Act provided by Rule 144A and (y) in offshore transactions in reliance upon
Regulation S under the Act.
(c) Such Initial Purchaser agrees that no form of general solicitation or
general advertising (within the meaning of Regulation D under the Act) has been
or will be used by such Initial Purchaser or any of its representatives in
connection with the offer and sale of the Series A Notes pursuant hereto,
including, but not limited to, articles, notices or other communications
published in any newspaper, magazine or similar medium or broadcast over
television or radio, or any seminar or meeting whose attendees have been invited
by any general solicitation or general advertising.
(d) Such Initial Purchaser agrees that, in connection with Exempt Resales,
such Initial Purchaser will solicit offers to buy the Series A Notes only from,
and will offer to sell the Series A Notes only to, Eligible Purchasers. Each
Initial Purchaser further agrees that it will offer to sell the Series A Notes
only to, and will solicit offers to buy the Series A Notes only from (A)
Eligible Purchasers that the Initial Purchaser reasonably believes are QIBs and
(B) Regulation S Purchasers, in each case, that agree that (x) the Series A
Notes purchased by them may be resold, pledged or otherwise transferred within
the time period referred to under Rule 144(k) (taking into account the
provisions of Rule 144(d) under the Act, if applicable) under the Act, as in
effect on the date of the transfer of such Series A Notes, only (1) to the
Company, Hovnanian or any of its subsidiaries, (2) to a person whom the seller
reasonably believes is a QIB purchasing for its own account or for the account
of a QIB in a transaction meeting the requirements of Rule 144A under the Act,
(3) in an offshore transaction (as defined in Rule 902 under the Act) meeting
the requirements of Rule 904 of the Act, (4) in a transaction meeting the
requirements of Rule 144 under the Act, (5) to an Accredited Institution that,
prior to such transfer, furnishes the Trustee a signed letter containing certain
representations and agreements relating to the registration of transfer of such
Series A Note (the form of which is substantially the same as Annex A to the
Offering Memorandum) and, if such transfer is in respect of an aggregate
principal amount of Series A Notes less than $250,000, an opinion of
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counsel acceptable to the Company that such transfer is in compliance with the
Act, (6) in accordance with another exemption from the registration requirements
of the Act (and based upon an opinion of counsel acceptable to the Company) or
(7) pursuant to an effective registration statement and, in each case, in
accordance with the applicable securities laws of any state of the United States
or any other applicable jurisdiction and (y) they will deliver to each person to
whom such Series A Notes or an interest therein is transferred a notice
substantially to the effect of the foregoing.
(e) Such Initial Purchaser and its affiliates or any person acting on its
or their behalf have not engaged or will not engage in any directed selling
efforts within the meaning of Regulation S with respect to the Series A Notes or
the Guarantees.
(f) The Series A Notes offered and sold by such Initial Purchaser pursuant
hereto in reliance on Regulation S have been and will be offered and sold only
in offshore transactions.
(g) The sale of the Series A Notes offered and sold by such Initial
Purchaser pursuant hereto in reliance on Regulation S is not part of a plan or
scheme to evade the registration provisions of the Act.
(h) Such Initial Purchaser agrees that it has not offered or sold and will
not offer or sell the Series A Notes in the United States or to, or for the
benefit or account of, a U.S. Person (other than a distributor), in each case,
as defined in Rule 902 under the Act (i) as part of its distribution at any time
and (ii) otherwise until 40 days after the later of the commencement of the
offering of the Series A Notes pursuant hereto and the Closing Date, other than
in accordance with Regulation S of the Act or another exemption from the
registration requirements of the Act. Such Initial Purchaser agrees that, during
such 40-day restricted period, it will not cause any advertisement with respect
to the Series A Notes (including any "tombstone" advertisement) to be published
in any newspaper or periodical or posted in any public place and will not issue
any circular relating to the Series A Notes, except such advertisements as are
permitted by and include the statements required by Regulation S.
(i) Such Initial Purchaser agrees that, at or prior to confirmation of a
sale of Series A Notes by it to any distributor, dealer or person receiving a
selling concession, fee or other remuneration during the 40-day restricted
period referred to in Rule 903(c)(2) under the Act, it will send to such
distributor, dealer or person receiving a selling concession, fee or other
remuneration a confirmation or notice to substantially the following effect:
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"The Series A Notes covered hereby have not been registered under the
U.S. Securities Act of 1933, as amended (the "Securities Act"), and
may not be offered and sold within the United States or to, or for the
account or benefit of, U.S. persons (i) as part of your distribution
at any time or (ii) otherwise until 40 days after the later of the
commencement of the Offering and the Closing Date, except in either
case in accordance with Regulation S under the Securities Act (or Rule
144A or to Accredited Institutions in transactions that are exempt
from the registration requirements of the Securities Act), and in
connection with any subsequent sale by you of the Series A Notes
covered hereby in reliance on Regulation S during the period referred
to above to any distributor, dealer or person receiving a selling
concession, fee or other remuneration, you must deliver a notice to
substantially the foregoing effect. Terms used above have the meanings
assigned to them in Regulation S."
Such Initial Purchaser acknowledges that the Company and the Guarantors
and, for purposes of the opinions to be delivered to each Initial Purchasers
pursuant to Section 9 hereof, counsel to the Company and the Guarantors and
counsel to the Initial Purchasers will rely upon the accuracy and truth of the
foregoing representations and such Initial Purchaser hereby consents to such
reliance.
Section 8. Indemnification. (a) The Company and Hovnanian, jointly and
severally, agree to indemnify and hold harmless each Initial Purchaser, its
directors, its officers and each person, if any, who controls any Initial
Purchaser within the meaning of Section 15 of the Act or Section 20 of the
Exchange Act, from and against any and all losses, claims, damages, liabilities
and judgments (including, without limitation, any legal or other expenses
incurred in connection with investigating or defending any matter, including any
action, that could give rise to any such losses, claims, damages, liabilities or
judgments) caused by any untrue statement or alleged untrue statement of a
material fact contained in the Offering Memorandum (or any amendment or
supplement thereto), the Preliminary Offering Memorandum or any Rule 144A
Information provided by the Company or Hovnanian to any holder or prospective
purchaser of Series A Notes pursuant to Section 5(g) or caused by any omission
or alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, except
insofar as such losses, claims, damages, liabilities or judgments are caused by
any such untrue statement or omission or alleged untrue statement or omission
based upon information relating to any Initial Purchaser furnished in writing to
the Company or Hovnanian by such Initial Purchaser through you expressly for use
therein; provided, however, that the foregoing indemnity agreement with respect
to any Preliminary Offering
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Memorandum shall not inure to the benefit of any Initial Purchaser who failed to
deliver a Final Offering Memorandum, as then amended or supplemented (so long as
the Final Offering Memorandum and any amendment or supplement thereto was
provided by the Company or Hovnanian to the several Initial Purchasers in the
requisite quantity and on a timely basis to permit proper delivery on or prior
to the Closing Date) to the person asserting any losses, claims, damages,
liabilities or judgements caused by any untrue statement or alleged untrue
statement of a material fact contained in any Preliminary Offering Memorandum,
or caused by any omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading, if such material misstatement or omission or alleged material
misstatement or omission was cured in the Final Offering Memorandum, as so
amended or supplemented.
(b) Each Initial Purchaser agrees, severally and not jointly, to indemnify
and hold harmless the Company and Hovnanian, and their respective directors and
officers and each person, if any, who controls Hovnanian within the meaning of
Section 15 of the Act or Section 20 of the Exchange Act, to the same extent as
the foregoing indemnity from the Company and Hovnanian to such Initial Purchaser
but only with reference to information relating to such Initial Purchaser
furnished in writing to the Company or Hovnanian by such Initial Purchaser
expressly for use in the Preliminary Offering Memorandum or the Offering
Memorandum.
(c) In case any action shall be commenced involving any person in respect
of which indemnity may be sought pursuant to Section 8(a) or 8(b) (the
"indemnified party"), the indemnified party shall promptly notify the person
against whom such indemnity may be sought (the "indemnifying party") in writing
and the indemnifying party shall assume the defense of such action, including
the employment of counsel reasonably satisfactory to the indemnified party and
the payment of all fees and expenses of such counsel, as incurred (except that
in the case of any action in respect of which indemnity may be sought pursuant
to both Sections 8(a) and 8(b), the Initial Purchasers shall not be required to
assume the defense of such action pursuant to this Section 8(c), but may employ
separate counsel and participate in the defense thereof, but the fees and
expenses of such counsel, except as provided below, shall be at the expense of
such Initial Purchaser). Any indemnified party shall have the right to employ
separate counsel in any such action and participate in the defense thereof, but
the fees and expenses of such counsel shall be at the expense of the indemnified
party unless (i) the employment of such counsel shall have been specifically
authorized in writing by the indemnifying party, (ii) the indemnifying party
shall have failed to assume the defense of such action or employ counsel
reasonably satisfactory to the indemnified party or (iii) the named parties to
any such action (including any impleaded parties) include both the indemnified
party and the indemnifying party, and the indemnified party shall have been
advised by such counsel that there may
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be one or more legal defenses available to it which are different from or
additional to those available to the indemnifying party (in which case the
indemnifying party shall not have the right to assume the defense of such action
on behalf of the indemnified party). In any such case, the indemnifying party
shall not, in connection with any one action or separate but substantially
similar or related actions in the same jurisdiction arising out of the same
general allegations or circumstances, be liable for the fees and expenses of
more than one separate firm of attorneys (in addition to any local counsel) for
all indemnified parties and all such fees and expenses shall be reimbursed as
they are incurred. Such firm shall be designated in writing by DLJ, in the case
of parties indemnified pursuant to Section 8(a), and by the Company or
Hovnanian, in the case of parties indemnified pursuant to Section 8(b). The
indemnifying party shall indemnify and hold harmless the indemnified party from
and against any and all losses, claims, damages, liabilities and judgments by
reason of any settlement of any action (i) effected with its written consent or
(ii) effected without its written consent if the settlement is entered into more
than twenty business days after the indemnifying party shall have received a
request from the indemnified party for reimbursement for the fees and expenses
of counsel (in any case where such fees and expenses are at the expense of the
indemnifying party) and, prior to the date of such settlement, the indemnifying
party shall have failed to comply with such reimbursement request. No
indemnifying party shall, without the prior written consent of the indemnified
party, effect any settlement or compromise of, or consent to the entry of
judgment with respect to, any pending or threatened action in respect of which
the indemnified party is or could have been a party and indemnity or
contribution may be or could have been sought hereunder by the indemnified
party, unless such settlement, compromise or judgment (i) includes an
unconditional release of the indemnified party from all liability on claims that
are or could have been the subject matter of such action and (ii) does not
include a statement as to or an admission of fault, culpability or a failure to
act, by or on behalf of the indemnified party.
(d) To the extent the indemnification provided for in this Section 8 is
unavailable to an indemnified party or insufficient in respect of any losses,
claims, damages, liabilities or judgments referred to therein, then each
indemnifying party, in lieu of indemnifying such indemnified party, shall
contribute to the amount paid or payable by such indemnified party as a result
of such losses, claims, damages, liabilities and judgments (i) in such
proportion as is appropriate to reflect the relative benefits received by the
Company and Hovnanian on the one hand and the Initial Purchasers on the other
hand from the offering of the Series A Notes or (ii) if the allocation provided
by clause 8(d)(i) above is not permitted by applicable law, in such proportion
as is appropriate to reflect not only the relative benefits referred to in
clause 8(d)(i) above but also the relative fault of the Company and Hovnanian on
the one hand and the Initial Purchasers on the other
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hand in connection with the statements or omissions which resulted in such
losses, claims, damages, liabilities or judgments, as well as any other relevant
equitable considerations. The relative benefits received by the Company and
Hovnanian on the one hand and the Initial Purchasers on the other hand shall be
deemed to be in the same proportion as the total net proceeds from the offering
(after deducting underwriting discounts and commissions but before deducting
expenses) received by the Company and Hovnanian, and the total discounts and
commissions received by the Initial Purchasers, bear to the total price to
investors of the Series A Notes, in each case as set forth in the table on the
cover page of the Offering Memorandum. The relative fault of the Company and
Hovnanian on the one hand and the Initial Purchasers, on the other hand shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to state
a material fact relates to information supplied by the Company and Hovnanian on
the one hand or the Initial Purchasers on the other hand and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission.
The Company, Hovnanian and the Initial Purchasers agree that it would not
be just and equitable if contribution pursuant to this Section 8(d) were
determined by pro rata allocation (even if the Initial Purchasers were treated
as one entity for such purpose) or by any other method of allocation which does
not take account of the equitable considerations referred to in the immediately
preceding paragraph. The amount paid or payable by an indemnified party as a
result of the losses, claims, damages, liabilities or judgments referred to in
the immediately preceding paragraph shall be deemed to include, subject to the
limitations set forth above, any legal or other expenses incurred by such
indemnified party in connection with investigating or defending any matter,
including any action, that could have given rise to such losses, claims,
damages, liabilities or judgments. Notwithstanding the provisions of this
Section 8, no Initial Purchaser shall be required to contribute any amount in
excess of the amount by which the total discounts and commissions received by
such Initial Purchasers exceeds the amount of any damages which such Initial
Purchaser has otherwise been required to pay by reason of such untrue or alleged
untrue statement or omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Act) shall be
entitled to contribution from any person who was not guilty of such fraudulent
misrepresentation. The Initial Purchasers' obligations to contribute pursuant to
this Section 8(d) are several in proportion to the respective principal amount
of Series A Notes purchased by each of the Initial Purchasers hereunder and not
joint.
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(e) The remedies provided for in this Section 8 are not exclusive and shall
not limit any rights or remedies which may otherwise be available to any
indemnified party at law or in equity.
Section 9. Conditions of Initial Purchasers Obligations. The several
obligations of the Initial Purchasers to purchase the Series A Notes under this
Agreement are subject to the satisfaction of each of the following conditions:
(a) All the representations and warranties of the Company, Hovnanian and
its subsidiaries contained in this Agreement shall be true and correct on the
Closing Date with the same force and effect as if made on and as of the Closing
Date.
(b) On or after the date hereof, (i) there shall not have occurred any
downgrading, suspension or withdrawal of, nor shall any notice have been given
of any potential or intended downgrading, suspension or withdrawal of, or of any
review (or of any potential or intended review) for a possible change that does
not indicate the direction of the possible change in, any rating of the Company
or Hovnanian or any securities of the Company or Hovnanian (including, without
limitation, the placing of any of the foregoing ratings on credit watch with
negative or developing implications or under review with an uncertain direction)
by any "nationally recognized statistical rating organization" as such term is
defined for purposes of Rule 436(g)(2) under the Act, (ii) there shall not have
occurred any change, nor shall any notice have been given of any potential or
intended change, in the outlook for any rating of the Company or Hovnanian or
any securities of the Company or Hovnanian by any such rating organization and
(iii) no such rating organization shall have given notice that it has assigned
(or is considering assigning) a lower rating to the Series A Notes than that on
which the Series A Notes were marketed.
(c) You shall have received on the Closing Date a certificate dated the
Closing Date, signed by Ara K. Hovnanian and J. Larry Sorsby, in their
capacities as President-Chief Executive Officer and Chief Financial Officer-
Treasurer of Hovnanian, confirming the matters set forth in Sections 6(w), 9(a)
and 9(b) and that, in all material respects, the Company and Hovnanian have
complied with all of the agreements and satisfied all of the conditions herein
contained and required to be complied with or satisfied by the Company and
Hovnanian on or prior to the Closing Date.
(d) Since the respective dates as of which information is given in the
Offering Memorandum other than as set forth in the Offering Memorandum
(exclusive of any amendments or supplements thereto subsequent to the date of
this Agreement), (i) there shall not have occurred any change or any development
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involving a prospective change in the condition, financial or otherwise, or the
earnings, business, management or operations of Hovnanian and its subsidiaries,
taken as a whole, (ii) there shall not have been any change or any development
involving a prospective change in the capital stock or in the long-term debt of
the Company or Hovnanian and (iii) neither the Company, Hovnanian, nor any of
its subsidiaries shall have incurred any liability or obligation, direct or
contingent, the effect of which, in any such case described in clause 9(d)(i),
9(d)(ii) or 9(d)(iii), in your judgment, is material and adverse and, in your
judgment, makes it impracticable to market the Series A Notes on the terms and
in the manner contemplated in the Offering Memorandum.
(e) You shall have received on the Closing Date an opinion (satisfactory to
you and counsel for the Initial Purchasers), dated the Closing Date, of Simpson
Thacher & Bartlett, New York, New York, counsel for the Company, to the effect
that:
(i) the Series A Notes have been duly authorized by the Company and
assuming due authentication thereof by the Trustee and your payment and
delivery in accordance with the terms of this Agreement, will be entitled
to the benefits of the Indenture and will be valid and binding obligations
of the Company, enforceable in accordance with their terms except as the
enforceability thereof may be limited by the effects of bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium and other
similar laws relating to or affecting creditors' rights generally, general
equitable principles (whether considered in a proceeding in equity or at
law) and an implied covenant of good faith and fair dealing;
(ii) assuming the guarantee of the Series A Notes has been duly
authorized and issued by the Guarantors, when the Series A Notes have been
executed and authenticated in accordance with the provisions of the
Indenture and delivered to and paid for by the Initial Purchasers in
accordance with the terms of this Agreement, such guarantee will be valid
and binding obligations of such Guarantors except as the enforceability
thereof may be limited by the effects of bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium and other similar laws relating to
or affecting creditors' rights generally, general equitable principles
(whether considered in a proceeding in equity or at law) and an implied
covenant of good faith and fair dealing;
(iii) the Indenture has been duly authorized, executed and delivered
by the Company and the Guarantors and, assuming the Indenture is a valid
and legally binding obligation of the Trustee, constitutes a valid and
binding agreement of the Company and the Guarantors, enforceable in
26
<PAGE>
accordance with its terms except as the enforceability thereof may be
limited by the effects of bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and other similar laws relating to or affecting
creditors' rights generally, general equitable principles (whether
considered in a proceeding in equity or at law) and an implied covenant of
good faith and fair dealing;
(iv) the Indenture complies as to form in all material respects with
the requirements of the TIA, and the rules and regulations of the
Commission applicable to an indenture which is qualified thereunder. It is
not necessary in connection with the offer, sale and delivery of the Series
A Notes to the Initial Purchasers in the manner contemplated by this
Agreement or in connection with the Exempt Resales to qualify the Indenture
under the TIA;
(v) this Agreement has been duly authorized, executed and delivered
by the Company and Hovnanian;
(vi) the Registration Rights Agreement has been duly authorized,
executed and delivered by the Company and the Guarantors and is a valid and
binding agreement of the Company and the Guarantors, enforceable in
accordance with its terms except as the enforceability thereof may be
limited by the effects of bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and other similar laws relating to or affecting
creditors' rights generally, general equitable principles (whether
considered in a proceeding in equity or at law) and an implied covenant of
good faith and fair dealing and as rights to indemnity and contribution
thereunder may be limited by applicable law;
(vii) the Series B Notes have been duly authorized
(viii) neither the Company nor Hovnanian is and, after giving effect
to the offering and sale of the Series A Notes and the application of the
proceeds thereof as described in the Offering Memorandum, will be, an
"investment company" as such term is defined in the Investment Company Act
of 1940, as amended;
(ix) no registration under the Act of the Series A Notes or the
Guarantees is required for the sale of the Series A Notes and the
Guarantees to the Initial Purchasers solely in the manner contemplated by
this Agreement or for the Exempt Resales assuming that (1) each Initial
Purchaser is a QIB or a Regulation S Purchaser, (2) the accuracy of, and
compliance with, the Initial Purchaser's representations and agreements
27
<PAGE>
contained in Section 7 of this Agreement and (3) the accuracy of the
representations of the Company and the Guarantors set forth in Sections
6(cc), 6(dd), 6(ee), 6(ff) and 6(gg) of this Agreement;
(x) the statements under the captions "Description of Notes" in the
Offering Memorandum, insofar as such statements purport to constitute a
summary of certain terms of documents referred to therein, constitute
accurate summaries of the terms of such documents;
(xi) the statements set forth in the Offering memorandum under the
caption "Certain United States Federal Income Tax Consequences to Non-U.S.
Persons," insofar as they purport to constitute summaries of matters of
United States federal tax law and regulations or legal conclusions with
respect thereto, constitute accurate summaries of the matters described in
all material respects;
(xii) (A) each document, if any, filed pursuant to the Exchange Act
and incorporated by reference in the Offering Memorandum (except for
financial statements and other financial data included therein as to which
no opinion need be expressed) complied when so filed as to form with the
Exchange Act, (B) such counsel has no reason to believe that, as of the
date of the Offering Memorandum or as of the Closing Date, the Offering
Memorandum, as amended or supplemented, if applicable (except for the
financial statements and other financial data, as aforesaid) contains any
untrue statement of a material fact or omits to state a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
In rendering such opinion, Simpson Thacher & Bartlett may rely as to
matters involving the application of laws of any jurisdiction other than the
State of New York, the General Corporation Law of the State of Delaware or the
Federal Law of the United States, to the extent they deem proper and specified
in such opinion, upon the opinion of Peter S. Reinhart, Esq., Senior Vice
President and General Counsel for the Company.
The opinion of described in Section 9(e) above shall be rendered to you at
the request of the Company and the Guarantors and shall so state therein. In
giving such opinions with respect to the matters covered by Section 9(e)(xii),
Simpson Thacher & Bartlett may state that their opinion and belief are based
upon their participation in the preparation of the Offering Memorandum and any
amendments or supplements thereto and documents incorporated therein by
reference and review and discussion of the contents thereof, but is without
independent check or verification except as specified.
28
<PAGE>
(f) You shall have received on the Closing Date an opinion (satisfactory
to you and counsel to the Initial Purchasers), dated the Closing Date, of Peter
S. Reinhart, Esq., Senior Vice President and General Counsel for the Company, to
the effect of that:
(i) each of the Company, Hovnanian and the subsidiary guarantors
which are material and which are listed on a schedule to such opinion (the
"Material Subsidiaries") has been duly incorporated, is validly existing as
a corporation or a limited liability company in good standing under the
laws of its jurisdiction of incorporation or formation and has the
corporate power and authority to carry on its business as described in the
Offering Memorandum and to own, lease and operate its properties;
(ii) each of the Company, Hovnanian and the Material Subsidiaries is
duly qualified and is in good standing as a foreign corporation or limited
liability company authorized to do business in each jurisdiction in which
the nature of its business or its ownership or leasing 27 of property
requires such qualification, except where the failure to be so qualified
would not have a Material Adverse Effect;
(iii) all the outstanding shares of capital stock of the Company,
Hovnanian and the Material Subsidiaries have been duly authorized and
validly issued and are fully paid, non-assessable and not subject to any
preemptive or similar rights;
(iv) the guarantee of the Series A Notes has been duly authorized by
each of the Guarantors and, when the Series A Notes have been executed and
authenticated in accordance with the provisions of the Indenture and
delivered to and paid for by the Initial Purchasers in accordance with the
terms of this Agreement, such guarantee will be valid and binding
obligations of each such Guarantor except as (A) the enforceability thereof
may be limited by bankruptcy, insolvency or similar laws affecting
creditors' rights generally and (B) rights of acceleration and the
availability of equitable remedies may be limited by equitable principles
of general applicability;
(v) this Agreement and the Registration Rights Agreement have been
duly authorized, executed and delivered by the Guarantors;
(vi) neither the Company, Hovnanian nor any of the Material
Subsidiaries is in violation of its respective charter or by-laws and, to
the best of such counsel's knowledge after due inquiry, neither the
Company,
29
<PAGE>
Hovnanian nor any of the Material Subsidiaries is in default in the
performance of any obligation, agreement, covenant or condition contained
in any indenture, loan agreement, mortgage, lease or other agreement or
instrument that is material to the Company, Hovnanian and its subsidiaries,
taken as a whole, to which the Company, Hovnanian and its subsidiaries is a
party or by which the Company, Hovnanian or its subsidiaries or their
respective property is bound;
(vii) the execution, delivery and performance of this Agreement, the
Registration Rights Agreement, the Indenture and the Series A Notes by the
Company, the execution, delivery and performance of this Agreement, the
Registration Rights Agreement, the Indenture and the guarantee of the
Series A Notes by the Guarantors, the execution, delivery and performance
of the Merger Agreement by Hovnanian, the compliance by the Company and the
Guarantors with all the provisions hereof and thereof and the consummation
of the transactions contemplated hereby and thereby will not (A) require
any consent, approval, authorization or other order of, or qualification
with, any court or governmental body or agency (except (i) those listed in
the Merger Agreement and (ii) such as may be required under the securities
or Blue Sky laws of the various states), (B) conflict with or constitute a
breach of any of the terms or provisions of, or a default under, the
charter or by-laws of the Company, Hovnanian or any of its subsidiaries or
any indenture, loan agreement, mortgage, lease or other agreement or
instrument that is material to the Company or Hovnanian and its
subsidiaries, taken as a whole, to which the Company, Hovnanian and its
subsidiaries is a party or by which the Company, Hovnanian or its
subsidiaries or their respective property is bound, (C) violate or conflict
with any applicable law or any rule, regulation, judgment, order or decree
of any court or any governmental body or agency having jurisdiction over
the Company, Hovnanian, any of its subsidiaries or their respective
property, (D) result in the imposition or creation of (or the obligation to
create or impose) a Lien under any agreement or instrument to which the
Company, Hovnanian or any of its subsidiaries is a party or by which the
Company, Hovnanian or any of its subsidiaries or their respective property
is bound or (E) result in the suspension, termination or revocation of any
Authorization of the Company, Hovnanian or any of its subsidiaries or any
other impairment of the rights of the holder of any such Authorization;
except where the failure to be valid and in full force and effect or to be
in compliance, the occurrence of any such event or the presence of any such
restriction or to have any such Authorization would not, singly or in the
aggregate, have a Material Adverse Effect;
30
<PAGE>
(viii) after due inquiry, such counsel does not know of any legal or
governmental proceedings pending or threatened to which the Company,
Hovnanian or any of its subsidiaries is or could be a party or to which any
of their respective property is or could be subject, which might result,
singly or in the aggregate, in a Material Adverse Effect;
(ix) neither the Company, Hovnanian nor any of its subsidiaries has
violated any Environmental Law, any provisions of the Employee Retirement
Income Security Act of 1974, as amended, or any provisions of the Foreign
Corrupt Practices Act or the rules and regulations promulgated thereunder,
except for such violations which, singly or in the aggregate, would not
have a Material Adverse Effect;
(x) each of the Company, Hovnanian and its subsidiaries has such
Authorizations of, and has made all filings with and notices to, all
governmental or regulatory authorities and self-regulatory organizations
and all courts and other tribunals, including, without limitation, under
any applicable Environmental Laws, as are necessary to own, lease, license
29 and operate its respective properties and to conduct its business,
except where the failure to have any such Authorization or to make any such
filing or notice would not, singly or in the aggregate, have a material
adverse effect on the business, prospects, financial condition or results
of operations of Hovnanian and its subsidiaries, taken as a whole; each
such Authorization is valid and in full force and effect and each of the
Company, Hovnanian and its subsidiaries is in compliance with all the terms
and conditions thereof and with the rules and regulations of the
authorities and governing bodies having jurisdiction with respect thereto;
and no event has occurred (including, without limitation, the receipt of
any notice from any authority or governing body) which allows or, after
notice or lapse of time or both, would allow, revocation, suspension or
termination of any such Authorization or results or, after notice or lapse
of time or both, would result in any other impairment of the rights of the
holder of any such Authorization; except where such failure to be valid and
in full force and effect or to be in compliance, the occurrence of any such
event or the presence of any such restriction would not, singly or in the
aggregate, have a Material Adverse Effect;
(xi) to the best of such counsel's knowledge after due inquiry,
there are no contracts, agreements or understandings between the Company or
Hovnanian and any person granting such person the right to require the
Company or Hovnanian to file a registration statement under the Act with
respect to any securities of the Company or Hovnanian or to require the
Company or Hovnanian to include such securities with the
31
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Series A Notes and Guarantees registered pursuant to any Registration
Statement; and
(xii) (A) each document, if any, filed pursuant to the Exchange Act and
incorporated by reference in the Offering Memorandum (except for financial
statements and other financial data included therein as to which no opinion
need be expressed) complied when so filed as to form with the Exchange Act,
(B) such counsel has no reason to believe that, as of the date of the
Offering Memorandum or as of the Closing Date, the Offering Memorandum, as
amended or supplemented, if applicable (except for the financial statements
and other financial data, as aforesaid) contains any untrue statement of a
material fact or omits to state a material fact necessary in order to make
the statements therein, in the light of the circumstances under which they
were made, not misleading.
In rendering such opinion, such counsel may rely as to matters involving
the application of laws of any jurisdiction other than the State of New Jersey,
to 30 the extent they deem proper and specified in such opinion, upon the
opinion of Simpson Thacher & Bartlett, Counsel for the Company.
(g) You shall have received on the Closing Date an opinion, dated the
Closing Date, of Davis Polk & Wardwell, New York, New York, counsel for the
Initial Purchasers, in form and substance reasonably satisfactory to the Initial
Purchasers.
(h) The Initial Purchasers shall have received, on each of the date hereof
and the Closing Date, a letter dated the date hereof or the Closing Date, as the
case may be, in form and substance satisfactory to you, from Ernst & Young LLP
and Deloitte & Touche LLP, independent public accountants, containing the
information and statements of the type ordinarily included in accountants'
"comfort letters" to Initial Purchasers with respect to the financial statements
and certain financial information contained in or incorporated by reference into
the Offering Memorandum.
(i) The Series A Notes shall have been rated "BB- " by Standard & Poor's
Corporation and "Ba3" by Moody's Investors Service, Inc
(j) The Series A Notes shall have been approved by the NASD for trading
and duly listed in PORTAL.
(k) Each Initial Purchaser shall have received a counterpart, conformed as
executed, of the Indenture which shall have been entered into by the Company,
the Guarantors and the Trustee..
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(l) The Company and the Guarantors shall have executed the
Registration Rights Agreement and each Initial Purchaser shall have received an
original copy thereof, duly executed by the Company and the Guarantors.
(m) Neither the Company nor Hovnanian shall have failed on or prior to the
Closing Date to perform or comply with any of the agreements herein contained
and required to be performed or complied with by the Company and Hovnanian on or
prior to the Closing Date.
SECTION 10. Effectiveness of Agreement and Termination. This Agreement
shall become effective upon the execution and delivery of this Agreement by the
parties hereto.
This Agreement may be terminated at any time on or prior to the Closing
Date by you by written notice to the Company and Hovnanian if any of the
following has occurred: (i) any outbreak or escalation of hostilities or other
31 national or international calamity or crisis or change in economic conditions
or in the financial markets of the United States or elsewhere that, in your
judgment, is material and adverse and, in the Initial Purchasers' judgment,
makes it impracticable to market the Series A Notes on the terms and in the
manner contemplated in the Offering Memorandum, (ii) the suspension or material
limitation of trading in securities or other instruments on the New York Stock
Exchange, the American Stock Exchange, the Chicago Board of Options Exchange,
the Chicago Mercantile Exchange, the Chicago Board of Trade or the Nasdaq
National Market or limitation or prices for securities or other instruments on
any such exchange or the Nasdaq National Market, (iii) the suspension of trading
of any securities of the Company or Hovnanian on any exchange or in the
over-the-counter market, (iv) the enactment, publication, decree or other
promulgation of any federal or state statute, regulation, rule or order of any
court or other governmental authority which in your opinion materially and
adversely affects, or will materially and adversely affect, the business,
prospects, financial condition or results of operations of Hovnanian and its
subsidiaries, taken as a whole, (v) the declaration of a banking moratorium by
either federal or New York State authorities or (vi) the taking of any action by
any federal, state or local government or agency in respect of its monetary or
fiscal affairs which in your opinion has a material adverse effect on the
financial markets in the United States.
If on the Closing Date any one or more of the Initial Purchasers shall fail
or refuse to purchase the Series A Notes which it or they have agreed to
purchase hereunder on such date and the aggregate principal amount of the Series
A Notes which such defaulting Initial Purchaser or Initial Purchasers, as the
case may be, agreed but failed or refused to purchase is not more than one-tenth
of the
33
<PAGE>
aggregate principal amount of the Series A Notes to be purchased on such date by
all Initial Purchasers, each non-defaulting Initial Purchaser shall be obligated
severally, in the proportion which the principal amount of the Series A Notes
set forth opposite its name in Schedule B bears to the aggregate principal
amount of the Series A Notes which all the non-defaulting Initial Purchasers, as
the case may be, have agreed to purchase, or in such other proportion as you may
specify, to purchase the Series A Notes which such defaulting Initial Purchaser
or Initial Purchasers, as the case may be, agreed but failed or refused to
purchase on such date; provided that in no event shall the aggregate principal
amount of the Series A Notes which any Initial Purchaser has agreed to purchase
pursuant to Section 2 hereof be increased pursuant to this Section 10 by an
amount in excess of one-ninth of such principal amount of the Series A Notes
without the written consent of such Initial Purchaser. If on the Closing Date
any Initial Purchaser or Initial Purchasers shall fail or refuse to purchase the
Series A Notes and the aggregate principal amount of the Series A Notes with
respect to which such default occurs is more than one-tenth of the aggregate
principal amount of the Series A Notes to be purchased by all Initial Purchasers
and arrangements satisfactory to the Initial Purchasers, the Company and
Hovnanian for purchase of such the Series A Notes are not made within 48 hours
after such default, this Agreement will terminate without liability on the part
of any non-defaulting Initial Purchaser, the Company and Hovnanian. In any such
case which does not result in termination of this Agreement, either you, the
Company or Hovnanian shall have the right to postpone the Closing Date, but in
no event for longer than seven days, in order that the required changes, if any,
in the Offering Memorandum or any other documents or arrangements may be
effected. Any action taken under this paragraph shall not relieve any defaulting
Initial Purchaser from liability in respect of any default of any such Initial
Purchaser under this Agreement.
SECTION 11. Miscellaneous. Notices given pursuant to any provision of this
Agreement shall be addressed as follows: (i) if to the Company or Hovnanian, to
K. Hovnanian Enterprises, Inc., 10 Highway 35, P.O. Box 500, Red Bank, New
Jersey 07701 and (ii) if to the Initial Purchaser, c/o Donaldson, Lufkin &
Jenrette Securities Corporation, 277 Park Avenue, New York, New York 10172,
Attention: Syndicate Department, or in any case to such other address as the
person to be notified may have requested in writing.
The respective indemnities, contribution agreements, representations,
warranties and other statements of the Company, Hovnanian and the several
Initial Purchasers set forth in or made pursuant to this Agreement shall remain
operative and in full force and effect, and will survive delivery of and payment
for the Series A Notes, regardless of (i) any investigation, or statement as to
the results thereof, made by or on behalf of any Initial Purchaser, the officers
or directors of any Initial Purchaser, any person controlling any Initial
Purchaser, the Company
34
<PAGE>
or Hovnanian, the officers or directors of the Company or Hovnanian or any
person controlling the Company or Hovnanian, (ii) acceptance of the Series A
Notes and payment for them hereunder and (iii) termination of this Agreement.
If for any reason the Series A Notes are not delivered by or on behalf of
the Company as provided herein (other than as a result of any termination of
this Agreement pursuant to Section 10), the Company and Hovnanian, jointly and
severally, agree to reimburse the several Initial Purchasers for all out-of-
pocket expenses (including the fees and disbursements of counsel) incurred by
them. Notwithstanding any termination of this Agreement, the Company and
Hovnanian, jointly and severally, shall be liable for all expenses which they
have agreed to pay pursuant to Section 5(h) hereof. The Company and Hovnanian,
jointly and severally, also agree to reimburse the several Initial Purchasers,
their directors and officers and any persons controlling any of the Initial
Purchasers for any and all fees and expenses (including, without limitation, the
fees disbursements of counsel) incurred by them in connection with enforcing
their rights hereunder (including, without limitation, their rights under
Section 8 hereof).
Except as otherwise provided, this Agreement has been and is made solely
for the benefit of and shall be binding upon the Company, Hovnanian, the Initial
Purchasers, the Initial Purchasers' directors and officers, any controlling
persons referred to herein, the Company's and Hovnanian's directors and their
respective successors and assigns, all as and to the extent provided in this
Agreement, and no other person shall acquire or have any right under or by
virtue of this Agreement. The term "successors and assigns" shall not include a
purchaser of any of the Series A Notes from any of the several Initial
Purchasers merely because of such purchase.
This Agreement shall be governed and construed in accordance with the laws
of the State of New York.
This Agreement may be signed in various counterparts which together shall
constitute one and the same instrument.
35
<PAGE>
Please confirm that the foregoing correctly sets forth the agreement
between the Company, Hovnanian and the several Initial Purchasers.
Very truly yours,
K. HOVNANIAN ENTERPRISES, INC.
____________________________________
By: J. Larry Sorsby
Title:
HOVNANIAN ENTERPRISES, INC.
As Guarantor
____________________________________
By: J. Larry Sorsby
Title:
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
Acting severally on behalf of
themselves and the several
Initial Purchasers named in
Schedule B hereto
By: DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
__________________________________
By:
Title:
36
<PAGE>
SALOMON SMITH BARNEY INC.
_________________________
By:
Title:
PNC CAPITAL MARKETS, INC.
_________________________
By:
Title:
37
<PAGE>
SCHEDULE A
----------
GUARANTORS
HOVNANIAN ENTERPRISES, INC.
K. HOVNANIAN AT HOPEWELL ILL, INC.
RECREATIONAL DEVELOPMENT CORP., INC.
PINE BROOK COMPANY, INC.
K. HOVNANIAN AT BEDMINSTER, INC.
K. HOVNANIAN AT THE BLUFF, INC.
K. HOVNANIAN AT ATLANTIC CITY, INC.
HOVNANIAN PROPERTIES OF ATLANTIC COUNTY, INC.
MONTEGO BAY I ACQUISITION CORP., INC.
PIKE UTILITIES, INC.
ARROW PROPERTIES, INC.
K. HOVNANIAN REAL ESTATE INVESTMENT, INC.
HOVNANIAN TEXAS, INC.
LANDARAMA, INC.
TROPICAL SERVICE BUILDERS, INC.
HOVNANIAN PENNSYLVANIA, INC.
K. HOVNANIAN PROPERTIES OF NORTH BRUNSWICK V, INC.
K. HOVNANIAN DEVELOPMENTS OF TEXAS, INC.
THE MATZEL & MUMFORD ORGANIZATION, INC.
M & M INVESTMENTS, L.P.
MATZEL & MUMFORD OF DELAWARE, INC.
PARK VILLAGE REALTY, INC.
GOODMAN FAMILY OF BUILDERS, L.P.
REFLECTIONS OF YOU INTERIORS, INC.
HEXTER FAIR LAND TITLE COMPANY I, INC.
K. HOVNANIAN AT MAHWAH VIII, INC.
K. HOVNANIAN AT WALL TOWNSHIP IV, INC.
K. HOVNANIAN AT MONTVILLE, INC.
HOVNANIAN OF PALM BEACH, INC.
K. HOVNANIAN COMPANIES OF FLORIDA, INC.
K. HOVNANIAN AT FREEHOLD TOWNSHIP, INC.
HOVNANIAN PROPERTIES OF LAKE WORTH, INC.
K. HOVNANIAN COMPANIES OF PENNSYLVANIA, INC.
K. HOVNANIAN PROPERTIES OF HAMILTON, INC.
K. HOVNANIAN AT SCOTCH PLAINS, INC.
K. HOVNANIAN AT WAYNE IV, INC.
HOVNANIAN DEVELOPMENTS OF FLORIDA, INC.
MONTEGO BAY II ACQUISITION CORP., INC.
38
<PAGE>
HOVNANIAN OF PALM BEACH VII, INC.
K. HOVNANIAN AT WALL TOWNSHIP II, INC.
K. HOVNANIAN ENTERPRISES, INC.
HOVNANIAN OF PALM BEACH IX, INC.
HOVNANIAN AT TARPON LAKES I, INC.
K. HOVNANIAN COMPANIES NORTHEAST, INC.
KINGS GRANT EVESHAM CORP.
K. HOVNANIAN AT MANALAPAN, INC.
K. HOVNANIAN AT WALL TOWNSHIP, INC.
K. HOVNANIAN AT EAST BRUNSWICK VII, INC.
K. HOVNANIAN COMPANIES OF CENTRAL JERSEY, INC.
K. HOVNANIAN OF PALM BEACH XI, INC.
K. HOVNANIAN AT SOUTH BRUNSWICK II, INC.
K. HOVNANIAN AT LAWRENCE SQUARE, INC.
K. HOVNANIAN AT TARPON LAKES III, INC.
K. HOVNANIAN AT HORIZON HEIGHTS, INC.
K. HOVNANIAN AT RESERVOIR RIDGE, INC. K.
K. HOVNANIAN AT JERSEY CITY I, INC.
K. HOVNANIAN INVESTMENT PROPERTIES OF NEW JERSEY, INC.
K. HOVNANIAN AT FT. MYERS I, INC.
K. HOVNANIAN AT HOWELL TOWNSHIP II, INC.
K. HOVNANIAN AT KLOCKNER FARMS, INC.
K. HOVNANIAN AT JENSEN BEACH, INC.
MOLLY PITCHER CONSTRUCTION CO., INC.
K. HOVNANIAN AT MAHWAH VII, INC.
K. HOVNANIAN AT WAYNE III, INC.
K. HOVNANIAN PROPERTIES OF EAST BRUNSWICK II, INC.
K. HOVNANIAN AT KINGS GRANT I, INC.
THE NEW FORTIS CORPORATION
K. HOVNANIAN AT CLARKSTOWN, INC.
K. HOVNANIAN COMPANIES OF NEW YORK, INC.
K. HOVNANIAN DEVELOPMENTS OF NEW YORK, INC.
DRYER ASSOCIATES, INC.
K. HOVNANIAN AT PASCO I, INC.
K. HOVNANIAN AT LAKEWOOD, INC.
K. HOVNANIAN AT MARTIN DOWNS II, INC.
K. HOVNANIAN AVIATION, INC.
K. HOVNANIAN INVESTMENT PROPERTIES, INC.
K. HOVNANIAN AT FT. MYERS II, INC.
K. HOVNANIAN AT BERNARDS II, INC.
K. HOVNANIAN AT SOUTH BRUNSWICK III, INC.
MINERVA GROUP, INC.
K. HOVNANIAN DEVELOPMENTS OF NEW JERSEY, INC.
39
<PAGE>
K. HOVNANIAN AT BRIDGEWATER V, INC.
K. HOVNANIAN AT NORTH BRUNSWICK II, INC.
K. HOVNANIAN AT WASHINGTONVILLE, INC.
K. HOVNANIAN AT PEEKSKILL, INC.
K. HOVNANIAN AT NEWARK I, INC.
K. HOVNANIAN AT CARMEL, INC.
K. HOVNANIAN AT EAST WINDSOR I, INC.
PARTHENON GROUP, INC.
K. HOVNANIAN AT MARLBORO TOWNSHIP II, INC.
K. HOVNANIAN AT SOMERSET III, INC.
R.C.K. COMMUNITY MANAGEMENT CO., INC.
K. HOVNANIAN AT MONTCLAIR, NJ, INC.
K. HOVNANIAN AT EAST BRUNSWICK VI, INC.
K. HOVNANIAN AT HACKETTSTOWN, INC.
K. HOVNANIAN COMPANIES OF NORTH CAROLINA, INC.
K. HOVNANIAN AT MONTVILLE II, INC.
K. HOVNANIAN AT WALL TOWNSHIP VII, INC.
K. HOVNANIAN AT BRIDGEWATER II, INC.
K. HOVNANIAN AT MERRIMACK, INC.
K. HOVNANIAN AT BERNARDS III, INC.
K. HOVNANIAN AT WAYNE V, INC.
K. HOVNANIAN AT PASCO II, INC.
K. HOVNANIAN AT DELRAY BEACH II, INC.
K. HOVNANIAN AT BRANCHBURG I, INC. K.
K. HOVNANIAN AT PLAINSBORO II, INC.
K. HOVNANIAN AT NORTHERN WESTCHESTER, INC.
K. HOVNANIAN AT MARLBORO TOWNSHIP, INC.
K. HOVNANIAN AT WEST ORANGE, INC.
EASTERN TITLE AGENCY, INC.
K. HOVNANIAN PROPERTIES OF FRANKLIN, INC.
K. HOVNANIAN AT MAHWAH II, INC.
NEW ENGLAND COMMUNITY MANAGEMENT COMPANY, INC.
K. HOVNANIAN AT HOWELL TOWNSHIP, INC.
K. HOVNANIAN AT SOUTH BRUNSWICK IV, INC.
K. HOVNANIAN AT WALL TOWNSHIP VI, INC.
K. HOVNANIAN PROPERTIES OF PISCATAWAY, INC.
K. HOVNANIAN AT MAHWAH V, INC.
K. HOVNANIAN AT MERRIMACK II, INC.
K. HOVNANIAN AT NEWARK URBAN RENEWAL CORPORATION I
K. HOVNANIAN AT LAWRENCE GROVE, INC.
K. HOVNANIAN AT CEDAR GROVE I, INC.
K. HOVNANIAN AT CEDAR GROVE II, INC. K.
HOVNANIAN AT NORTH BRUNSWICK III, INC.
40
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K. HOVNANIAN AT JERSEY CITY II, INC.
K. HOVNANIAN AT BURLINGTON, INC.
K. HOVNANIAN AT SOUTH BRUNSWICK V, INC.
K. HOVNANIAN AT HALF MOON BAY, INC.
K. HOVNANIAN AT JACKSONVILLE II, INC.
K. HOVNANIAN AT BRANCHBURG II, INC.
K. HOVNANIAN AT EMBASSY LAKES, INC.
K. HOVNANIAN AT THE RESERVE AT MEDFORD, INC.
K. HOVNANIAN AT BRANCHBURG III, INC.
K. HOVNANIAN AT LOWER SAUCON, INC.
JERSEY CITY DANFORTH CSO, INC.
K. HOVNANIAN AT EAST WINDSOR II, INC.
K. HOVNANIAN AT MARLBORO TOWNSHIP III, INC.
K. HOVNANIAN AT NEWARK URBAN RENEWAL CORP. III, INC.
K. HOVNANIAN AT SOMERSET VIII, INC.
K. HOVNANIAN AT READINGTON, INC.
K. HOVNANIAN AT HOPEWELL I, INC.
K. HOVNANIAN AT NEWARK URBAN RENEWAL CORP. IV, INC.
K. HOVNANIAN AT NEWARK URBAN RENEWAL CORP. V, INC.
K. HOVNANIAN AT PLAINSBORO III, INC.
K. HOVNANIAN AT MAHWAH IV, INC.
K. HOVNANIAN AT POMPANO BEACH, INC.
K. HOVNANIAN AT JERSEY CITY III, INC.
K. HOVNANIAN PROPERTIES OF NEWARK URBAN RENEWAL CORPORATION, INC.
K. HOVNANIAN AT NORTH BRUNSWICK IV, INC.
K. HOVNANIAN AT BRIDGEWATER IV, INC.
K. HOVNANIAN AT SOUTH BRUNSWICK, INC.
K. HOVNANIAN AT PERKIOMEN I, INC.
K. HOVNANIAN AT VALLEYBROOK, INC.
K. HOVNANIAN AT OCEAN TOWNSHIP, INC.
K. HOVNANIAN AT PLAINSBORO I, INC.
K. HOVNANIAN REAL ESTATE OF FLORIDA, INC.
WESTERN FINANCIAL SERVICES, INC.
K. HOVNANIAN AT WAYNE, INC.
K. HOVNANIAN PROPERTIES OF RED BANK, INC.
K. HOVNANIAN AT HANOVER, INC.
K. HOVNANIAN AT LAKE CHARLESTON, INC.
NEW K. HOVNANIAN DEVELOPMENTS OF FLORIDA, INC.
K. HOVNANIAN COMPANIES OF METRO WASHINGTON, INC.
K. HOVNANIAN AT MONTGOMERY I, INC. EXC, INC.
K. HOVNANIAN DEVELOPMENTS OF METRO WASHINGTON, INC.
K. HOVNANIAN AT ASHBURN VILLAGE, INC.
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K. HOVNANIAN AT WOODMONT, INC.
K. HOVNANIAN AT FAIRWAY VIEWS, INC.
K. HOVNANIAN AT CAROLINA COUNTRY CLUB I, INC.
K. HOVNANIAN AT CHAPEL TRAIL, INC.
K. HOVNANIAN TREASURE COAST, INC. K.
K. HOVNANIAN AT UPPER MERION, INC.
K. HOVNANIAN AT MAHWAH VI, INC.
K. HOVNANIAN AT MEDFORD I, INC.
K. HOV INTERNATIONAL, INC.
K. HOVNANIAN AT MONTCLAIR, INC.
K. HOVNANIAN AT BULL RUN, INC.
K. HOVNANIAN AT SULLY STATION, INC.
K. HOVNANIAN AT SPRING RIDGE, INC.
K. HOVNANIAN MARINE, INC.
K. HOVNANIAN AT RIVER OAKS, INC.
K. HOVNANIAN AT HOLLY CREST, INC.
K. HOVNANIAN PROPERTIES OF ROUTE 35, INC.
STONEBROOK HOMES, INC.
K. HOVNANIAN AT WINSTON TRAILS, INC.
K. HOVNANIAN AT LAKES OF BOCA RATON, INC.
K. HOVNANIAN AT LAKE CHARLESTON II, INC.
K. HOVNANIAN AT LAKE CHARLESTON III, INC.
K. HOVNANIAN AT BRIDGEWATER VI, INC.
KHIPE, INC.
K. HOVNANIAN AT FAIR LAKES, INC.
K. HOVNANIAN AT CAROLINA COUNTRY CLUB II, INC.
K. HOVNANIAN AT VALLEYBROOK II, INC.
K. HOVNANIAN AT PARK RIDGE, INC.
K. HOVNANIAN AT BELMONT, INC.
K. HOVNANIAN AT WINSTON TRAILS II, INC.
K. HOVNANIAN FAIR LAKES GLEN, INC.
K. HOVNANIAN AT PEMBROKE SHORES, INC.
K. HOVNANIAN AT CAROLINA COUNTRY CLUB III, INC.
GOVERNOR'S ABSTRACT CO., INC.
K. HOVNANIAN AT COCONUT CREEK, INC.
K. HOVNANIAN AT POLO TRACE, INC.
FOUNDERS TITLE AGENCY, INC.
K. HOVNANIAN AT BERNARDS IV, INC.
K. HOVNANIAN AT PERKIOMEN II, INC.
K. HOVNANIAN AT WAYNE II, INC.
K. HOVNANIAN AT UPPER MAKEFIELD I, INC.
K. HOVNANIAN COMPANIES OF CALIFORNIA, INC.
K. HOVNANIAN AT TERRAZA, INC.
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K. HOVNANIAN DEVELOPMENTS OF CALIFORNIA, INC.
KHC ACQUISITION, INC.
K. HOVNANIAN AT STUART ROAD, INC.
K. HOVNANIAN AT HIGHLAND VINEYARDS, INC.
K. HOVNANIAN AT BALLANTRAE, INC.
BALLANTRAE HOME SALES, INC.
K. HOVNANIAN COMPANIES AT WILDROSE, INC.
K. HOVNANIAN AT GREENBROOK, INC.
K. HOVNANIAN AT HUNTER ESTATES, INC.
K. HOVNANIAN AT CARMEL DEL MAR, INC.
K. HOVNANIAN AT VAIL RANCH, INC.
K. HOVNANIAN AT PRINCETON, INC.
K. HOVNANIAN AT RARITAN I, INC.
K. HOVNANIAN AT CALABRIA, INC.
K. HOVNANIAN AT SENECA CROSSING, INC.
K. HOVNANIAN COMPANIES OF MARYLAND, INC.
K. HOVNANIAN DEVELOPMENTS OF MARYLAND, INC.
K. HOVNANIAN AT EXETER HILLS, INC.
K. HOVNANIAN FLORIDA REGION, INC.
K. HOVNANIAN SOUTHEAST FLORIDA, INC.
K. HOVNANIAN AT BERLIN, INC.
K. HOVNANIAN AT EAST BRUNSWICK VI, INC.
K. HOVNANIAN AT BEDMINSTER II, INC.
K. HOVNANIAN AT INVERRARY I, INC.
K. HOVNANIAN AT MAHWAH IX, INC.
K. HOVNANIAN AT NORTHLAKE, INC.
K. HOVNANIAN AT HOPEWELL IV, INC.
K. HOVNANIAN AT LOCUST GROVE I, INC.
K. HOVNANIAN AT CASTILE, INC.
K. HOVNANIAN AT TIERRASANTA, INC.
K. HOVNANIAN AT PRESTON, INC.
K. HOVNANIAN AT BERNARDS III, INC.
K. HOVNANIAN AT WAYNE VI, INC.
K. HOVNANIAN PROPERTIES OF NORTH CENTER DRIVE, INC.
BALLANTRAE DEVELOPMENT CORP.
K. HOVNANIAN AT LA TROVATA, INC.
K. HOVNANIAN AT RANCHO CRISTIANITOS, INC.
K. HOVNANIAN AT TANNERY HILL, INC.
K. HOVNANIAN PROPERTIES OF N.B. THEATRE, INC.
K. HOVNANIAN AT CRYSTAL SPRINGS, INC.
K. HOVNANIAN AT THE CEDARS, INC.
K. HOVNANIAN CONSTRUCTION MANAGEMENT, INC.
K. HOVNANIAN ACQUISITIONS, INC.
43
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K. HOVNANIAN AT BURLINGTON II, INC.
K. HOVNANIAN AT BURLINGTON III, INC.
K. HOVNANIAN AT BALLANTRAE ESTATES, INC.
K. HOVNANIAN AT SMITHVILLE, INC.
K. HOVNANIAN AT JEFFERSON, INC.
K. HOVNANIAN AT UPPER FREEHOLD TOWNSHIP I, INC.
K. HOVNANIAN AT HERSHEY'S MILL, INC.
K. HOVNANIAN AT DOMINION RIDGE, INC.
K. HOVNANIAN AT PORT IMPERIAL NORTH, INC.
K. HOVNANIAN AT UNION TOWNSHIP I, INC.
K. HOVNANIAN AT EAST BRUNSWICK VIII, INC.
K. HOVNANIAN AT MANALAPAN II, INC.
K. HOVNANIAN AT HOPEWELL V, INC.
K. HOVNANIAN AT HOPEWELL VI, INC.
K. HOVNANIAN AT CAMERON CHASE, INC.
K. HOVNANIAN AT THORNBURY, INC.
K. HOVNANIAN AT WAYNE VII, INC.
K. HOVNANIAN SCOTCH PLAINS II, INC.
K. HOVNANIAN AT MARLBORO TOWNSHIP IV, INC.
K. HOVNANIAN PORT IMPERIAL URBAN RENEWAL, INC.
K. HOVNANIAN AT EAST WHITELAND I, INC.
K. HOVNANIAN AT STONEGATE, INC.
K. HOVNANIAN AT CRESTLINE, INC.
K. HOVNANIAN AT SAN SEVAINE, INC.
K. HOVNANIAN AT SYCAMORE, INC.
K. HOVNANIAN COMPANIES OF SOUTHERN CALIFORNIA, INC.
K. HOVNANIAN AT SMITHVILLE II, INC.
K. HOVNANIAN AT STONY POINT, INC.
K. HOVNANIAN AT STONE CANYON, INC.
K. HOVNANIAN AT TUXEDO, INC.
K. HOVNANIAN AT BRIDGEPORT, INC.
K. HOVNANIAN AT SARATOGA, INC.
K. HOVNANIAN AT CHAPARRAL, INC.
K. HOVNANIAN AT OCEAN WALK, INC.
K. HOVNANIAN AT LOWER SAUGON II, INC.
K. HOVNANIAN AT STONEGATE, INC.
K. HOVNANIAN AT BARRINGTON, INC.
K. HOVNANIAN AT HAMPTON OAKS, INC.
K. HOVNANIAN AT P.C. HOMES, INC.
K. HOVNANIAN AT P.C. PROPERTIES, INC.
K. HOVNANIAN AT SUMMERWOOD, INC.
44
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K. HOVNANIAN AT THE GLEN
K. HOVNANIAN'S FOUR SEASONS OF THE PALM BEACHES, INC.
K. HOVNANIAN AT WALL TOWNSHIP VIII, INC.
K. HOVNANIAN AT NORTH JERSEY ACQUISITION, L.L.C.
K. HOVNANIAN CENTRAL ACQUISITION, L.L.C.
K. HOVNANIAN SHORE ACQUISITION, L.L.C.
K. HOVNANIAN SOUTH JERSEY ACQUISITION, L.L.C.
K. HOVNANIAN AT MANSFIELD I, L.L.C.
K. HOVNANIAN AT MANSFIELD II, L.L.C.
K. HOVNANIAN NORTH CENTRAL ACQUISITION, L.L.C.
K. HOVNANIAN AT WAYNE VIII, L.L.C.
K. HOVNANIAN AT BERNARDS V, L.L.C.
K. HOVNANIAN AT WANAQUE, L.L.C.
K. HOVNANIAN AT CHESTER I, L.L.C.
K. HOVNANIAN AT WINCHESTER, L.L.C.
K. HOVNANIAN AT MIDDLETOWN, L.L.C.
K. HOVNANIAN'S FOUR SEASONS, L.L.C.
K. HOVNANIAN AT MENIFEE, L.L.C.
K. HOVNANIAN AT NORTH BRUNSWICK VI, L.L.C.
K. HOVNANIAN AT CARMEL VILLAGE, L.L.C.
K. HOVNANIAN AT LAWRENCE, L.L.C.
K. HOVNANIAN AT BLUE HERON PINES, L.L.C.
K. HOVNANIAN AT JACKSON, L.L.C.
K. HOVNANIAN AT ROLAND HEIGHTS, L.L.C.
K. HOVNANIAN AT BERKELEY, L.L.C.
K. HOVNANIAN AT KING FARM, L.L.C.
K. HOVNANIAN AT SOUTH BANK, L.L.C.
K. HOVNANIAN AT PRINCE WILLIAM, L.L.C.
K. HOVNANIAN AT LAKE TERRAPIN, L.L.C.
K. HOVNANIAN AT GUTTENBERG, L.L.C.
K. HOVNANIAN AT KING FARM, L.L.C.
K. HOVNANIAN AT SOUTH BANK, L.L.C.
K. HOVNANIAN AT CLIFTON, L.L.C.
K. HOVNANIAN AT JERSEY CITY IV, L.L.C.
K. HOVNANIAN AT LAFAYETTE ESTATES, L.L.C.
K. HOVNANIAN AT UPPER FREEHOLD TOWNSHIP II, L.L.C.
K. HOVNANIAN AT KINCAID, L.L.C.
K. HOVNANIAN AT LINWOOD, L.L.C.
K. HOVNANIAN AT SOUTH AMBOY, L.L.C.
K. HOVNANIAN AT UPPER FREEHOLD TOWNSHIP III, L.L.C.
K. HOVNANIAN AT BRENBROOKE, L.L.C.
45
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K. HOVNANIAN AT BLOOMS CROSSING, L.L.C.
K. HOVNANIAN AT SPRING HILL ROAD, L.L.C.
K. HOVNANIAN AT ST. MARGARETS, L.L.C.
K. HOVNANIAN AT PARAMUS, L.L.C.
K. HOVNANIAN AT WILLOW BROOK, L.L.C.
K. HOVNANIAN AT WEST MILFORD, L.L.C.
WHI HOLDING CO., INC.
46
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SCHEDULE B
----------
Principal Amount
of Series A Notes
Initial Purchasers to be Purchased
------------------ ---------
Donaldson, Lufkin & Jenrette Securities Corporation $ 90,000,000
Salomon Smith Barney Inc. $ 37,500,000
PNC Capital Markets, Inc. $ 22,500,000
------------
Total $150,000,000
47
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EXHIBIT A
---------
Form of Registration Rights Agreement
48
