REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT (hereinafter called this
"Agreement"), dated as of August 28, 2000, between Hovnanian Enterprises,
Inc., a Delaware corporation (the "Company"), and each of the stockholders of
WHI (as hereinafter defined) set forth on the signature pages hereto (each an
"Investor").
RECITALS
WHEREAS, the Investors are the beneficial owners of shares of
common stock, par value $.01 per share ("WHI Common Stock"), of Washington
Homes, Inc., a Maryland corporation ("WHI");
WHEREAS, the Company, WHI Holding Co., Inc., a Delaware
corporation and a wholly owned subsidiary of the Company ("Merger Sub"), and
WHI have entered into an Agreement and Plan of Merger of even date herewith
(the "Merger Agreement"), pursuant to which WHI will be merged (the "Merger")
with and into Merger Sub;
WHEREAS, as a result of the Merger, certain of the shares of WHI
Common Stock beneficially owned by the Investors will be converted at the
effective time of the Merger (the "Effective Time") into the right to
receive, and thereafter the Investors shall become the beneficial owners of,
shares of Class A Common Stock, par value $.01 per share ("Class A Common
Stock"), of the Company;
WHEREAS, in connection with the Merger, the Company and certain
of the Investors are contemporaneously entering into Voting Agreements of
even date herewith, pursuant to which each such Investor, as one of a limited
number of related shareholders of WHI, has agreed, among other things,
subject to certain terms and conditions, to vote his, her or its shares of
WHI Common Stock for approval and adoption of the Merger Agreement; and
WHEREAS, the parties hereto desire to enter into this Agreement,
which sets forth certain registration rights applicable to the Registrable
Securities (as hereinafter defined) held from time to time by the Investor.
NOW, THEREFORE, to implement the foregoing and in consideration
of the premises and of the mutual agreements contained herein, the parties
hereto agree as follows:
1. Definitions.
Whenever the following terms are used in this Agreement, they
shall have the meaning specified below:
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
"Holder" shall mean each Investor and any holder of Registrable
Securities who agrees in writing to be bound by the provisions of this
Agreement.
"Person" shall mean any individual, partnership, firm,
corporation, limited liability company, association, trust,
unincorporated organization or other entity.
"Registrable Securities" shall mean any Class A Common Stock
issued or issuable to a Holder and any Class A Common Stock which may
be issued or distributed in respect of such Class A Common Stock by way
of stock dividend or stock split or other distribution,
recapitalization or reclassification. As to any particular Registrable
Securities, once issued such securities shall cease to be Registrable
Securities when (i) a registration statement with respect to the sale
of such securities shall have become effective under the Securities Act
and such securities shall have been disposed of in accordance with such
registration statement, (ii) they shall have been distributed to the
public pursuant to Rule 144 or 144A (or any successor provisions) under
the Securities Act, (iii) they shall have been otherwise transferred,
new certificates for them not bearing a legend restricting further
transfer shall have been delivered by the Company and subsequent
disposition of them shall not require registration or qualification of
them under the Securities Act or any state securities or blue sky law
then in force, or (iv) they shall have ceased to be outstanding.
"Registration Expenses" shall mean expenses incident to
performance of or compliance with this Agreement, including, without
limitation, (i) all SEC and stock exchange or National Association of
Securities Dealers, Inc. registration and filing fees, (ii) all fees
and expenses of complying with securities or blue sky laws (including
fees and disbursements of counsel for the underwriters in connection
with blue sky qualifications of the Registrable Securities), (iii) all
printing, messenger and delivery expenses, (iv) all fees and expenses
incurred in connection with the listing of the Registrable Securities
on any securities exchange pursuant to clause (viii) of Section 4,
(v)the fees and disbursements of counsel for the Company and of its
independent public accountants, including the expenses of any special
audits and/or "cold comfort" letters required by or incident to such
performance and compliance, (vi) the reasonable fees and disbursements
of one counsel to all Investors participating in the registration, and
(vii) any fees and disbursements of underwriters customarily paid by
the issuers or sellers of securities, including liability insurance if
the Company so desires or if the underwriters so require, and the
reasonable fees and expenses of any special experts retained in
connection with the requested registration, but excluding underwriting
discounts and commissions and transfer taxes, if any.
"Securities Act" shall mean the Securities Act of 1933, as
amended.
"SEC" shall mean the Securities and Exchange Commission or any
other federal agency at the time administering the Securities Act or
the Exchange Act.
"Seller" shall mean a Holder whose Registrable Securities are
included in a registration statement pursuant to any provision of this
Agreement.
2. Incidental Registrations.
(a) Right to Include Registrable Securities. If the Company at
any time after the Effective Time proposes to register its Class A Common
Stock under the Securities Act (other than a registration of shares in
connection with a sale for its own account, or a registration on Form S-4 or
S-8, or any successor or other forms promulgated for similar purposes, or a
registration statement in connection with an offering to employees of the
Company and its subsidiaries or a registration of shares of Class A Common
Stock pursuant to the terms of any Supplemental Agreement (as hereinafter
defined) other than any such registration resulting from any right of a party
to such Supplemental Agreement to have the Company effect registration under
Section 7(a) of this Agreement), pursuant to a registration statement on
which it is permissible to register Registrable Securities for sale to the
public under the Securities Act, it will each such time give prompt written
notice to each Investor of its intention to do so and of the Investor's
rights under this Section 2. Upon the written request of any Investor made
within 15 days after the receipt of any such notice (which request shall
specify the Registrable Securities intended to be disposed of by the
Investor), the Company will use its reasonable best efforts to effect the
registration under the Securities Act of all Registrable Securities which the
Company has been so requested to register by the Investor; provided, that (i)
if, at any time after giving written notice of its intention to register any
securities and prior to the effective date of the registration statement
filed in connection with such registration, the Company shall determine for
any reason not to proceed with the proposed registration of the securities
identified in such notice to be sold, the Company may, at its election, give
written notice of such determination to the Investor and, thereupon, shall be
relieved of its obligation to register any Registrable Securities in
connection with such registration (but not from its obligation to pay the
Registration Expenses in connection therewith), and (ii) if such registration
involves an underwritten offering, the Investor must sell his, her or its
Registrable Securities to the underwriters selected by the Company on the
same terms and conditions as apply to the Company, with such differences,
including any with respect to indemnification and liability insurance, as may
be customary or appropriate in secondary offerings. If a registration
requested pursuant to this Section 2(a) involves an underwritten public
offering, an Investor may elect, in writing prior to the effective date of
the registration statement filed in connection with such registration, not to
register such securities in connection with such registration.
(b) Expenses. The Company will pay Registration Expenses in
connection with each registration of Registrable Securities requested
pursuant to this Section 2 to the same extent that the Company is obligated
to pay the registration expenses of any other holders of Class A Common Stock
or any holders of Class B Common Stock, par value $.01 per share ("Class B
Common Stock" and, collectively with the Class A Common Stock, "Common
Stock"), of the Company under the registration rights agreement or agreements
having the most favorable terms to holders with respect to payment of such
expenses.
(c) Priority in Incidental Registrations. If a registration
pursuant to this Section 2 involves an underwritten offering and the managing
underwriter in good faith advises the Company in writing that, in its
opinion, the total amount of securities requested to be included in such
registration (including the Registrable Securities which Investors have
requested to be included in such registration pursuant to Section 2(a)
hereof) exceeds the amount which can be sold in such offering without having
an adverse effect on such offering as contemplated by the Company (including
the price at which the Company proposes to sell such securities), then the
Company will include in such registration (i) first, 100% of the securities
proposed to be sold in the notice delivered to the Investors pursuant to
Section 2(a) hereof and (ii) second, to the extent of the number of
securities requested to be included in such registration exceed the number of
securities that, in the opinion of such managing underwriter, can be sold
without having the adverse effect referred to above, the amount of
Registrable Securities that Investors have requested to be included in such
registration (and, in the case of more than one Holder having the rights of
the Investors under this Section 2 and requesting pursuant to Section 2(a)
hereof to have Registrable Securities included in such registration, such
amount to be allocated pro rata among all requesting Holders on the basis of
the relative number of shares of Registrable Securities then held by each
such Holder, provided that any Registrable Securities thereby allocated to
any such Holder that exceed such Holder's request will be reallocated among
the remaining requesting Holders in like manner).
3. Registration on Request.
(a) Request by Investors. After the Effective Time, upon the
written request of an Investor or group of Investors that, as of the date of
such request, hold Registrable Securities equal to at least 50% of the
aggregate of all Registrable Securities then held by all Investors requesting
that the Company effect the registration under the Securities Act of all or
part of such Investor's or Investors' Registrable Securities and specifying
the amount and intended method of disposition thereof, the Company will (i)
promptly upon receipt thereof, give written notice of such request to all
other Holders and (ii) as expeditiously as possible, use its reasonable best
efforts to effect the registration under the Securities Act of the
Registrable Securities which the Company has been so requested to register by
such Investor or Investors and any other Holders so as to permit the
disposition (in accordance with the intended method thereof as aforesaid) of
the Registrable Securities so to be registered. Notwithstanding the
foregoing, upon delivery to the requesting Investor or Investors of written
notice and a brief statement of the reason for the Company's action, the
Company shall be entitled to postpone filing of the registration statement
otherwise properly requested to be filed pursuant to this Section 3 for a
period not to exceed 60 days if, in the reasonable judgment of the Board of
Directors of the Company, such registration would materially interfere with
or materially adversely affect any then existing negotiations for financing
or any other arrangement, agreement or plan then pending or being negotiated
in good faith, provided that the duration of such postponement does not
exceed the number of days required to avoid such material interference or
material adverse effect. Notwithstanding anything to the contrary in this
Agreement, the Company need only effect a total of two registrations
requested under this Section 3 for all of the Investors as a whole, and
following such two registrations no Investor shall have any rights under this
Section 3.
(b) Registration Statement Form. Registration under this
Section 3 shall be on such appropriate registration form prescribed by the
SEC under the Securities Act (i) as shall be selected by the Company and as
shall be reasonably acceptable to the Investor and (ii) as shall permit the
disposition of the Registrable Securities pursuant to the intended method of
disposition thereof specified in accordance with Section 3(a) hereof. The
Company agrees to include in such registration statement filed pursuant to
this Section 3 all information that the participating Investors, upon advice
of counsel, shall reasonably request. The Company may, if permitted by law,
effect any registration requested under this Section 3 by the filing of a
registration statement on Form S-3 (or any successor or similar short form
registration statement). If the managing underwriter shall advise the
Company in writing that, in its opinion, the use of a form of registration
statement other than Form S-3 is of material importance to the success of
such proposed offering, then such registration shall be effected on such
other form.
(c) Expenses. The Company will pay Registration Expenses in
connection with each registration of Registrable Securities requested
pursuant to this Section 3 to the same extent that the Company is obligated
to pay the registration expenses of any other holders of Class A Common Stock
or any holders of Class B Common Stock under the registration rights
agreement or agreements having the most favorable terms to holders with
respect to payment of such expenses.
(d) Effective Registration Statement. A registration requested
pursuant to this Section 3 will not be deemed to have been effected unless it
has become effective; provided, that if, within 180 days after it has become
effective, the offering of Registrable Securities pursuant to such
registration is interfered with by any stop order, injunction or other order
or requirement of the SEC or other governmental agency or court, such
registration will be deemed not to have been effected.
(e) Selection of Underwriters. If a requested registration
pursuant to this Section 3 involves an underwritten offering, the requesting
Investor or Investors shall have the right to select the investment banker or
bankers and managers to administer the offering; provided, however, that such
investment banker or bankers and managers shall be reasonably satisfactory to
the Company.
(f) Priority in Requested Registrations. If a requested
registration pursuant to this Section 3 involves an underwritten offering and
the managing underwriter in good faith advises the Company in writing that,
in its opinion, the number of securities requested to be included in such
registration (including any Registrable Securities which any other Holder has
requested to be included in such registration pursuant to Section 3(a)
hereof) exceeds the amount which can be sold in such offering without having
an adverse effect on such offering as contemplated by the requesting Investor
or Investors (including the price at which the Investor or Investors propose
to sell such securities), then the Company will include in such registration
(i) first, 100% of the securities the requesting Investor or Investors
propose to sell and (ii) second, to the extent of the number of securities
requested to be included in such registration exceed the number of securities
that, in the opinion of such managing underwriter, can be sold without having
the adverse effect referred to above, the amount of Registrable Securities
that the other Holders have requested to be included in such registration,
such amount to be allocated pro rata among all requesting Holders on the
basis of the relative number of shares of Registrable Securities then held by
each such Holder, provided that any Registrable Securities thereby allocated
to any such Holder that exceed such Holder's request will be reallocated
among the remaining requesting Holders in like manner). In the event that
the number of Registrable Securities requested to be included in such
registration (consisting of the sum of the number of Registrable Securities
that the Investor or Investors have requested to be included in such
registration pursuant to Section 3(a) hereof and the number of Registrable
Securities which any other Holder has requested to be included in such
registration pursuant to Section 3(a)) is less than the amount of Registrable
Securities that, in the opinion of the managing underwriter, can be sold
without having the adverse effect referred to above, the Company may include
in such registration the securities the Company proposes to sell up to the
number of securities that, in the opinion of such managing underwriter, can
be so sold.
(g) Offerings Without Registration. Notwithstanding anything
to the contrary in this Section 3, if counsel for the Company shall determine
that registration under the Securities Act is not required for the amount
and/or intended method of disposition of the Registrable Securities specified
in the Investor's or Investors' request for registration pursuant to Section
3(a) hereof, the Company shall not be required to effect such requested
registration. In any such instance involving a proposed underwritten
offering of such Registrable Securities, however, the Company shall use its
reasonable best efforts to assist the Investor or Investor in consummating
the transaction or transactions contemplated in such request, including,
without limitation, the preparation of appropriate offering or sale
documents, and shall pay Registration Expenses in connection with such
offering to the same extent as the Company would be obligated to pay
Registration Expenses pursuant to Section 3(c) hereof.
4. Registration Procedures. If and whenever the Company is
required to use its reasonable best efforts to effect or cause the
registration of any Registrable Securities under the Securities Act as
provided in this Agreement, the Company will, as expeditiously as possible:
(i) prepare and, in any event within 120 days after the
end of the period within which a request for registration may be given
to the Company, file with the SEC a registration statement with respect
to such Registrable Securities and use its best efforts to cause such
registration statement to become effective; provided, however, that the
Company may discontinue any registration of its securities which is
being effected pursuant to Section 2 hereof at any time prior to the
effective date of the registration statement relating thereto;
(ii) prepare and file with the SEC such amendments
and supplements to such registration statement and the prospectus used
in connection therewith as may be necessary to keep such registration
statement effective for a period not in excess of 180 days (or such
period as may be permitted under the Securities Act) and to comply with
the provisions of the Securities Act with respect to the disposition of
all securities covered by such registration statement during such
period in accordance with the intended methods of disposition by the
Seller or Sellers thereof set forth in such registration statement;
provided, that before filing a registration statement or prospectus, or
any amendments or supplements thereto, the Company will furnish to
counsel for the Investor or Investors copies of all documents proposed
to be filed, which documents will be subject to the review of such
counsel and no such registration statement or prospectus, or any
amendment or supplement thereto, shall be filed to which such counsel
shall have reasonably objected on the grounds that such registration
statement or prospectus, or amendment or supplement (with respect to
disclosures or omissions in the case of a registration under Section 3
hereof relating to the Holders of Registrable Securities), does not
comply in all material respects with the requirements of the Securities
Act or the rules or regulations thereunder and shall have specified the
basis for such objection in reasonable detail;
(iii) furnish to each Seller of such Registrable
Securities such number of copies of such registration statement and of
each amendment and supplement thereto (in each case including all
exhibits), such number of copies of the prospectus included in such
registration statement (including each preliminary prospectus and
summary prospectus), in conformity with the requirements of the
Securities Act, and such other documents as such Seller may reasonably
request in order to facilitate the disposition of the Registrable
Securities by such Seller;
(iv) use its reasonable best efforts to register or
qualify such Registrable Securities covered by such registration
statement under such other securities or blue sky laws of such
jurisdictions as each Seller shall reasonably request, and do any and
all other acts and things which may be reasonably necessary or
advisable to enable such Seller to consummate the disposition in such
jurisdictions of the Registrable Securities owned by such Seller,
except that the Company shall not for any such purpose be required to
qualify generally to do business as a foreign corporation in any
jurisdiction where, but for the requirements of this clause (iv), it
would not be obligated to be so qualified, to subject itself to
taxation in any such jurisdiction, or to consent to general service of
process in any such jurisdiction;
(v) use its reasonable best efforts to cause such
Registrable Securities covered by such registration statement to be
registered with or approved by such other governmental agencies or
authorities as may be necessary to enable the Seller or Sellers thereof
to consummate the disposition of such Registrable Securities;
(vi) notify each Seller of any such Registrable
Securities covered by such registration statement, at any time when a
prospectus relating thereto is required to be delivered under the
Securities Act within the appropriate period mentioned in clause (ii)
of this Section 4, of the Company's becoming aware that the prospectus
included in such registration statement, as then in effect, includes an
untrue statement of a material fact or omits to state a material fact
required to be stated therein or necessary to make the statements
therein not misleading in the light of the circumstances then existing,
and at the request of any such Seller, prepare and furnish to such
Seller a reasonable number of copies of an amended or supplemental
prospectus as may be necessary so that, as thereafter delivered to the
purchasers of such Registrable Securities, such prospectus shall not
include an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the
statements therein not misleading in the light of the circumstances
then existing;
(vii) otherwise use its reasonable best efforts to
comply with all applicable rules and regulations of the SEC, and make
available to its security holders, as soon as reasonably practicable
(but not more than 18 months) after the effective date of the
registration statement, an earnings statement which shall satisfy the
provisions of Section 11(a) of the Securities Act and the rules and
regulations promulgated thereunder;
(viii) use its reasonable best efforts to list such
Registrable Securities on any securities exchange on which the Class A
Common Stock is then listed, if such Registrable Securities are not
already so listed and if such listing is then permitted under the rules
of such exchange, and to provide a transfer agent and registrar for
such Registrable Securities covered by such registration statement not
later than the effective date of such registration statement;
(ix) enter into such customary agreements (including
an underwriting agreement in customary form) and take such other
actions as requesting Investor or Investors, the Seller or Sellers of a
majority of the Registrable Securities being sold by other Holders or
the underwriters, if any, reasonably request in order to expedite or
facilitate the disposition of such Registrable Securities;
(x) obtain a "cold comfort" letter or letters from the
Company's independent public accountants in customary form and covering
matters of the type customarily covered by "cold comfort" letters as
the Investor or the Seller or Sellers of a majority of the Registrable
Securities being sold by other Holders (provided that such Registrable
Securities constitute at least 25% of the securities covered by such
registration statement) shall reasonably request; and
(xi) make available for inspection by any Seller of
such Registrable Securities covered by such registration statement, by
any underwriter participating in any disposition to be effected
pursuant to such registration statement and by any attorney, accountant
or other agent retained by any such Seller or any such underwriter, all
pertinent financial and other records, pertinent corporate documents
and properties of the Company, and cause all of the Company's officers,
directors and employees to supply all information reasonably requested
by any such Seller, underwriter, attorney, accountant or agent in
connection with such registration statement.
The Company may require each Seller to furnish the Company with
such information regarding such Seller and pertinent to the disclosure
requirements relating to the registration and the distribution of such
securities as the Company may from time to time reasonably request in
writing.
Each Seller agrees that, upon receipt of any notice from the
Company of the happening of any event of the kind described in clause (vi) of
this Section 4, such Seller will forthwith discontinue disposition of
Registrable Securities pursuant to the registration statement covering such
Registrable Securities until such Seller's receipt of the copies of the
supplemented or amended prospectus contemplated by clause (vi) of this
Section 4, and, if so directed by the Company, such Seller will deliver to
the Company (at the Company's expense) all copies, other than permanent file
copies then in such Seller's possession, of the prospectus covering such
Registrable Securities current at the time of receipt of such notice. In the
event the Company shall give any such notice, the period mentioned in clause
(ii) of this Section 4 shall be extended by the number of days during the
period from and including the date of the giving of such notice pursuant to
clause (vi) of this Section 4 and including the date when each Seller shall
have received the copies of the supplemented or amended prospectus
contemplated by clause (vi) of this Section 4.
5. Indemnification.
(a) Indemnification by the Company. In the event of any
registration of any securities of the Company under the Securities Act
pursuant to Section 2 or 3, the Company will, and it hereby does, indemnify
and hold harmless, to the extent permitted by law, the Seller of any
Registrable Securities covered by such registration statement, each affiliate
of such Seller and their respective directors and officers or general and
limited partners (and the directors, officers, affiliates and controlling
Persons thereof), each other Person who participates as an underwriter in the
offering or sale of such securities and each other Person, if any, who
controls such Seller or any such underwriter within the meaning of the
Securities Act (collectively, the "Indemnified Parties"), against any and all
losses, claims, damages or liabilities, joint or several, and expenses to
which such Seller, any such director or officer or general or limited partner
or affiliate or any such underwriter or controlling Person may become subject
under the Securities Act, common law or otherwise, insofar as such losses,
claims, damages or liabilities (or actions or proceedings in respect thereof,
whether or not such Indemnified Party is a party thereto) arise out of or are
based upon (i) any untrue statement or alleged untrue statement of any
material fact contained in any registration statement under which such
securities were registered under the Securities Act, any preliminary, final
or summary prospectus contained therein, or any amendment or supplement
thereto, or (ii) 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 in the light of the circumstances then existing, and
the Company will reimburse such Indemnified Party for any legal or any other
expenses reasonably incurred by it in connection with investigating or
defending any such loss, claim, liability, action or proceeding; provided,
that the Company shall not be liable to any Indemnified Party in any such
case to the extent that any such loss, claim, damage, liability (or action or
proceeding in respect thereof) or expense arises out of or is based upon any
untrue statement or alleged untrue statement or omission or alleged omission
made in such registration statement or amendment or supplement thereto or in
any such preliminary, final or summary prospectus in reliance upon and in
conformity with written information with respect to such Seller furnished to
the Company by such Seller for use in the preparation thereof; and provided,
further, that the Company will not be liable to any Person who participates
as an underwriter in the offering or sale of Registrable Securities or any
other Person, if any, who controls such underwriter within the meaning of the
Securities Act, under the indemnity agreement in this Section 5(a) with
respect to any preliminary prospectus or the final prospectus or the final
prospectus as amended or supplemented, as the case may be, to the extent that
any such loss, claim, damage or liability of such underwriter or controlling
Person results from the fact that such underwriter sold Registrable
Securities to a Person to whom there was not sent or given, at or prior to
the written confirmation of such sale, a copy of the final prospectus
(including any documents incorporated by reference therein) or of the final
prospectus as then amended or supplemented (including any documents
incorporated by reference therein), whichever is most recent, if the Company
has previously furnished copies thereof to such underwriter. Such indemnity
shall remain in full force and effect regardless of any investigation made by
or on behalf of such Seller or any Indemnified Party and shall survive the
transfer of such securities by such Seller.
(b) Indemnification by the Seller. The Company may require, as
a condition to including any Registrable Securities in any registration
statement filed in accordance with Section 4 herein, that the Company shall
have received an undertaking reasonably satisfactory to it from the
prospective Seller of such Registrable Securities or any underwriter to
indemnify and hold harmless (in the same manner and to the same extent as set
forth in Section 5(a) hereof) the Company and all other prospective Sellers
or any underwriter, as the case may be, with respect to any statement or
alleged statement in or omission or alleged omission from such registration
statement, any preliminary, final or summary prospectus contained therein, or
any amendment or supplement, if such statement or alleged statement or
omission or alleged omission was made in reliance upon and in conformity with
written information with respect to such Seller or underwriter furnished to
the Company by such Seller or underwriter for use in the preparation of such
registration statement, preliminary, final or summary prospectus or amendment
or supplement, or a document incorporated by reference into any of the
foregoing. Such indemnity shall remain in full force and effect regardless
of any investigation made by or on behalf of the Company or any of the
prospective Sellers, or any of their respective affiliates, directors,
officers or controlling Persons and shall survive the transfer of such
securities by such Seller.
(c) Notices of Claims, Etc. Promptly after receipt by an
Indemnified Party hereunder of written notice of the commencement of any
action or proceeding with respect to which a claim for indemnification may be
made pursuant to this Section 5, such Indemnified Party will, if a claim in
respect thereof is to be made against an indemnifying party, give written
notice to the latter of the commencement of such action; provided, that the
failure of the Indemnified Party to give notice as provided herein shall not
relieve the indemnifying party of its obligations under the preceding
subdivisions of this Section 5, except to the extent that the indemnifying
party is actually prejudiced by such failure to give notice. In case any
such action is brought against an Indemnified Party, unless in such
Indemnified Party's reasonable judgment a conflict of interest between such
indemnified and indemnifying parties may exist in respect of such claim, the
indemnifying party will be entitled to participate in and to assume the
defense thereof, jointly with any other indemnifying party similarly notified
to the extent that it may wish, with counsel reasonably satisfactory to such
Indemnified Party, and after notice from the indemnifying party to such
Indemnified Party of its election so to assume the defense thereof, the
indemnifying party will not be liable to such Indemnified Party for any legal
or other expenses subsequently incurred by the latter in connection with the
defense thereof other than reasonable costs of investigation. No
indemnifying party will consent to entry of any judgment or enter into any
settlement which does not include, as an unconditional term thereof, the
giving by the claimant or plaintiff to such Indemnified Party of a release
from all liability in respect to such claim or litigation, without the prior
written consent of the Indemnified Party.
(d) Other Indemnification. Indemnification similar to that
specified in the preceding subdivisions of this Section 5 (with appropriate
modifications) shall be given by the Company and each Seller with respect to
any required registration or other qualification of securities under any
federal or state law or regulation or governmental authority other than the
Securities Act.
(e) Non-Exclusivity. The obligations of the parties under this
Section 5 shall be in addition to any liability which any party may otherwise
have to any other party.
6. Rule 144. The Company covenants that it will file the
reports required to be filed by it under the Securities Act and the Exchange
Act and the rules and regulations adopted by the SEC thereunder (or, if the
Company is not required to file such reports, it will, upon the request of
the Investor, make publicly available such information), and it will take
such further action as the Investor may reasonably request, all to the extent
required from time to time to enable Investors to sell shares of Registrable
Securities without registration under the Securities Act within the
limitation of the exemptions provided by (i) Rule 144 under the Securities
Act, as such Rule may be amended from time to time, or (ii) any similar rule
or regulation hereafter adopted by the SEC. Upon the request of any
Investor, the Company will deliver to the Investor a written statement as to
whether he, she or it has complied with such requirements. Notwithstanding
anything contained in this Section 6, the Company may deregister under
Section 12 of the Exchange Act if it then is permitted to do so pursuant to
the Exchange Act and the rules and regulations thereunder.
7. Miscellaneous.
(a) Holdback Agreement. If any such registration shall be in
connection with an underwritten public offering, the Holders agree not to
effect any public sale or distribution, including any sale pursuant to Rule
144 under the Securities Act, of any equity securities of the Company, or of
any security convertible into or exchangeable or exercisable for any equity
security of the Company (in each case, other than as part of such
underwritten public offering), within 7 days before or 180 days (or such
lesser period as the managing underwriters may permit) after the effective
date of such registration if, and to the extent, the Company or any managing
underwriter of any such offering determines such action is necessary or
desirable in order to effect such offering, and the Company hereby also so
agrees and agrees to cause each other holder of any equity security, or of
any security convertible into or exchangeable or exercisable for any equity
security, of the Company purchased from the Company (at any time other than
in a public offering) to so agree.
(b) Amendments and Waivers. This Agreement may be amended and
the Company may take any action herein prohibited, or omit to perform any act
herein required to be performed by it, only if the Company shall have
obtained the written consent to such amendment, action or omission to act, of
each Investor who is then a party hereto. Each Holder of any Registrable
Securities at the time or thereafter outstanding shall be bound by any
consent authorized by this Section 7(c), whether or not such Registrable
Securities shall have been marked to indicate such consent.
(c) Successors, Assigns and Transferees. This Agreement shall
be binding upon and shall inure to the benefit of the parties hereto and
their respective successors and assigns. In addition, and whether or not any
express assignment shall have been made, the provisions of this Agreement
which are for the benefit of the parties hereto other than the Company shall
also be for the benefit of and enforceable by any subsequent Holder of any
Registrable Securities, subject to the provisions contained herein.
(d) Notices. All notices and other communications provided for
hereunder shall be in writing and shall be sent by first class mail, telex,
facsimile or hand delivery:
(i) if to the Company, to:
Hovnanian Enterprises, Inc.
▇▇ ▇▇▇▇▇▇▇ ▇▇, ▇.▇. ▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Attention:
With a copy to:
Hovnanian Enterprises, Inc.
▇▇ ▇▇▇▇▇▇▇ ▇▇, ▇.▇. ▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Attention:
(ii) if to any Investor, to him, her or it at the address
set forth below his or her signature or otherwise designated by such
Investor:
(iii) if to any other Holder, to the address of such other
holder as shown in the books and records of the Company, or to such
other address as any of the above shall have designated in writing to
all of the other above.
All such notices and communications shall be deemed to have been given or
made (1) when delivered by hand, (2) five business days after being deposited
in the mail, postage prepaid, (3) when telexed, answer-back received or (4)
when sent by facsimile, receipt acknowledged.
(e) Descriptive Headings. The headings in this Agreement are
for convenience of reference only and shall not limit or otherwise affect the
meaning of terms contained herein.
(f) Severability. In the event that any one or more of the
provisions, paragraphs, words, clauses, phrases or sentences contained
herein, or the application thereof in any circumstances, is held invalid,
illegal or unenforceable in any respect for any reason, the validity,
legality and enforceability of any such provision, paragraph, word, clause,
phrase or sentence in every other respect and of the remaining provisions,
paragraphs, words, clauses, phrases or sentences hereof shall not be in any
way impaired, it being intended that all rights, powers and privileges of the
parties hereto shall be enforceable to the fullest extent permitted by law.
(g) Counterparts. This Agreement may be executed in two or
more counterparts, and by different parties on separate counterparts, each of
which shall be deemed an original, but all such counterparts shall together
constitute one and the same instrument, and it shall not be necessary in
making proof of this Agreement to produce or account for more than one such
counterpart.
(h) Effectiveness; Termination. This Agreement shall not
become effective until the Effective Time. This Agreement shall terminate,
and shall cease to be of any further force or effect, with respect to any
Investor or any other Holder at such time as such person beneficially owns
shares of Class A Common Stock representing less than 1% of the issued and
outstanding shares of Common Stock of the Company.
(i) Governing Law. This Agreement shall be governed by and
construed and enforced in accordance with the laws of the State of Delaware
applicable to contracts made and to be performed therein. The parties to
this Agreement hereby agree to submit to the jurisdiction of the courts of
the State of New Jersey in any action or proceeding arising out of or
relating to this Agreement.
(j) Specific Performance. The parties hereto acknowledge and
agree that irreparable damage would occur in the event that any of the
provisions of this Agreement were not performed in accordance with their
specific terms or were otherwise breached. Accordingly, it is agreed that
they shall be entitled to an injunction or injunctions to prevent breaches of
the provisions of this Agreement and to enforce specifically the terms and
provisions hereof in any court of competent jurisdiction in the United States
or any state thereof, in addition to any other remedy to which they may be
entitled at law or equity.
IN WITNESS WHEREOF, each of the undersigned has executed this
Agreement or caused this Agreement to be executed on its behalf as of the
date first written above.
HOVNANIAN ENTERPRISES, INC.
By: /S/ J. ▇▇▇▇▇ ▇▇▇▇▇▇
Name: J. ▇▇▇▇▇ ▇▇▇▇▇▇
Title: Senior Vice-President and CFO
Investors:
/s/ Geaton ▇. ▇▇▇▇▇▇▇▇▇, ▇▇ /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
Geaton ▇. ▇▇▇▇▇▇▇▇▇, ▇▇.* ▇▇▇▇ ▇. ▇▇▇▇▇▇*
/s/ ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ /s/ Iad ▇. ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇* ▇▇▇ ▇. ▇▇▇▇▇▇*
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇* ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇*
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ /s/ ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇* ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇*
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ /s/ Geaton A. DeCeasaris, Jr.
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇* Geaton ▇. ▇▇▇▇▇▇▇▇▇, ▇▇.
/s/ A. ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
A. ▇▇▇▇ ▇▇▇▇▇▇▇▇▇* ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇*
* Pursuant to a Power of Attorney attached hereto.
THE ▇▇▇▇▇▇▇▇▇ FAMILY WASHINGTON THE ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
HOMES STOCK GRAT TRUST FAMILY TRUST
By: /s/ Geaton ▇. ▇▇▇▇▇▇▇▇▇, ▇▇., Trustee By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Trustee
Geaton ▇. ▇▇▇▇▇▇▇▇▇, ▇▇., Trustee* ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Trustee*
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Trustee
THE ▇▇▇▇▇▇ ▇. AND ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Trustee*
▇▇▇▇▇▇▇▇▇ FAMILY TRUST
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Trustee THE GEATON A. AND
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Trustee* ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
FAMILY TRUST
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Trustee
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Trustee* By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Trustee
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Trustee*
THE GEATON A. AND ▇▇▇▇▇▇▇▇▇ ▇. By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇,
Trustee
▇▇▇▇▇▇▇▇▇ FAMILY TRUST ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Trustee*
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Trustee
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Trustee* THE A. HUGO AND ▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇▇ FAMILY TRUST
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Trustee
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Trustee* By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Trustee
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Trustee*
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇,
Trustee
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Trustee*
* Pursuant to a Power of Attorney attached hereto.
15
