Common use of Limitations on Transactions with Affiliates Clause in Contracts

Limitations on Transactions with Affiliates. (a) Hovnanian and the Issuer will not, and will not cause or permit any Restricted Subsidiary to, make any loan, advance, guarantee or capital contribution to, or for the benefit of, or sell, lease, transfer or otherwise dispose of any property or assets to or for the benefit of, or purchase or lease any property or assets from, or enter into or amend any contract, agreement or understanding with, or for the benefit of, any Affiliate of Hovnanian or any Affiliate of any of Hovnanian’s Subsidiaries or any holder of 10% or more of the Common Equity of Hovnanian (including any Affiliates of such holders), in a single transaction or series of related transactions (each, an “Affiliate Transaction”), except for any Affiliate Transaction the terms of which are at least as favorable as the terms which could be obtained by Hovnanian, the Issuer or such Restricted Subsidiary, as the case may be, in a comparable transaction made on an arm’s length basis with Persons who are not such a holder, an Affiliate of such a holder or an Affiliate of Hovnanian or any of Hovnanian’s Subsidiaries. (b) In addition, Hovnanian and the Issuer will not, and will not cause or permit any Restricted Subsidiary to, enter into an Affiliate Transaction unless: (i) with respect to any such Affiliate Transaction involving or having a value of more than $1 million, Hovnanian shall have (x) obtained the approval of a majority of the Board of Directors of Hovnanian and (y) either obtained the approval of a majority of Hovnanian’s disinterested directors or obtained an opinion of a qualified independent financial advisor to the effect that such Affiliate Transaction is fair to Hovnanian, the Issuer or such Restricted Subsidiary, as the case may be, from a financial point of view, and (ii) with respect to any such Affiliate Transaction involving or having a value of more than $10 million, Hovnanian shall have (x) obtained the approval of a majority of the Board of Directors of Hovnanian and (y) delivered to the Trustee an opinion of a qualified independent financial advisor to the effect that such Affiliate Transaction is fair to Hovnanian, the Issuer or such Restricted Subsidiary, as the case may be, from a financial point of view. (c) Notwithstanding the foregoing, an Affiliate Transaction will not include: (i) any contract, agreement or understanding with, or for the benefit of, or plan for the benefit of, employees of Hovnanian or its Subsidiaries generally (in their capacities as such) that has been approved by the Board of Directors of Hovnanian, (ii) Capital Stock issuances to directors, officers and employees of Hovnanian or its Subsidiaries pursuant to plans approved by the stockholders of Hovnanian, (iii) any Restricted Payment otherwise permitted under Section 3.06 hereof, (iv) any transaction between or among Hovnanian and one or more Restricted Subsidiaries or between or among Restricted Subsidiaries (provided, however, no such transaction shall involve any other Affiliate of Hovnanian (other than an Unrestricted Subsidiary to the extent the applicable amount constitutes a Restricted Payment permitted by the Indenture)), (v) any transaction between one or more Restricted Subsidiaries and one or more Unrestricted Subsidiaries where all of the payments to, or other benefits conferred upon, such Unrestricted Subsidiaries are substantially contemporaneously dividended, or otherwise distributed or transferred without charge, to Hovnanian or a Restricted Subsidiary, (vi) issuances, sales or other transfers or dispositions of mortgages and collateralized mortgage obligations in the ordinary course of business between Restricted Subsidiaries and Unrestricted Subsidiaries of Hovnanian, and (vii) the payment of reasonable and customary fees to, and indemnity provided on behalf of, officers, directors, employees or consultants of Hovnanian, the Issuer or any Restricted Subsidiary.

Limitations on Transactions with Affiliates. (a) Hovnanian The Company and the Issuer will not, and will not cause or permit any Restricted Subsidiary to, make any loan, advance, guarantee or capital contribution to, or for the benefit of, or sell, lease, transfer or otherwise dispose of any property or assets to or for the benefit of, or purchase or lease any property or assets from, or enter into or amend any contract, agreement or understanding with, or for the benefit of, any Affiliate of Hovnanian the Company or any Affiliate of any of Hovnanianthe Company’s Subsidiaries or any holder of 10% or more of the Common Equity of Hovnanian the Company (including any Affiliates of such holders), in a single transaction or series of related transactions (each, an “Affiliate Transaction”), except for any Affiliate Transaction the terms of which are at least as favorable as the terms which could be obtained by Hovnanianthe Company, the Issuer or such Restricted Subsidiary, as the case may be, in a comparable transaction made on an arm’s arm’s-length basis with Persons who are not such a holder, an Affiliate of such a holder or an Affiliate of Hovnanian the Company or any of Hovnanianthe Company’s Subsidiaries. (b) In addition, Hovnanian the Company and the Issuer will not, and will not cause or permit any Restricted Subsidiary to, enter into an Affiliate Transaction unless: (i) with respect to any such Affiliate Transaction involving or having a value of more than $1 million, Hovnanian the Company shall have (x) obtained the approval of a majority of the Board of Directors of Hovnanian the Company and (y) either obtained the approval of a majority of Hovnanianthe Company’s disinterested directors or obtained an opinion of a qualified independent financial advisor to the effect that such Affiliate Transaction is fair to Hovnanianthe Company, the Issuer or such Restricted Subsidiary, as the case may be, from a financial point of view, and (ii) with respect to any such Affiliate Transaction involving or having a value of more than $10 million, Hovnanian the Company shall have (x) obtained the approval of a majority of the Board of Directors of Hovnanian the Company and (y) delivered to the Trustee an opinion of a qualified independent financial advisor to the effect that such Affiliate Transaction is fair to Hovnanianthe Company, the Issuer or such Restricted Subsidiary, as the case may be, from a financial point of view. (c) Notwithstanding the foregoing, an Affiliate Transaction will not include: (i) any contract, agreement or understanding with, or for the benefit of, or plan for the benefit of, employees of Hovnanian the Company or its Subsidiaries generally (in their capacities as such) that has been approved by the Board of Directors of Hovnanianthe Company, (ii) Capital Stock issuances to directors, officers and employees of Hovnanian the Company or its Subsidiaries pursuant to plans approved by the stockholders of Hovnanianthe Company, (iii) any Restricted Payment otherwise permitted under Section 3.06 4.07 hereof, (iv) any transaction between or among Hovnanian the Company and one or more Restricted Subsidiaries or between or among Restricted Subsidiaries (provided, however, no such transaction shall involve any other Affiliate of Hovnanian the Company (other than an Unrestricted Subsidiary to the extent the applicable amount constitutes a Restricted Payment permitted by the this Indenture)), (v) any transaction between one or more Restricted Subsidiaries and one or more Unrestricted Subsidiaries where all of the payments to, or other benefits conferred upon, such Unrestricted Subsidiaries are substantially contemporaneously dividended, or otherwise distributed or transferred without charge, to Hovnanian the Company or a Restricted Subsidiary, (vi) issuances, sales or other transfers or dispositions of mortgages and collateralized mortgage obligations in the ordinary course of business between Restricted Subsidiaries and Unrestricted Subsidiaries of Hovnanianthe Company, and (vii) the payment of reasonable and customary fees to, and indemnity provided on behalf of, officers, directors, employees or consultants of Hovnanianthe Company, the Issuer or any Restricted Subsidiary.

Limitations on Transactions with Affiliates. (a) Hovnanian The Company and the Issuer will not, and will not cause or permit any Restricted Subsidiary to, make any loan, advance, guarantee or capital contribution to, or for the benefit of, or sell, lease, transfer or otherwise dispose of any property or assets to or for the benefit of, or purchase or lease any property or assets from, or enter into or amend any contract, agreement or understanding with, or for the benefit of, any Affiliate of Hovnanian the Company or any Affiliate of any of Hovnanianthe Company’s Subsidiaries or any holder of 10% or more of the Common Equity of Hovnanian the Company (including any Affiliates of such holders), in a single transaction or series of related transactions (each, an “Affiliate Transaction”), except for any Affiliate Transaction the terms of which are at least as favorable as the terms which could be obtained by Hovnanianthe Company, the Issuer or such Restricted Subsidiary, as the case may be, in a comparable transaction made on an arm’s arm’s-length basis with Persons who are not such a holder, an Affiliate of such a holder or an Affiliate of Hovnanian the Company or any of Hovnanianthe Company’s Subsidiaries. (b) In addition, Hovnanian the Company and the Issuer will not, and will not cause or permit any Restricted Subsidiary to, enter into an Affiliate Transaction unless: (i) with respect to any such Affiliate Transaction involving or having a value of more than $1 10.0 million, Hovnanian the Company shall have (x) obtained the approval of a majority of the Board of Directors of Hovnanian the Company and (y) either obtained the approval of a majority of Hovnanianthe Company’s disinterested directors or obtained an opinion of a qualified independent financial advisor to the effect that such Affiliate Transaction is fair to Hovnanianthe Company, the Issuer or such Restricted Subsidiary, as the case may be, from a financial point of view, and (ii) with respect to any such Affiliate Transaction involving or having a value of more than $10 20.0 million, Hovnanian the Company shall have (x) obtained the approval of a majority of the Board of Directors of Hovnanian the Company and (y) delivered to the Trustee an opinion of a qualified independent financial advisor to the effect that such Affiliate Transaction is fair to Hovnanianthe Company, the Issuer or such Restricted Subsidiary, as the case may be, from a financial point of view. (c) Notwithstanding the foregoing, an Affiliate Transaction will not include: (i) any contract, agreement or understanding with, or for the benefit of, or plan for the benefit of, employees of Hovnanian the Company or its Subsidiaries generally (in their capacities as such) that has been approved by the Board of Directors of Hovnanianthe Company, (ii) Capital Stock issuances to directors, officers and employees of Hovnanian the Company or its Subsidiaries pursuant to plans approved by the stockholders of Hovnanianthe Company, (iii) any Restricted Payment otherwise permitted under Section 3.06 hereof4.07 hereof or any Permitted Investment (other than a Permitted Investment referred to in clause (b) of the definition thereof, except as permitted by clause (iv) below), (iv) any transaction between or among Hovnanian the Company and one or more Restricted Subsidiaries or between or among Restricted Subsidiaries (provided, however, no such transaction shall involve any other Affiliate of Hovnanian the Company (other than an Unrestricted Subsidiary to the extent the applicable amount constitutes a Restricted Payment permitted by the this Indenture)), (v) any transaction between one or more Restricted Subsidiaries and one or more Unrestricted Subsidiaries where all of the payments to, or other benefits conferred upon, such Unrestricted Subsidiaries are substantially contemporaneously dividended, or otherwise distributed or transferred without charge, to Hovnanian the Company or a Restricted Subsidiary, (vi) issuances, sales or other transfers or dispositions of mortgages and collateralized mortgage obligations in the ordinary course of business between Restricted Subsidiaries and Unrestricted Subsidiaries of Hovnanianthe Company, and (vii) the payment of reasonable and customary fees to, and indemnity provided on behalf of, officers, directors, employees or consultants of Hovnanianthe Company, the Issuer or any Restricted Subsidiary.

Limitations on Transactions with Affiliates. (a) Hovnanian The Company and the Issuer will not, and will not cause or permit any Restricted Subsidiary to, make any loan, advance, guarantee or capital contribution to, or for the benefit of, or sell, lease, transfer or otherwise dispose of any property or assets to or for the benefit of, or purchase or lease any property or assets from, or enter into or amend any contract, agreement or understanding with, or for the benefit of, any Affiliate of Hovnanian the Company or any Affiliate of any of Hovnanianthe Company’s Subsidiaries or any holder of 10% or more of the Common Equity of Hovnanian the Company (including any Affiliates of such holders), in a single transaction or series of related transactions (each, an “Affiliate Transaction”), except for any Affiliate Transaction the terms of which are at least as favorable as the terms which could be obtained by Hovnanianthe Company, the Issuer or such Restricted Subsidiary, as the case may be, in a comparable transaction made on an arm’s length basis with Persons who are not such a holder, an Affiliate of such a holder or an Affiliate of Hovnanian the Company or any of Hovnanianthe Company’s Subsidiaries. (b) In addition, Hovnanian the Company and the Issuer will not, and will not cause or permit any Restricted Subsidiary to, enter into an Affiliate Transaction unless: (i) with respect to any such Affiliate Transaction involving or having a value of more than $1 million, Hovnanian the Company shall have (x) obtained the approval of a majority of the Board of Directors of Hovnanian the Company and (y) either obtained the approval of a majority of Hovnanianthe Company’s disinterested directors or obtained an opinion of a qualified independent financial advisor to the effect that such Affiliate Transaction is fair to Hovnanianthe Company, the Issuer or such Restricted Subsidiary, as the case may be, from a financial point of view, and (ii) with respect to any such Affiliate Transaction involving or having a value of more than $10 million, Hovnanian the Company shall have (x) obtained the approval of a majority of the Board of Directors of Hovnanian the Company and (y) delivered to the Senior Trustee an opinion of a qualified independent financial advisor to the effect that such Affiliate Transaction is fair to Hovnanianthe Company, the Issuer or such Restricted Subsidiary, as the case may be, from a financial point of view. (c) Notwithstanding the foregoing, an Affiliate Transaction will not include: (i) any contract, agreement or understanding with, or for the benefit of, or plan for the benefit of, employees of Hovnanian the Company or its Subsidiaries generally (in their capacities as such) that has been approved by the Board of Directors of Hovnanianthe Company, (ii) Capital Stock issuances to directors, officers and employees of Hovnanian the Company or its Subsidiaries pursuant to plans approved by the stockholders of Hovnanianthe Company, (iii) any Restricted Payment otherwise permitted under Section 3.06 4.07 hereof, (iv) any transaction between or among Hovnanian the Company and one or more Restricted Subsidiaries or between or among Restricted Subsidiaries (provided, however, no such transaction shall involve any other Affiliate of Hovnanian the Company (other than an Unrestricted Subsidiary to the extent the applicable amount constitutes a Restricted Payment permitted by the this Indenture)), (v) any transaction between one or more Restricted Subsidiaries and one or more Unrestricted Subsidiaries where all of the payments to, or other benefits conferred upon, such Unrestricted Subsidiaries are substantially contemporaneously dividended, or otherwise distributed or transferred without charge, to Hovnanian the Company or a Restricted Subsidiary, (vi) issuances, sales or other transfers or dispositions of mortgages and collateralized mortgage obligations in the ordinary course of business between Restricted Subsidiaries and Unrestricted Subsidiaries of Hovnanianthe Company, and (vii) the payment of reasonable and customary fees to, and indemnity provided on behalf of, officers, directors, employees or consultants of Hovnanianthe Company, the Issuer or any Restricted Subsidiary.

Limitations on Transactions with Affiliates. (a) Hovnanian and the Issuer will not, and will not cause or permit any Restricted Subsidiary to, make any loan, advance, guarantee or capital contribution to, or for the benefit of, or sell, lease, transfer or otherwise dispose of any property or assets to or for the benefit of, or purchase or lease any property or assets from, or enter into or amend any contract, agreement or understanding with, or for the benefit of, any Affiliate of Hovnanian or any Affiliate of any of Hovnanian’s Subsidiaries or any holder of 10% or more of the Common Equity of Hovnanian (including any Affiliates of such holders), in a single transaction or series of related transactions (each, an “Affiliate Transaction”), except for any Affiliate Transaction the terms of which are at least as favorable as the terms which could be obtained by Hovnanian, the Issuer or such Restricted Subsidiary, as the case may be, in a comparable transaction made on an arm’s length basis with Persons who are not such a holder, an Affiliate of such a holder or an Affiliate of Hovnanian or any of Hovnanian’s Subsidiaries. (b) In addition, Hovnanian and the Issuer will not, and will not cause or permit any Restricted Subsidiary to, enter into an Affiliate Transaction unless: (i) with respect to any such Affiliate Transaction involving or having a value of more than $1 1.0 million, Hovnanian shall have (x) obtained the approval of a majority of the Board of Directors of Hovnanian and (y) either obtained the approval of a majority of Hovnanian’s disinterested directors or obtained an opinion of a qualified independent financial advisor to the effect that such Affiliate Transaction is fair to Hovnanian, the Issuer or such Restricted Subsidiary, as the case may be, from a financial point of view, and (ii) with respect to any such Affiliate Transaction involving or having a value of more than $10 10.0 million, Hovnanian shall have (x) obtained the approval of a majority of the Board of Directors of Hovnanian and (y) delivered to the Trustee an opinion of a qualified independent financial advisor to the effect that such Affiliate Transaction is fair to Hovnanian, the Issuer or such Restricted Subsidiary, as the case may be, from a financial point of view. (c) Notwithstanding the foregoing, an Affiliate Transaction will not include: (i) any contract, agreement or understanding with, or for the benefit of, or plan for the benefit of, employees of Hovnanian or its Subsidiaries generally (in their capacities as such) that has been approved by the Board of Directors of Hovnanian, (ii) Capital Stock issuances to directors, officers and employees of Hovnanian or its Subsidiaries pursuant to plans approved by the stockholders of Hovnanian, (iii) any Restricted Payment otherwise permitted under Section 3.06 hereofhereof or any Permitted Investment (other than a Permitted Investment referred to in clause (b) of the definition thereof, except as permitted by clause (iv) below), (iv) any transaction between or among Hovnanian and one or more Restricted Subsidiaries or between or among Restricted Subsidiaries (provided, however, no such transaction shall involve any other Affiliate of Hovnanian (other than an Unrestricted Subsidiary to the extent the applicable amount constitutes a Restricted Payment permitted by the Indenture)), (v) any transaction between one or more Restricted Subsidiaries and one or more Unrestricted Subsidiaries where all of the payments to, or other benefits conferred upon, such Unrestricted Subsidiaries are substantially contemporaneously dividended, or otherwise distributed or transferred without charge, to Hovnanian or a Restricted Subsidiary, (vi) issuances, sales or other transfers or dispositions of mortgages and collateralized mortgage obligations in the ordinary course of business between Restricted Subsidiaries and Unrestricted Subsidiaries of Hovnanian, and (vii) the payment of reasonable and customary fees to, and indemnity provided on behalf of, officers, directors, employees or consultants of Hovnanian, the Issuer or any Restricted Subsidiary.

Limitations on Transactions with Affiliates. (a) Hovnanian The Company and the Issuer will not, and will not cause or permit any Restricted Subsidiary to, make any loan, advance, guarantee or capital contribution to, or for the benefit of, or sell, lease, transfer or otherwise dispose of any property or assets to or for the benefit of, or purchase or lease any property or assets from, or enter into or amend any contract, agreement or understanding with, or for the benefit of, any Affiliate of Hovnanian the Company or any Affiliate of any of Hovnanianthe Company’s Subsidiaries involving aggregate payments or any holder consideration in excess of 10% or more of the Common Equity of Hovnanian (including any Affiliates of such holders), $7.5 million in a single transaction or series of related transactions (each, an “Affiliate Transaction”), except for any Affiliate Transaction the terms of which are at least as favorable as the terms which could be obtained by Hovnanianthe Company, the Issuer or such Restricted Subsidiary, as the case may be, in a comparable transaction made on an arm’s arm’s-length basis with Persons who are not such a holder, an Affiliate of such a holder or an Affiliate of Hovnanian the Company or any of Hovnanianthe Company’s Subsidiaries. (b) In addition, Hovnanian the Company and the Issuer will not, and will not cause or permit any Restricted Subsidiary to, enter into an Affiliate Transaction unless: (i) with respect to any such Affiliate Transaction involving or having a value of more than $1 15.0 million, Hovnanian the Company shall have (x) obtained the approval of a majority of the Board of Directors of Hovnanian the Company and (y) either obtained the approval of a majority of Hovnanianthe Company’s disinterested directors or obtained an opinion of a qualified independent financial advisor to the effect that such Affiliate Transaction is fair to Hovnanianthe Company, the Issuer or such Restricted Subsidiary, as the case may be, from a financial point of view, ; and (ii) with respect to any such Affiliate Transaction involving or having a value of more than $10 30.0 million, Hovnanian the Company shall have (x) obtained the approval of a majority of the Board of Directors of Hovnanian the Company and (y) delivered to the Trustee an opinion of a qualified independent financial advisor to the effect that such Affiliate Transaction is fair to Hovnanianthe Company, the Issuer or such Restricted Subsidiary, as the case may be, from a financial point of view. (c) Notwithstanding the foregoing, an Affiliate Transaction will not include: (i) any contract, agreement or understanding with, or for the benefit of, or plan for the benefit of, employees of Hovnanian the Company or its Subsidiaries generally (in their capacities as such) that has been approved by the Board of Directors of Hovnanian,the Company; (ii) Capital Stock issuances to directors, officers and employees of Hovnanian the Company or its Subsidiaries pursuant to plans approved by the stockholders of Hovnanian,the Company; (iii) any Restricted Payment otherwise permitted under Section 3.06 hereof,4.07 hereof or any Permitted Investment (other than a Permitted Investment referred to in clause (b) of the definition thereof, except as permitted by clause (iv) below); (iv) any transaction between or among Hovnanian and the Company and/or one or more Restricted Subsidiaries or between or among Restricted Subsidiaries (provided, however, no such transaction shall involve any other Affiliate of Hovnanian the Company (other than an Unrestricted Subsidiary to the extent permitted by this Indenture)) and any Guarantees issued by the applicable amount constitutes Company or a Restricted Payment permitted by Subsidiary for the Indenture)),benefit of the Company or a Restricted Subsidiary, as the case may be, in accordance with Section 4.06; (v) any transaction between the Company or one or more Restricted Subsidiaries and one or more Unrestricted Subsidiaries (1) where all of the payments to, or other benefits conferred upon, such Unrestricted Subsidiaries are substantially contemporaneously dividended, or otherwise distributed or transferred without charge, to Hovnanian the Company or a Restricted Subsidiary,Subsidiary or (2) in the ordinary course of business, including, without limitation, sales (directly or indirectly), sales subject to repurchase options, leases and sales and leasebacks of (A) homes, improved land and unimproved land and (B) real estate (including related amenities and improvements); (vi) issuances, sales or other transfers or dispositions of mortgages and collateralized mortgage obligations in the ordinary course of business between Restricted Subsidiaries and Unrestricted Subsidiaries of Hovnanian, andthe Company; (vii) the payment of reasonable and customary fees to, and indemnity provided on behalf of, officers, directors, employees or consultants of Hovnanianthe Company, the Issuer or any Restricted Subsidiary; (viii) transactions in which the Company or any Restricted Subsidiary, as the case may be, delivers to the Trustee an opinion of a qualified independent financial advisor stating that such transaction is fair to the Company or such Restricted Subsidiary from a financial point of view or stating that the terms are not materially less favorable to the Company or its relevant Restricted Subsidiary than those that would have been obtained in a comparable transaction by the Company or such Restricted Subsidiary with an unrelated Person on an arm’s length basis; (ix) any agreement or arrangement as in effect as of the Issue Date, or any amendment thereto (so long as any such amendment is not disadvantageous in any material respect to the Holders when taken as a whole as compared to the applicable agreement or arrangement as in effect on the Issue Date); (x) transactions with joint ventures entered into in the ordinary course of business, including, without limitation, sales (directly or indirectly), sales subject to repurchase options, leases and sales and leasebacks of (A) homes, improved land and unimproved land and (B) real estate (including related amenities and improvements); (xi) any transaction with a Person (other than an Unrestricted Subsidiary) which would constitute an Affiliate Transaction solely because the Company or a Restricted Subsidiary owns Capital Stock in or otherwise controls such Person; (xii) the issuance and transfer of Capital Stock of the Company and the granting and performance of customary registration rights; (xiii) any lease entered into between the Company or any Restricted Subsidiary, as lessee, and any Affiliate of the Company, as lessor, in the ordinary course of business; (xiv) intellectual property licenses in the ordinary course of business; (xv) transactions between the Company or any of its Restricted Subsidiaries and any Person that would constitute an Affiliate Transaction solely because a director of which is also a director of the Company; provided, however, that such director abstains from voting as a director of the Company on any matter involving such other Person; and (xvi) pledges of Capital Stock of Unrestricted Subsidiaries.

Limitations on Transactions with Affiliates. (a) Hovnanian and So long as any of the Securities remain outstanding, neither the Issuer nor any of its Subsidiaries will not, and will not cause directly or permit any Restricted Subsidiary to, make any loan, advance, guarantee or capital contribution to, or for the benefit of, or sell, lease, transfer or otherwise dispose of any property or assets to or for the benefit of, or purchase or lease any property or assets from, or indirectly enter into any transaction or amend series of related transactions involving aggregate consideration in excess of $ 1,000,000 in any contract, agreement or understanding with, or for the benefit of, fiscal year with any Affiliate of Hovnanian or any Affiliate of any of Hovnanian’s Subsidiaries or any holder of 105% or more of any class of Capital Stock of the Common Equity of Hovnanian Issuer other than the Series C Preferred Stock (including any Affiliates of such holders), in a single transaction or series of related transactions (each, an “Affiliate Transaction”), ) except for any Affiliate Transaction transaction (including any loans or advances by or to any Affiliate) (i) the terms of which are fair and reasonable to the Issuer or such Subsidiary, as the case may be, and are at least as favorable as the terms which could be obtained by Hovnanian, the Issuer or such Restricted Subsidiary, as the case may be, in a comparable transaction made on an arm’s 's length basis with Persons who are not such a holder, an Affiliate of such a holder or Affiliate of the Issuer and (ii) which has been approved by a majority of the Issuer's directors (including a majority of the Issuer's independent directors, if any) in the exercise of their fiduciary duties; PROVIDED that any such transaction shall be conclusively deemed to be on terms which are fair and reasonable to the Issuer or any of its Subsidiaries and on terms which are at least as favorable as the terms which could be obtained on an arms length basis with Persons who are not such a holder, an Affiliate of Hovnanian such holder or any Affiliate of Hovnanian’s Subsidiaries. (b) In addition, Hovnanian and the Issuer will not, and will not cause or permit any Restricted Subsidiary to, enter into an Affiliate Transaction unless: (i) with respect to any if such Affiliate Transaction involving or having a value of more than $1 million, Hovnanian shall have (x) obtained the approval of transaction is approved by a majority of the Board of Directors of Hovnanian and (y) either obtained the approval of including a majority of Hovnanian’s disinterested directors the Issuer's independent directors, if any). If the Issuer or obtained any Subsidiary enters into a transaction with an opinion Affiliate (or a series of related transactions with Affiliates related to a qualified independent financial advisor to the effect common plan) that such Affiliate Transaction is involves an aggregate fair to Hovnanianmarket value of more than $10 million, the Issuer or such Restricted Subsidiary, as the case may be, shall, prior to the consummation thereof, obtain a favorable opinion as to the fairness of such transactions to the Issuer or the relevant Subsidiary, as the case may be, from a financial point of view, and (ii) with respect to any such Affiliate Transaction involving or having a value of more than $10 million, Hovnanian shall have (x) obtained the approval of a majority of the Board of Directors of Hovnanian view from an independent nationally recognized investment banking firm and (y) delivered deliver same to the Trustee an opinion Trustee. This covenant does not apply to: (a) any transaction between the Issuer and any of a qualified independent financial advisor to the effect its Wholly Owned Subsidiaries or between any of its Wholly Owned Subsidiaries; PROVIDED that such Affiliate Transaction is fair to Hovnanian, the Issuer or such Restricted Subsidiary, as the case may be, from a financial point transactions are not prohibited by other provisions of view. this Indenture; (c) Notwithstanding the foregoing, an Affiliate Transaction will not include: (i) any contract, agreement or understanding with, or for the benefit of, or plan for the benefit of, employees of Hovnanian or its Subsidiaries generally (in their capacities as such) that has been approved by the Board of Directors of Hovnanian, (ii) Capital Stock issuances to directors, officers and employees of Hovnanian or its Subsidiaries pursuant to plans approved by the stockholders of Hovnanian, (iiib) any Restricted Payment not otherwise permitted under prohibited by Section 3.06 hereof, 3.10; (ivc) any transaction pursuant to an agreement in existence on the date of the Indenture and included as an exhibit to the Issuer's Exchange Act Reports; (d) transactions between the Issuer and the 1984 ESOP, 1989 ESOP or among Hovnanian and one or more Restricted Subsidiaries or between or among Restricted Subsidiaries (provided, however, no such transaction shall involve any other Affiliate of Hovnanian employee benefit plan; (other than an Unrestricted Subsidiary to the extent the applicable amount constitutes a Restricted Payment permitted by the Indenture)), (ve) any transaction between one with a Subsidiary or more Restricted Subsidiaries and one a Permitted Joint Venture which would constitute a transaction with an Affiliate solely because the Issuer or more Unrestricted Subsidiaries where all of the payments to, or other benefits conferred upon, such Unrestricted Subsidiaries are substantially contemporaneously dividended, a Subsidiary owns an equity interest in or otherwise distributed or transferred without charge, to Hovnanian controls such Subsidiary or a Restricted Subsidiary, Permitted Joint Venture; and (vif) issuances, sales or other transfers or dispositions of mortgages reasonable fees and collateralized mortgage obligations in the ordinary course of business between Restricted Subsidiaries and Unrestricted Subsidiaries of Hovnanian, and (vii) the payment of reasonable and customary fees compensation paid to, and indemnity provided on behalf of, officers, directors, directors or employees or consultants of Hovnanian, the Issuer or any Restricted SubsidiarySubsidiary of the Issuer as determined in good faith by the Issuer's Board of Directors.

Limitations on Transactions with Affiliates. (a) Hovnanian The Company and the Issuer will not, and will not cause or permit any Restricted Subsidiary to, make any loan, advance, guarantee or capital contribution to, or for the benefit of, or sell, lease, transfer or otherwise dispose of any property or assets to or for the benefit of, or purchase or lease any property or assets from, or enter into or amend any contract, agreement or understanding with, or for the benefit of, any Affiliate of Hovnanian the Company or any Affiliate of any of Hovnanianthe Company’s Subsidiaries involving aggregate payments or any holder consideration in excess of 10% or more of the Common Equity of Hovnanian (including any Affiliates of such holders), $7.5 million in a single transaction or series of related transactions (each, an “Affiliate Transaction”), except for any Affiliate Transaction the terms of which are at least as favorable as the terms which could be obtained by Hovnanianthe Company, the Issuer or such Restricted Subsidiary, as the case may be, in a comparable transaction made on an arm’s arm’s-length basis with Persons who are not such a holder, an Affiliate of such a holder or an Affiliate of Hovnanian the Company or any of Hovnanianthe Company’s Subsidiaries. (b) In addition, Hovnanian the Company and the Issuer will not, and will not cause or permit any Restricted Subsidiary to, enter into an Affiliate Transaction unless: (i) with respect to any such Affiliate Transaction involving or having a value of more than $1 15.0 million, Hovnanian the Company shall have (x) obtained the approval of a majority of the Board of Directors of Hovnanian the Company and (y) either obtained the approval of a majority of Hovnanianthe Company’s disinterested directors or obtained an opinion of a qualified independent financial advisor to the effect that such Affiliate Transaction is fair to Hovnanianthe Company, the Issuer or such Restricted Subsidiary, as the case may be, from a financial point of view, and (ii) with respect to any such Affiliate Transaction involving or having a value of more than $10 30.0 million, Hovnanian the Company shall have (x) obtained the approval of a majority of the Board of Directors of Hovnanian the Company and (y) delivered to the Trustee an opinion of a qualified independent financial advisor to the effect that such Affiliate Transaction is fair to Hovnanianthe Company, the Issuer or such Restricted Subsidiary, as the case may be, from a financial point of view. (c) Notwithstanding the foregoing, an Affiliate Transaction will not include: (i) any contract, agreement or understanding with, or for the benefit of, or plan for the benefit of, employees of Hovnanian the Company or its Subsidiaries generally (in their capacities as such) that has been approved by the Board of Directors of Hovnanian,the Company; (ii) Capital Stock issuances to directors, officers and employees of Hovnanian the Company or its Subsidiaries pursuant to plans approved by the stockholders of Hovnanian,the Company; (iii) any Restricted Payment otherwise permitted under Section 3.06 hereof,4.07 hereof or any Permitted Investment (other than a Permitted Investment referred to in clause (b) of the definition thereof, except as permitted by clause (iv) below); (iv) any transaction between or among Hovnanian and the Company and/or one or more Restricted Subsidiaries or between or among Restricted Subsidiaries (provided, however, no such transaction shall involve any other Affiliate of Hovnanian the Company (other than an Unrestricted Subsidiary to the extent permitted by this Indenture)) and any Guarantees issued by the applicable amount constitutes Company or a Restricted Payment permitted by Subsidiary for the Indenture)),benefit of the Company or a Restricted Subsidiary, as the case may be, in accordance with Section 4.06; (v) any transaction between the Company or one or more Restricted Subsidiaries and one or more Unrestricted Subsidiaries (1) where all of the payments to, or other benefits conferred upon, such Unrestricted Subsidiaries are substantially contemporaneously dividended, or otherwise distributed or transferred without charge, to Hovnanian the Company or a Restricted Subsidiary,Subsidiary or (2) in the ordinary course of business, including, without limitation, sales (directly or indirectly), sales subject to repurchase options, leases and sales and leasebacks of (A) homes, improved land and unimproved land and (B) real estate (including related amenities and improvements); (vi) issuances, sales or other transfers or dispositions of mortgages and collateralized mortgage obligations in the ordinary course of business between Restricted Subsidiaries and Unrestricted Subsidiaries of Hovnanian, andthe Company; (vii) the payment of reasonable and customary fees to, and indemnity provided on behalf of, officers, directors, employees or consultants of Hovnanianthe Company, the Issuer or any Restricted Subsidiary; (viii) transactions in which the Company or any Restricted Subsidiary, as the case may be, delivers to the Trustee an opinion of a qualified independent financial advisor stating that such transaction is fair to the Company or such Restricted Subsidiary from a financial point of view or stating that the terms are not materially less favorable to the Company or its relevant Restricted Subsidiary than those that would have been obtained in a comparable transaction by the Company or such Restricted Subsidiary with an unrelated Person on an arm’s length basis; (ix) any agreement or arrangement as in effect as of the Issue Date, or any amendment thereto (so long as any such amendment is not disadvantageous in any material respect to the Holders when taken as a whole as compared to the applicable agreement or arrangement as in effect on the Issue Date); (x) transactions with joint ventures entered into in the ordinary course of business, including, without limitation, sales (directly or indirectly), sales subject to repurchase options, leases and sales and leasebacks of (A) homes, improved land and unimproved land and (B) real estate (including related amenities and improvements); (xi) any transaction with a Person (other than an Unrestricted Subsidiary) which would constitute an Affiliate Transaction solely because the Company or a Restricted Subsidiary owns Capital Stock in or otherwise controls such Person; (xii) the issuance and transfer of Capital Stock of the Company and the granting and performance of customary registration rights; (xiii) any lease entered into between the Company or any Restricted Subsidiary, as lessee, and any Affiliate of the Company, as lessor, in the ordinary course of business; (xiv) intellectual property licenses in the ordinary course of business; (xv) transactions between the Company or any of its Restricted Subsidiaries and any Person that would constitute an Affiliate Transaction solely because a director of which is also a director of the Company; provided, however, that such director abstains from voting as a director of the Company on any matter involving such other Person; and (xvi) pledges of Capital Stock of Unrestricted Subsidiaries.

Limitations on Transactions with Affiliates. (a) Hovnanian The Company and the Issuer will not, and will not cause or permit any Restricted Subsidiary to, make any loan, advance, guarantee or capital contribution to, or for the benefit of, or sell, lease, transfer or otherwise dispose of any property or assets to or for the benefit of, or purchase or lease any property or assets from, or enter into or amend any contract, agreement or understanding with, or for the benefit of, any Affiliate of Hovnanian the Company or any Affiliate of any of Hovnanianthe Company’s Subsidiaries or any holder of 10% or more of the Common Equity of Hovnanian the Company (including any Affiliates of such holders), in a single transaction or series of related transactions (each, an “Affiliate Transaction”), except for any Affiliate Transaction the terms of which are at least as favorable as the terms which could be obtained by Hovnanianthe Company, the Issuer or such Restricted Subsidiary, as the case may be, in a comparable transaction made on an arm’s arm’s-length basis with Persons who are not such a holder, an Affiliate of such a holder or an Affiliate of Hovnanian the Company or any of Hovnanianthe Company’s Subsidiaries.. 66 (b) In addition, Hovnanian the Company and the Issuer will not, and will not cause or permit any Restricted Subsidiary to, enter into an Affiliate Transaction unless: (i) with respect to any such Affiliate Transaction involving or having a value of more than $1 1.0 million, Hovnanian the Company shall have (x) obtained the approval of a majority of the Board of Directors of Hovnanian the Company and (y) either obtained the approval of a majority of Hovnanianthe Company’s disinterested directors or obtained an opinion of a qualified independent financial advisor to the effect that such Affiliate Transaction is fair to Hovnanianthe Company, the Issuer or such Restricted Subsidiary, as the case may be, from a financial point of view, and (ii) with respect to any such Affiliate Transaction involving or having a value of more than $10 10.0 million, Hovnanian the Company shall have (x) obtained the approval of a majority of the Board of Directors of Hovnanian the Company and (y) delivered to the Trustee an opinion of a qualified independent financial advisor to the effect that such Affiliate Transaction is fair to Hovnanianthe Company, the Issuer or such Restricted Subsidiary, as the case may be, from a financial point of view. (c) Notwithstanding the foregoing, an Affiliate Transaction will not include: (i) any contract, agreement or understanding with, or for the benefit of, or plan for the benefit of, employees of Hovnanian the Company or its Subsidiaries generally (in their capacities as such) that has been approved by the Board of Directors of Hovnanianthe Company, (ii) Capital Stock issuances to directors, officers and employees of Hovnanian the Company or its Subsidiaries pursuant to plans approved by the stockholders of Hovnanianthe Company, (iii) any Restricted Payment otherwise permitted under Section 3.06 hereof4.07 hereof or any Permitted Investment (other than a Permitted Investment referred to in clause (b) of the definition thereof, except as permitted by clause (iv) below), (iv) any transaction between or among Hovnanian (A) the Company and one or more Restricted Subsidiaries or between or among Restricted Subsidiaries, so long as no such Restricted Subsidiaries are members of the Secured Group or (B) any members of the Secured Group (provided, however, that in each case no such transaction shall involve any other Affiliate of Hovnanian the Company (other than an Unrestricted Subsidiary to the extent the applicable amount constitutes a Restricted Payment permitted by the this Indenture)), (v) any transaction between one or more Restricted Subsidiaries and one or more Unrestricted Subsidiaries where all of the payments to, or other benefits conferred upon, such Unrestricted Subsidiaries are substantially contemporaneously dividended, or otherwise distributed or transferred without charge, to Hovnanian the Company or a Restricted Subsidiary, (vi) issuances, sales or other transfers or dispositions of mortgages and collateralized mortgage obligations in the ordinary course of business between Restricted Subsidiaries and Unrestricted Subsidiaries of Hovnanianthe Company, and (vii) the payment of reasonable and customary fees to, and indemnity provided on behalf of, officers, directors, employees or consultants of Hovnanianthe Company, the Issuer or any Restricted Subsidiary.

Limitations on Transactions with Affiliates. Until the Notes are rated Investment Grade by both Rating Agencies (after which time this Section 3.05 will no longer be in effect), (a) Hovnanian and the Issuer Company will not, and will not cause or permit any Restricted Subsidiary to, make any loan, advance, guarantee or capital contribution to, or for the benefit of, or sell, lease, transfer or otherwise dispose of any property or assets to to, or for the benefit of, or purchase or lease any property or assets from, or enter into or amend any contract, agreement or understanding with, or for the benefit of, any Affiliate of Hovnanian the Company or any Affiliate of any of Hovnanian’s the Company's Subsidiaries or any holder of 10% or more of the Common Equity of Hovnanian the Company (including any Affiliates of such holders), in a single transaction or series of related transactions (each, an “"Affiliate Transaction”"), --------------------- except for any Affiliate Transaction the terms of which are at least as favorable as the terms which could be obtained by Hovnanian, the Issuer Company or such Restricted Subsidiary, as the case may be, in a comparable transaction made on an arm’s 's length basis with Persons who are not such a holder, an Affiliate of such a holder or an Affiliate of Hovnanian the Company or any of Hovnanian’s the Company's Subsidiaries. (b) In addition, Hovnanian and the Issuer Company will not, and will not cause or permit any Restricted Subsidiary to, enter into an Affiliate Transaction unless: unless (i) with respect to any such Affiliate Transaction involving or having a value of more than $1 10 million, Hovnanian the Company shall have (x) obtained the approval of a majority of the Board of Directors of Hovnanian the Company and (y) either obtained the approval of a majority of Hovnanian’s the Company's disinterested directors or obtained an opinion of a qualified independent financial advisor to the effect that such Affiliate Transaction is fair to Hovnanian, the Issuer Company or such Restricted Subsidiary, as the case may be, from a financial point of view, and view and (ii) with respect to any such Affiliate Transaction involving or having a value of more than $10 50.0 million, Hovnanian the Company shall have (x) obtained the approval of a majority of the Board of Directors of Hovnanian the Company and (y) delivered to the Trustee an opinion of a qualified independent financial advisor to the effect that such Affiliate Transaction is fair to Hovnanian, the Issuer Company or such Restricted Subsidiary, as the case may be, from a financial point of view. (c) Notwithstanding the foregoing(a) and (b) above , an Affiliate Transaction will not include: include (i) any contract, agreement or understanding with, or for the benefit of, or plan for the benefit of, of employees of Hovnanian the Company or its Subsidiaries generally (in their capacities as such) that has been approved by the Board of Directors of Hovnanian, the Company, (ii) Capital Stock issuances to directors, officers and employees of Hovnanian the Company or its Subsidiaries pursuant to plans approved by the stockholders of Hovnanian, the Company, (iii) any Restricted Payment otherwise permitted under Section 3.06 hereof, 3.04, (iv) any transaction between or among Hovnanian the Company and one or more Restricted Subsidiaries or between or among Restricted Subsidiaries (provided, -------- however, no such transaction shall involve any other Affiliate of Hovnanian the ------- Company (other than an Unrestricted Subsidiary to the extent the applicable amount constitutes a Restricted Payment permitted by the this Indenture)), ) and (v) any transaction between one or more Restricted Subsidiaries and one or more Unrestricted Subsidiaries where all of the payments to, or other benefits conferred upon, such Unrestricted Subsidiaries are substantially contemporaneously dividended, or otherwise distributed or transferred without charge, to Hovnanian the Company or a Restricted Subsidiary, (vi) issuances, sales or other transfers or dispositions of mortgages and collateralized mortgage obligations in the ordinary course of business between Restricted Subsidiaries and Unrestricted Subsidiaries of Hovnanian, and (vii) the payment of reasonable and customary fees to, and indemnity provided on behalf of, officers, directors, employees or consultants of Hovnanian, the Issuer or any Restricted Subsidiary.

Limitations on Transactions with Affiliates. (a) Hovnanian The Company and the Issuer will not, and will not cause or permit any Restricted Subsidiary to, make any loan, advance, guarantee or capital contribution to, or for the benefit of, or sell, lease, transfer or otherwise dispose of any property or assets to or for the benefit of, or purchase or lease any property or assets from, or enter into or amend any contract, agreement or understanding with, or for the benefit of, any Affiliate of Hovnanian the Company or any Affiliate of any of Hovnanian’s the Company's Subsidiaries or any holder of 10% or more of the Common Equity of Hovnanian the Company (including any Affiliates of such holders), in a single transaction or series of related transactions (each, an “"Affiliate Transaction”"), except for any Affiliate Transaction the terms of which are at least as favorable as the terms which could be obtained by Hovnanianthe Company, the Issuer or such Restricted Subsidiary, as the case may be, in a comparable transaction made on an arm’s 's length basis with Persons who are not such a holder, an Affiliate of such a holder or an Affiliate of Hovnanian the Company or any of Hovnanian’s the Company's Subsidiaries. (b) In addition, Hovnanian the Company and the Issuer will not, and will not cause or permit any Restricted Subsidiary to, enter into an Affiliate Transaction unless: (i) with respect to any such Affiliate Transaction involving or having a value of more than $1 million, Hovnanian the Company shall have (x) obtained the approval of a majority of the Board of Directors of Hovnanian the Company and (y) either obtained the approval of a majority of Hovnanian’s the Company's disinterested directors or obtained an opinion of a qualified independent financial advisor to the effect that such Affiliate Transaction is fair to Hovnanianthe Company, the Issuer or such Restricted Subsidiary, as the case may be, from a financial point of view, and (ii) with respect to any such Affiliate Transaction involving or having a value of more than $10 million, Hovnanian the Company shall have (x) obtained the approval of a majority of the Board of Directors of Hovnanian the Company and (y) delivered to the Trustee an opinion of a qualified independent financial advisor to the effect that such Affiliate Transaction is fair to Hovnanianthe Company, the Issuer or such Restricted Subsidiary, as the case may be, from a financial point of view. (c) Notwithstanding the foregoing, an Affiliate Transaction will not include: (i) any contract, agreement or understanding with, or for the benefit of, or plan for the benefit of, employees of Hovnanian the Company or its Subsidiaries generally (in their capacities as such) that has been approved by the Board of Directors of Hovnanianthe Company, (ii) Capital Stock issuances to directors, officers and employees of Hovnanian the Company or its Subsidiaries pursuant to plans approved by the stockholders of Hovnanianthe Company, (iii) any Restricted Payment otherwise permitted under Section 3.06 3.3 hereof, (iv) any transaction between or among Hovnanian the Company and one or more Restricted Subsidiaries or between or among Restricted Subsidiaries (provided, however, no such transaction shall involve any other Affiliate of Hovnanian the Company (other than an Unrestricted Subsidiary to the extent the applicable amount constitutes a Restricted Payment permitted by the Indenture)), (v) any transaction between one or more Restricted Subsidiaries and one or more Unrestricted Subsidiaries where all of the payments to, or other benefits conferred upon, such Unrestricted Subsidiaries are substantially contemporaneously dividended, or otherwise distributed or transferred without charge, to Hovnanian the Company or a Restricted Subsidiary, (vi) issuances, sales or other transfers or dispositions of mortgages and collateralized mortgage obligations in the ordinary course of business between Restricted Subsidiaries and Unrestricted Subsidiaries of Hovnanianthe Company, and (vii) the payment of reasonable and customary fees to, and indemnity provided on behalf of, officers, directors, employees or consultants of Hovnanianthe Company, the Issuer or any Restricted Subsidiary.