Exhibit 10.2
AMENDED AND RESTATED GUARANTY AND
SURETYSHIP AGREEMENT
THIS AMENDED AND RESTATED GUARANTY
AND SURETYSHIP AGREEMENT (the “Guarantee”) is made and
entered into June 14, 2005, by each of the entities listed on
the signature pages hereto (each a “Guarantor” and
collectively, the “Guarantors”), in favor of PNC BANK,
NATIONAL ASSOCIATION, including its successors and assigns, as
administrative agent for the Lenders under the Credit Agreement
described below (the “Agent”).
BACKGROUND:
In order to induce the Lenders to
make loans to K. Hovnanian Enterprises, Inc., a California
corporation (the “Borrower”), in accordance with that
certain Fifth Amended and Restated Credit Agreement of even date
herewith (as it may hereafter from time to time be amended,
restated, modified or supplemented, the “Credit
Agreement”) by and among the Borrower, Hovnanian
Enterprises, Inc. (one of the Guarantors), the Agent, and the
Lenders now or hereafter party thereto (the “Lenders”),
each Guarantor hereby unconditionally and irrevocably guarantees
and becomes surety as though it was a primary obligor for the full
and timely payment when due, whether at maturity, by declaration,
acceleration or otherwise, of the principal of and interest and
fees on all Obligations (as defined in the Credit Agreement), both
those now in existence and those that shall hereafter be made, of
the Borrower to the Agent and the Lenders under the Credit
Agreement and the Notes issued by the Borrower in connection
therewith and any extensions, renewals, replacements or refundings
thereof, and each and every other obligation or liability (both
those now in existence and those that shall hereafter arise and
including, without limitation, all costs and expenses of
enforcement and collection, including reasonable attorney’s
fees) of the Borrower to the Lenders under the Credit Agreement and
the other Loan Documents (as defined in the Credit Agreement), and
any extensions, renewals, replacements or refundings thereof
(hereinafter referred to as the “Guaranteed
Indebtedness”), whether or not such Guaranteed Indebtedness
or any portion thereof shall hereafter be released or discharged or
is for any reason invalid or unenforceable.
1.
Capitalized terms
used herein and not otherwise defined herein shall have such
meanings given to them in the Credit Agreement.
2.
Each Guarantor
agrees to make such full payment forthwith upon demand of the Agent
when the Guaranteed Indebtedness or any portion thereof is due to
be paid by the Borrower to the Lenders, whether at stated maturity,
by declaration, acceleration or otherwise. Each Guarantor
agrees to make such full payment irrespective of whether or not any
one or more of the following events has occurred:
(i) the Agent has made any demand on the Borrower or the other
Guarantors; (ii) the Agent has taken any action of any nature
against the Borrower or the other Guarantors; (iii) the Agent
has pursued any rights which it has against any other Person who
may be liable for the Guaranteed Indebtedness; (iv) the Agent
holds or has resorted to any security for the Guaranteed
Indebtedness; or (v) the Agent has invoked any other remedy or
right it has available with respect to the Guaranteed
Indebtedness. Each Guarantor further agrees to make full
payment to the Lenders even if circumstances exist which otherwise
constitute a legal or equitable discharge of such Guarantor as
surety or guarantor.
3.
The terms,
conditions and provisions of Section 5.1 [Representations and
Warranties] of the Credit Agreement are incorporated herein by
reference as if fully set forth in this Guarantee. The
Guarantors, jointly and severally, without any further act or
undertaking or the occurrence of any other event, make the
representations and warranties set forth in Section 5.1
[Representations and Warranties] of the Credit Agreement to the
Agent and to each of the Lenders on the date hereof and on the
Closing Date and each date thereafter on which a Loan is made or a
Letter of Credit is issued as provided in and subject to
Section 6.1 [First Loans and Letters of Credit] and
Section 6.2 [Each Additional Loan or Letter of Credit] of the
Credit Agreement. In addition, each Guarantor warrants to the
Agent and the Lenders that: (i) no other agreement,
representation or special condition exists between such Guarantor
and the Agent or any Lender regarding the liability of such
Guarantor hereunder, nor does any understanding exist between such
Guarantor and any Lender that the obligations of such Guarantor
hereunder are or will be other than as set forth herein; and
(ii) as of the date hereof, such Guarantor has no defense
whatsoever to any action or proceeding that may be brought to
enforce this Guarantee.
4.
Until all of the
Guaranteed Indebtedness is paid in full, each Guarantor waives and
agrees not to enforce any of the rights of such Guarantor against
the Borrower or the other Guarantors, including, but not limited
to: (i) any right of such Guarantor to be subrogated in whole
or in part to any right or claim with respect to any Guaranteed
Indebtedness or any portion thereof to the Lenders which might
otherwise arise from payment by any Guarantor to the Lenders on the
account of the Guaranteed Indebtedness or any portion thereof; and
(ii) any right of any Guarantor to require the marshalling of
assets of the Borrower or the other Guarantors which might
otherwise arise from payment by any Guarantor to the Lenders on
account of the Guaranteed Indebtedness or any portion
thereof. If any amount shall be paid to any Guarantor in
violation of the preceding sentence, such amount shall be deemed to
have been paid to such Guarantor for the benefit of, and held in
trust for the benefit of, the Lenders and shall forthwith be paid
to the Agent and the Lenders to be credited and applied upon the
Guaranteed Indebtedness, whether matured or unmatured, in
accordance with the terms of the Credit Agreement. Each
Guarantor acknowledges that it will receive direct and indirect
benefits from the financing arrangements contemplated by the Credit
Agreement and that the waivers set forth in this Section are
knowingly made in contemplation of such benefits.
5.
Each Guarantor
waives promptness and diligence by the Lenders with respect to its
rights under the Credit Agreement or any of the other Loan
Documents, including, but not limited to, this
Guarantee.
6.
Each Guarantor
waives any and all notice with respect to:
(i) acceptance by the Agent on behalf of the Lenders of this
Guarantee; (ii) the provisions of any note, instrument or
agreement relating to the Guaranteed Indebtedness; and
(iii) any default in connection with the Guaranteed
Indebtedness.
7.
Each Guarantor
waives any presentment, demand, notice of dishonor or nonpayment,
protest, and notice of protest in connection with the Guaranteed
Indebtedness.
8.
Each Guarantor
agrees that the Lenders may from time to time and as many times as
the Lenders, in their sole discretion, deem appropriate, do any of
the following without notice to any Guarantor and without adversely
affecting the validity or enforceability of this
Guarantee:
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(i) release, surrender,
exchange, compromise, or settle the Guaranteed Indebtedness or any
portion thereof; (ii) change, renew, or waive the terms of the
Guaranteed Indebtedness or any portion thereof; (iii) change,
renew, or waive the terms, including without limitation, the rate
of interest charged to the Borrower or any Guarantor, of any note,
instrument, or agreement relating to the Guaranteed Indebtedness or
any portion thereof; (iv) grant any extension or indulgence
with respect to the payment to the Lenders of the Guaranteed
Indebtedness or any portion thereof; (v) enter into any
agreement of forbearance with respect to the Guaranteed
Indebtedness or any portion thereof; (vi) release, surrender,
exchange or compromise any security held by the Agent on behalf of
the Lenders for the Guaranteed Indebtedness; (vii) release any
Person who is a guarantor or surety or who has agreed to purchase
the Guaranteed Indebtedness or any portion thereof; and
(viii) release, surrender, exchange or compromise any security
or lien held by the Agent on behalf of the Lenders for the
liabilities of any Person who is a guarantor or surety for the
Guaranteed Indebtedness or any portion thereof. Each
Guarantor agrees that the Agent on behalf of the Lenders may do any
of the above as it deems necessary or advisable, in its sole
discretion, without giving any notice to any Guarantor, and that
each Guarantor will remain liable for full payment to the Lenders
of the Guaranteed Indebtedness.
9.
Each Guarantor
agrees to be jointly and severally bound by the terms of this
Guarantee and jointly and severally liable under this
Guarantee. As a result of such liability, each Guarantor
acknowledges that the Lenders may, in their sole discretion, elect
to enforce this Guarantee for the total Guaranteed Indebtedness
against any Guarantor without any duty or responsibility to pursue
the other Guarantors and that such an election by the Lenders shall
not be a defense to any action the Agent on behalf of the Lenders
may elect to take against any Guarantor.
10.
If any amount
owing hereunder shall have become due and payable (by acceleration
or otherwise), any Lender and any branch, subsidiary or affiliate
of any Lender anywhere in the world shall each have the right, at
any time and from time to time to the fullest extent permitted by
Law, in addition to all other rights and remedies available to it,
without prior notice to any Guarantor, to set-off against and to
appropriate and apply to such due and payable amounts any debt
owing to, and any other funds held in any manner for the account of
any Guarantor by any Lender or any such branch, subsidiary or
affiliate including, without limitation, all funds in all deposit
accounts (whether time or demand, general or special, provisionally
credited or finally credited, or otherwise) now or hereafter
maintained by any Guarantor with any Lender or such branch,
subsidiary or affiliate. Such right shall exist whether or
not any Lender shall have given notice or made any demand hereunder
or under any of the Notes or Loan Documents, whether or not such
debt owing to or funds held for the account of any Guarantor is or
are matured or unmatured, and regardless of the existence or
adequacy of any collateral, guarantee or any other security, right
or remedy available to any Lender. Each Guarantor hereby
consents to and confirms the foregoing arrangements, and confirms
each Lenders rights and each such branch’s,
subsidiary’s and affiliate’s rights of banker’s
lien and set-off.
11.
Each Guarantor
recognizes and agrees that the Borrower, after the date hereof, may
incur additional Obligations or other obligations, fees and
expenses to the Lenders under the Credit Agreement, refinance
existing Guaranteed Indebtedness or pay existing Guaranteed
Indebtedness and subsequently incur additional Obligations to the
Lenders under the Credit Agreement, and that in any such
transaction, even if such transaction is not now
contemplated,
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the Lenders will rely in any
such case upon this Guarantee and the enforceability thereof
against each Guarantor and that this Guarantee shall remain in full
force and effect with respect to such future Obligations of the
Borrower to the Lenders and such Obligations shall for all purposes
constitute Guaranteed Indebtedness.
12.
Each Guarantor
further agrees that, if at any time all or any part of any payment,
from whomever received, theretofore applied by the Lenders to any
of the Guaranteed Indebtedness is or must be rescinded or returned
by the Lenders for any reason whatsoever including, without
limitation, the insolvency, bankruptcy or reorganization of any
Guarantor, such liability shall, for the purposes of this
Guarantee, to the extent that such payment is or must be rescinded
or returned, be deemed to have continued in existence,
notwithstanding such application by any Lender, and this Guarantee
shall continue to be effective or be reinstated, as the case may
be, as to such liabilities, all as though such application by the
Lenders had not been made.
13.
Each Guarantor
agrees that no failure or delay on the part of any Lender or of the
Agent on behalf of the Lenders to exercise any of its rights,
powers or privileges under this Guarantee shall be a waiver of such
rights, powers or privileges or a waiver of any default, nor shall
any single or partial exercise of any of the Agent’s or of
any Lenders’ rights, powers or privileges preclude other or
further exercise thereof or the exercise of any other right, power
or privilege or be construed as a waiver of any default. Each
Guarantor further agrees that no waiver or modification of any
rights of the Lenders or of the Agent under this Guarantee shall be
effective unless in writing and signed by each Lender and the
Agent. Each Guarantor further agrees that each written waiver
shall extend only to the specific instance actually recited in such
written waiver and shall not impair the rights of any Lender or of
the Agent in any other respect.
14.
Each Guarantor
unconditionally agrees to pay all costs and expenses, including
attorney’s fees, incurred by the Agent on behalf of the
Lenders in enforcing this Guarantee against any
Guarantor.
15.
Each Guarantor
agrees that this Guarantee and the rights and obligations of the
parties hereto shall for all purposes be governed by and construed
and enforced in accordance with the substantive law of the State of
New Jersey without giving effect to its principles of conflict of
laws.
16.
Each Guarantor
acknowledges that in addition to binding itself to this Guarantee,
at the time of execution of this Guarantee the Agent offered to
such Guarantor a copy of this Guarantee in the form in which it was
executed and that by acknowledging this fact such Guarantor may not
later be able to claim that a copy of the Guarantee was not
received by it.
17.
Each Guarantor
agrees that this Guarantee shall be binding upon each Guarantor and
its successors and assigns; provided , however , that
no Guarantor may assign or transfer any of its rights and
obligations hereunder or any interest herein. Each Guarantor
further agrees that (i) this Guarantee is freely assignable
and transferable by the Lenders in connection with any assignment
or transfer of the Guaranteed Indebtedness and (ii) this
Guarantee shall inure to the benefit of the Lenders, and their
successors and assigns.
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18.
Each Guarantor
agrees that if any Guarantor fails to perform any covenant or
agreement hereunder or if there occurs and continues to exist an
Event of Default under the Credit Agreement, all or any part of the
Guaranteed Indebtedness may be declared to be forthwith due and
payable and, in the case of an Event of Default described in
Section 8.1.14 [Involuntary Proceedings] or
Section 8.1.15 [Voluntary Proceedings] of the Credit
Agreement, the Guaranteed Indebtedness shall be immediately due and
payable, in any case without presentment, demand, protest or notice
of any kind, all of which are hereby expressly waived.
19.
Each Guarantor
agrees that the enumeration of the Lenders’ rights and
remedies set forth in this Guarantee is not intended to be
exhaustive and the exercise by any of the Lenders of any right or
remedy shall not preclude the exercise of any other rights or
remedies, all of which shall be cumulative and shall be in addition
to any other right or remedy given hereunder or under any other
agreement among the parties to the Loan Documents or which may now
or hereafter exist at law or in equity or by suit or
otherwise.
20.
Each Guarantor
agrees that all notices, statements, requests, demands and other
communications under this Guarantee shall be given to each of the
Guarantors at the address set forth below their respective names on
the signature page hereof in the manner provided in
Section 10.6 [Notices] of the Credit Agreement.
21.
(a)
Each Guarantor
agrees that the provisions of this Guarantee are severable, and in
an action or proceeding involving any state or federal bankruptcy,
insolvency or other law affecting the rights of creditors
generally:
(i)
if any clause or
provision shall be held invalid or unenforceable in whole or in
part in any jurisdiction, then such invalidity or unenforceability
shall affect only such clause or provision, or part thereof, in
such jurisdiction and shall not in any manner affect such clause or
provision in any other jurisdiction, or any other clause or
provision in this Guarantee in any jurisdiction.
(ii)
if this Guarantee
would be held or determined to be void, invalid or unenforceable on
account of the amount of a Guarantor’s aggregate liability
under this Guarantee, then, notwithstanding any other provision of
this Guarantee to the contrary, the aggregate amount of such
liability shall, without any further action by the Lenders, such
Guarantor or any other Person, be automatically limited and reduced
to the highest amount which is valid and enforceable as determined
in such action or proceeding, which (without limiting the
generality of the foregoing) may be an amount which is not greater
than the greater of:
(A)
the fair
consideration actually received by such Guarantor under the terms
of and as a result of the Loan Documents, including, without
limiting the generality of the foregoing, and to the extent not
inconsistent with applicable federal and state laws affecting the
enforceability of guarantees, distributions or advances made to
such Guarantor with the proceeds of any credit extended under the
Loan Documents in exchange for its guaranty of the Guaranteed
Indebtedness, or
(B)
the excess of
(1) the amount of the fair saleable value of the assets of
such Guarantor as of the date of this Guarantee as determined in
accordance with applicable federal and state laws governing
determinations of the insolvency of debtors as in
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effect on the date thereof
over (2) the amount of all liabilities of such Guarantor as of
the date of this Guarantee, also as determined on the basis of
applicable federal and state laws governing the insolvency of
debtors as in effect on the date thereof.
(b)
If the guarantee
by any one or more Guarantors of the Guaranteed Indebtedness is
held or determined to be void, invalid or
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