21.	Subsequent events

February 1, 2018,

K. Hovnanian closed

certain of the previously announced financing transactions (see Note

) as follows: (i) K. Hovnanian borrowed the Initial Term Loans in the amount of

$132.5

million under the New Term Loan Credit Agreement, and proceeds of such Initial Term Loans, together with cash on hand, were used to redeem all of K. Hovnanian’s outstanding

$132.5

million aggregate principal amount of

7.0%

Notes (upon redemption, all

7.0%

Notes were cancelled); and (ii) K. Hovnanian accepted all of the

$170.2

million aggregate principal amount of

8.0%

Notes validly tendered and

not

validly withdrawn in the Exchange Offer, and in connection therewith, K. Hovnanian issued

$90.6

million aggregate principal amount of New

2026

Notes and

$90.1

million aggregate principal amount of New

2040

Notes under the New Indenture (as defined below), and as part of the Exchange Offer, the Subsidiary Purchaser purchased for

$26.5

million in cash the Purchased

8.0%

Notes.

K. Hovnanian issued the New

2026

Notes and the New

2040

Notes under an indenture (the “

New Indenture”) dated as of

February 1, 2018

among K. Hovnanian, the Company, the other guarantors party thereto and Wilmington Trust, National Association, as trustee.

The New Notes are issued by K. Hovnanian and guaranteed by the Notes Guarantors, except the Subsidiary Purchaser, which does

not

guarantee the New Notes. The New

2026

Notes bear interest at

13.5%

per annum and m

ature on

February 1, 2026.

The New

2040

Notes bear interest at

5.0%

per annum and mature on

February 1, 2040.

Interest on the New Notes is payable semi-annually on

February 1

and

August 1

of each year, beginning on

August 1, 2018,

to holders of record at the close of business on

January 15

July 15,

as the case

may

be, immediately preceding each such interest payment date.

The New Indenture contains restrictive covenants that limit, among other things, and in each case subject to certain exceptions, the

ability of the Company and certain of its subsidiaries, including K. Hovnanian, to incur additional indebtedness, pay dividends and make distributions on common and preferred stock, repurchase subordinated indebtedness and common and preferred stock, make other restricted payments, including investments, sell certain assets, incur liens, consolidate, merge, sell or otherwise dispose of all or substantially all of its assets and enter into certain transactions with affiliates. The New Indenture also contains customary events of default which would permit the holders of the applicable series of New Notes to declare those New Notes to be immediately due and payable if

not

cured within applicable grace periods, including the failure to make timely payments on the applicable series of New Notes or other material indebtedness, the failure to satisfy covenants and specified events of bankruptcy and insolvency.

The New Indenture also contains limitations on actions with respect to the Purchased

8.0%

Notes, including that, (A) K. Hovnanian and the guarantors of the New Notes shall

not,

(i) prior to

June 6, 2018,

redeem, cancel or otherwise retire, purchase or acquire any Purchased

8.0%

Notes or (ii) make any interest payments on the Purchased

8.0%

Notes prior to their stated maturity, and (B) K. Hovnanian and the guarantors of the New Notes shall

not,

and shall

not

permit any of their subsidiaries to, (i) sell, transfer, convey, lease or otherwise dispose of any Purchased

8.0%

Notes other than to any subsidiary of Hovnanian that is

not

K. Hovnanian or a guarantor of the New Notes or (ii) amend, supplement or otherwise modify the Purchased

Notes or the indenture under which they were issued with respect to the Purchased

Notes, subject to certain exceptions. In addition, the New Indenture provides that notwithstanding the above, at all times on or after

June 6, 2018

and prior to the stated maturity of the Purchased

Notes, the Subsidiary Purchaser shall continue to own and hold at least the minimum denomination thereof.