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<SEC-DOCUMENT>0000950123-11-009826.txt : 20110207
<SEC-HEADER>0000950123-11-009826.hdr.sgml : 20110207
<ACCEPTANCE-DATETIME>20110207171209
ACCESSION NUMBER:		0000950123-11-009826
CONFORMED SUBMISSION TYPE:	424B5
PUBLIC DOCUMENT COUNT:		3
FILED AS OF DATE:		20110207
DATE AS OF CHANGE:		20110207

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			K HOVNANIAN ENTERPRISES INC
		CENTRAL INDEX KEY:			0000833199
		STANDARD INDUSTRIAL CLASSIFICATION:	GEN BUILDING CONTRACTORS - RESIDENTIAL BUILDINGS [1520]
		IRS NUMBER:				222423583
		STATE OF INCORPORATION:			NJ
		FISCAL YEAR END:			1031

	FILING VALUES:
		FORM TYPE:		424B5
		SEC ACT:		1933 Act
		SEC FILE NUMBER:	333-171349-01
		FILM NUMBER:		11579446

	BUSINESS ADDRESS:	
		STREET 1:		10 HIGHWAY 35
		STREET 2:		P O BOX 500
		CITY:			RED BANK
		STATE:			NJ
		ZIP:			07701
		BUSINESS PHONE:		7327477800

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			HOVNANIAN ENTERPRISES INC
		CENTRAL INDEX KEY:			0000357294
		STANDARD INDUSTRIAL CLASSIFICATION:	OPERATIVE BUILDERS [1531]
		IRS NUMBER:				221851059
		STATE OF INCORPORATION:			DE
		FISCAL YEAR END:			1031

	FILING VALUES:
		FORM TYPE:		424B5
		SEC ACT:		1933 Act
		SEC FILE NUMBER:	333-171349
		FILM NUMBER:		11579445

	BUSINESS ADDRESS:	
		STREET 1:		110 WEST FRONT STREET
		STREET 2:		PO BOX 500
		CITY:			RED BANK
		STATE:			NJ
		ZIP:			07701
		BUSINESS PHONE:		7327477800

	MAIL ADDRESS:	
		STREET 1:		110 WEST FRONT STREET PO BOX 500
		STREET 2:		110 WEST FRONT STREET  PO BOX 500
		CITY:			RED BANK
		STATE:			NJ
		ZIP:			07701
</SEC-HEADER>
<DOCUMENT>
<TYPE>424B5
<SEQUENCE>1
<FILENAME>y89359b5e424b5.htm
<DESCRIPTION>424B5
<TEXT>
<HTML>
<HEAD>
<TITLE>e424b5</TITLE>
</HEAD>
<BODY bgcolor="#FFFFFF">
<!-- PAGEBREAK -->
<H5 align="left" style="page-break-before:always"><A HREF="#Y89359tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<!-- XBRL Pagebreak End -->
</DIV><!-- END PAGE WIDTH -->
<DIV style="width: 92%; margin-left: 4%"><!-- BEGIN PAGE WIDTH -->

<DIV style="margin-top: 8pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="right" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: transparent">

    <B><FONT style="font-family: 'Times New Roman', Times">Filed
    Pursuant to Rule&#160;424(b)(5)<BR>
    Registration
    <FONT style="white-space: nowrap">No.&#160;333-171349</FONT></FONT></B>
</DIV>

<DIV style="margin-top: 9pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <IMG src="y89359b5y8935902a.gif" alt="(HOVNANIAN ENTERPRISES, INC. LOGO)"><B>
    </B>
</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <B><FONT style="font-size: 16pt; font-family: Arial, Helvetica">3,000,000
    7.25% Tangible Equity Units</FONT></B>
</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <B><FONT style="font-size: 22pt; font-family: Arial, Helvetica">Hovnanian
    Enterprises, Inc.</FONT></B>
</DIV>

<DIV style="margin-top: 2pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 3%; font-size: 8pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <FONT style="font-family: Arial, Helvetica">This is an offering
    of tangible equity units, or &#147;Units,&#148; issued by
    Hovnanian Enterprises, Inc (&#147;Hovnanian&#148;) and K.
    Hovnanian Enterprises, Inc. (&#147;K. Hovnanian&#148;). Each
    Unit has a stated amount of $25. Each Unit is comprised of a
    prepaid stock purchase contract issued by Hovnanian and a senior
    subordinated amortizing note due February&#160;15, 2014 issued
    by K. Hovnanian, which has an initial principal amount of
    $4.526049 per amortizing note and a final installment payment
    date of February&#160;15, 2014.
    </FONT>
</DIV>

<DIV style="margin-top: 2pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 3%; font-size: 8pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <FONT style="font-family: Arial, Helvetica">Unless settled
    earlier as described herein, on February&#160;15, 2014 (subject
    to postponement in certain limited circumstances), each purchase
    contract will automatically settle, and we will deliver a number
    of shares of our Class&#160;A common stock based on the
    applicable market value of our Class&#160;A common stock. The
    applicable market value is the average of the closing prices of
    the Class&#160;A common stock on each of the 20 consecutive
    trading days beginning on, and including, the
    23rd&#160;scheduled trading day immediately preceding
    February&#160;15, 2014. On the mandatory settlement date, each
    purchase contract will settle, unless earlier settled, as
    follows (subject to adjustment):
    </FONT>
</DIV>

<DIV style="margin-top: 2pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top" style="font-size: 8pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    <FONT style="font-family: Arial, Helvetica">&#149;&#160;
    </FONT>
</TD>
    <TD align="left">
    <FONT style="font-family: Arial, Helvetica">if the applicable
    market value equals or exceeds the threshold appreciation price,
    which is approximately $5.25, you will receive
    4.7655&#160;shares;
    </FONT>
</TD>
</TR>


<TR style="line-height: 2pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 8pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    <FONT style="font-family: Arial, Helvetica">&#149;&#160;
    </FONT>
</TD>
    <TD align="left">
    <FONT style="font-family: Arial, Helvetica">if the applicable
    market value is greater than $4.30 but less than the threshold
    appreciation price, you will receive a number of shares having a
    value, based on the applicable market value, equal to
    $25;&#160;and
    </FONT>
</TD>
</TR>


<TR style="line-height: 2pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 8pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    <FONT style="font-family: Arial, Helvetica">&#149;&#160;
    </FONT>
</TD>
    <TD align="left">
    <FONT style="font-family: Arial, Helvetica">if the applicable
    market value is less than or equal to $4.30, you will receive
    5.8140&#160;shares.
    </FONT>
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 2pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 3%; font-size: 8pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <FONT style="font-family: Arial, Helvetica">At any time prior to
    the third scheduled trading day immediately preceding
    February&#160;15, 2014, you may settle your purchase contract
    early, and we will deliver 4.7655&#160;shares of our
    Class&#160;A common stock per purchase contract (subject to
    adjustment). In addition, if a &#147;fundamental change&#148;
    (as defined herein) occurs and you elect to settle your purchase
    contracts early in connection with such fundamental change, you
    will receive a number of shares of our Class&#160;A common stock
    based on the fundamental change early settlement rate, as
    described herein. We may elect to settle all, but not less than
    all, outstanding purchase contracts prior to February&#160;15,
    2014 at the &#147;early mandatory settlement rate&#148; (as
    defined herein), upon a date fixed by us upon not less than five
    business days&#146; notice. Except for cash in lieu of
    fractional shares, the purchase contract holders will not
    receive any cash distributions under the purchase contracts.
    </FONT>
</DIV>

<DIV style="margin-top: 2pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 3%; font-size: 8pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <FONT style="font-family: Arial, Helvetica">In order to preserve
    the tax treatment of our net operating loss carryforwards under
    the Internal Revenue Code of 1986, as amended (the
    &#147;Code&#148;), beneficial owners of Units and any separate
    purchase contracts will be subject to both a beneficial
    ownership limitation and a settlement limitation as described
    herein. In addition, as a Class&#160;A common stockholder upon
    settlement of your purchase contract, you will be subject to
    both our Rights Plan and the transfer restrictions of our
    amended Certificate of Incorporation. See &#147;Limitation on
    Beneficial Ownership of Class&#160;A Common Stock, Units and
    Separate Purchase Contracts.&#148;
    </FONT>
</DIV>

<DIV style="margin-top: 2pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 3%; font-size: 8pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <FONT style="font-family: Arial, Helvetica">The amortizing notes
    will pay you equal quarterly cash installments of $0.453125 per
    amortizing note, which cash payment in the aggregate will be
    equivalent to 7.25% per year with respect to each
    $25&#160;stated amount of Units. The amortizing notes will be K.
    Hovnanian&#146;s unsecured senior subordinated obligations and
    will be subordinated in right of payment to all of K.
    Hovnanian&#146;s senior indebtedness as described herein. The
    obligations under the amortizing notes will be fully and
    unconditionally guaranteed by Hovnanian and most of its existing
    and future subsidiaries. If we elect to settle the purchase
    contracts early, you will have the right to require K. Hovnanian
    to repurchase your amortizing notes, except in certain
    circumstances as described herein.
    </FONT>
</DIV>

<DIV style="margin-top: 2pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 3%; font-size: 8pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <FONT style="font-family: Arial, Helvetica">Each Unit may be
    separated into its constituent purchase contract and amortizing
    note after the initial issuance date of the Units, and the
    separate components may be combined to create a Unit.
    </FONT>
</DIV>

<DIV style="margin-top: 2pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 3%; font-size: 8pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <FONT style="font-family: Arial, Helvetica">We will apply to
    list the Units on the New York Stock Exchange, subject to
    satisfaction of its minimum listing standards with respect to
    the Units. If the Units are approved for listing, we expect
    trading on the New York Stock Exchange to begin within 30
    calendar days after the Units are first issued. However, we will
    not initially apply to list the separate purchase contracts or
    the separate amortizing notes on any securities exchange or
    automated inter-dealer quotation system, but we may apply to
    list such separate purchase contracts and separate amortizing
    notes in the future as described herein. Prior to this offering,
    there has been no public market for the Units.
    </FONT>
</DIV>

<DIV style="margin-top: 2pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 3%; font-size: 8pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <FONT style="font-family: Arial, Helvetica">Our Class&#160;A
    common stock is listed on the New York Stock Exchange under the
    symbol &#147;HOV.&#148; On February&#160;3, 2011, the last
    reported sale price of our Class&#160;A common stock on the New
    York Stock Exchange was $4.49 per share.
    </FONT>
</DIV>

<DIV style="margin-top: 2pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 3%; font-size: 8pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <FONT style="font-family: Arial, Helvetica">The underwriters
    have a
    <FONT style="white-space: nowrap">30-day</FONT>
    option to purchase up to an additional 450,000 Units from us to
    cover over-allotments, if any, at the price to public less the
    underwriting discount and commissions.
    </FONT>
</DIV>

<DIV style="margin-top: 2pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 3%; font-size: 8pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <FONT style="font-family: Arial, Helvetica">Concurrently with
    this offering of Units, pursuant to separate prospectus
    supplements, we are offering $155.0&#160;million aggregate
    principal amount of Senior Notes due 2015 and
    11,750,000&#160;shares of our Class&#160;A common stock for a
    total price to public of approximately $50.5&#160;million (or
    13,512,500&#160;shares, for a total price to public of
    approximately $58.1&#160;million if the underwriters exercise
    their over-allotment option in full). The completion of the
    offering of the senior notes is contingent on the completion of
    each of the offering of the Class&#160;A common stock and this
    offering, but the completion of the offering of Class&#160;A
    common stock and this offering are not contingent on the
    completion of the offering of senior notes or each other.
    </FONT>
</DIV>

<DIV style="margin-top: 2pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 3%; font-size: 8pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <B><FONT style="font-family: Arial, Helvetica">Investing in the
    Units involves risks. See &#147;Risk Factors&#148; beginning on
    <FONT style="white-space: nowrap">page&#160;S-14.</FONT></FONT></B>
</DIV>

<DIV style="margin-top: 2pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 3%; font-size: 8pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <B><FONT style="font-family: Arial, Helvetica">Neither the
    Securities and Exchange Commission nor any state securities
    commission has approved or disapproved of these securities or
    determined if this prospectus supplement or the accompanying
    prospectus is truthful or complete. Any representation to the
    contrary is a criminal offense.</FONT></B>
</DIV>

<DIV style="margin-top: 4pt; font-size: 1pt">&nbsp;</DIV>

<TABLE border="0" width="100%" align="center" cellpadding="0" cellspacing="0" style="font-size: 8pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
<!-- Table Width Row BEGIN -->
<TR style="font-size: 1pt" valign="bottom">
    <TD width="43%">&nbsp;</TD>	<!-- colindex=01 type=maindata -->
    <TD width="1%">&nbsp;</TD>	<!-- colindex=02 type=gutter -->
    <TD width="13%" align="right">&nbsp;</TD>	<!-- colindex=02 type=lead -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=02 type=body -->
    <TD width="13%" align="left">&nbsp;</TD>	<!-- colindex=02 type=hang1 -->
    <TD width="2%">&nbsp;</TD>	<!-- colindex=03 type=gutter -->
    <TD width="13%" align="right">&nbsp;</TD>	<!-- colindex=03 type=lead -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=03 type=body -->
    <TD width="13%" align="left">&nbsp;</TD>	<!-- colindex=03 type=hang1 -->
</TR>
<!-- Table Width Row END -->
<!-- TableOutputHead -->
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B><FONT style="font-family: Arial, Helvetica">Per
    Unit</FONT></B>
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B><FONT style="font-family: Arial, Helvetica">Total</FONT></B>
</TD>
</TR>
<TR style="line-height: 3pt; font-size: 1pt">
<TD>&nbsp;
</TD>
</TR>
<!-- TableOutputBody -->
<TR valign="bottom">
<TD align="left" valign="top" style="font-family: Arial, Helvetica">
<DIV style="text-indent: -8pt; margin-left: 8pt">
    Public Offering Price
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom" style="font-family: Arial, Helvetica">
    $
</TD>
<TD nowrap align="center" valign="bottom" style="font-family: Arial, Helvetica">
    25.00
</TD>
<TD nowrap align="left" valign="bottom" style="font-family: Arial, Helvetica">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom" style="font-family: Arial, Helvetica">
    $
</TD>
<TD nowrap align="center" valign="bottom" style="font-family: Arial, Helvetica">
    75,000,000
</TD>
<TD nowrap align="left" valign="bottom" style="font-family: Arial, Helvetica">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="top" style="font-family: Arial, Helvetica">
<DIV style="text-indent: -8pt; margin-left: 8pt">
    Underwriting Discount
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom" style="font-family: Arial, Helvetica">
    $
</TD>
<TD nowrap align="center" valign="bottom" style="font-family: Arial, Helvetica">
    0.75
</TD>
<TD nowrap align="left" valign="bottom" style="font-family: Arial, Helvetica">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom" style="font-family: Arial, Helvetica">
    $
</TD>
<TD nowrap align="center" valign="bottom" style="font-family: Arial, Helvetica">
    2,250,000
</TD>
<TD nowrap align="left" valign="bottom" style="font-family: Arial, Helvetica">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="top" style="font-family: Arial, Helvetica">
<DIV style="text-indent: -8pt; margin-left: 8pt">
    Proceeds to Us (before expenses)
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom" style="font-family: Arial, Helvetica">
    $
</TD>
<TD nowrap align="center" valign="bottom" style="font-family: Arial, Helvetica">
    24.25
</TD>
<TD nowrap align="left" valign="bottom" style="font-family: Arial, Helvetica">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom" style="font-family: Arial, Helvetica">
    $
</TD>
<TD nowrap align="center" valign="bottom" style="font-family: Arial, Helvetica">
    72,750,000
</TD>
<TD nowrap align="left" valign="bottom" style="font-family: Arial, Helvetica">
&nbsp;
</TD>
</TR>
</TABLE>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">

</DIV>

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 3%; font-size: 8pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <FONT style="font-family: Arial, Helvetica">The underwriters
    expect to deliver the Units to purchasers on or about
    February&#160;9, 2011 through the book-entry facilities of The
    Depository Trust&#160;Company.
    </FONT>
</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <I><FONT style="font-size: 8pt; font-family: Arial, Helvetica">Joint
    Book-Running Managers</FONT></I>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: transparent">

<TR>
    <TD width="33%"></TD>
    <TD width="33%"></TD>
    <TD width="33%"></TD>
</TR>

<TR valign="top">
    <TD nowrap align="left">    <B><FONT style="font-size: 16pt; font-family: Arial, Helvetica">Credit
    Suisse</FONT></B></TD>
    <TD nowrap align="center">    <B><FONT style="font-size: 16pt; font-family: Arial, Helvetica">
    Citi</FONT></B></TD>
    <TD nowrap align="right">    <B><FONT style="font-size: 16pt; font-family: Arial, Helvetica">
    J.P. Morgan</FONT></B></TD>
</TR>

</TABLE>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <I><FONT style="font-size: 8pt; font-family: Arial, Helvetica">Co-Managers</FONT></I>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: transparent">

<TR>
    <TD width="33%"></TD>
    <TD width="33%"></TD>
    <TD width="33%"></TD>
</TR>

<TR valign="top">
    <TD nowrap align="left">    <B><FONT style="font-size: 14pt; font-family: Arial, Helvetica">BofA
    Merrill Lynch</FONT></B></TD>
    <TD nowrap align="center">    <B><FONT style="font-size: 14pt; font-family: Arial, Helvetica">
    Deutsche Bank Securities</FONT></B></TD>
    <TD nowrap align="right">    <B><FONT style="font-size: 14pt; font-family: Arial, Helvetica">
    Wells Fargo Securities</FONT></B></TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <FONT style="font-size: 8pt; font-family: Arial, Helvetica">February&#160;3,
    2011
    </FONT>
</DIV>
<!-- XBRL Pagebreak Begin -->

<P align="left" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">

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<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="width: 92%; margin-left: 4%"><!-- BEGIN PAGE WIDTH -->
<!-- XBRL Pagebreak End -->
</DIV><!-- END PAGE WIDTH -->
<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <B>We have not authorized anyone to provide you with any
    information other than that contained in this prospectus
    supplement, the accompanying prospectus, any free writing
    prospectus prepared by or on behalf of us and the documents
    incorporated by reference herein. We take no responsibility for,
    and can provide no assurance as to the reliability of, any other
    information that others may give you. This prospectus supplement
    and the accompanying prospectus may only be used where it is
    legal to sell these securities. The information in this
    prospectus supplement and the accompanying prospectus may only
    be accurate on the date of this prospectus supplement or such
    incorporated document.</B>
</DIV>

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>

<CENTER style="font-size: 1pt; width: 18%; border-bottom: 1pt solid #000000"></CENTER>

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: transparent">

    <B><FONT style="font-family: 'Times New Roman', Times">TABLE OF
    CONTENTS<BR>
    </FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: transparent">

    <B><FONT style="font-family: 'Times New Roman', Times">Prospectus
    Supplement</FONT></B>
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>


<DIV align="left">
<!-- TOC -->
</DIV>

<DIV align="left">
<A name="Y89359tocpage"></A>
</DIV>

<TABLE border="0" width="100%" align="center" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
<!-- Table Width Row BEGIN -->
<TR style="font-size: 1pt" valign="bottom">
    <TD width="88%">&nbsp;</TD>	<!-- colindex=01 type=maindata -->
    <TD width="4%">&nbsp;</TD>	<!-- colindex=02 type=gutter -->
    <TD width="3%">&nbsp;</TD>	<!-- colindex=02 type=quadleft -->
    <TD width="1%">&nbsp;</TD>	<!-- colindex=02 type=maindata -->
    <TD width="3%">&nbsp;</TD>	<!-- colindex=02 type=quadright -->
</TR>
<!-- Table Width Row END -->
<!-- TableOutputHead -->
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>Page</B>
</TD>
</TR>
<TR style="line-height: 3pt; font-size: 1pt">
<TD>&nbsp;
</TD>
</TR>
<!-- TableOutputBody -->
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <A HREF='#Y89359101'><FONT style="font-variant: SMALL-CAPS">About this
    Prospectus Supplement</FONT></A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    S-ii
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <A HREF='#Y89359102'><FONT style="font-variant: SMALL-CAPS">Industry
    and Market Data</FONT></A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    S-ii
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <A HREF='#Y89359103'><FONT style="font-variant: SMALL-CAPS">Forward&#160;&#151;
    Looking Statements</FONT></A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    S-ii
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <A HREF='#Y89359104'><FONT style="font-variant: SMALL-CAPS">Summary</FONT></A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    S-1
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <A HREF='#Y89359105'><FONT style="font-variant: SMALL-CAPS">Risk
    Factors</FONT></A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    S-14
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <A HREF='#Y89359106'><FONT style="font-variant: SMALL-CAPS">Use of
    Proceeds</FONT></A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    S-35
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <A HREF='#Y89359107'><FONT style="font-variant: SMALL-CAPS">Capitalization</FONT></A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    S-36
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <A HREF='#Y89359108'><FONT style="font-variant: SMALL-CAPS">Price
    Range of Common Stock; Dividend Policy</FONT></A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    S-38
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <A HREF='#Y89359109'><FONT style="font-variant: SMALL-CAPS">Description
    of the Units</FONT></A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    S-39
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <A HREF='#Y89359110'><FONT style="font-variant: SMALL-CAPS">Description
    of the Purchase Contracts</FONT></A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    S-42
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <A HREF='#Y89359111'><FONT style="font-variant: SMALL-CAPS">Description
    of the Amortizing Notes</FONT></A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    S-58
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <A HREF='#Y89359112'><FONT style="font-variant: SMALL-CAPS">Limitation
    on Beneficial Ownership of Class&#160;A Common Stock, Units and
    Separate Purchase Contracts</FONT></A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    S-70
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <A HREF='#Y89359113'><FONT style="font-variant: SMALL-CAPS">Book-Entry
    Procedures and Settlement</FONT></A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    S-73
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <A HREF='#Y89359114'><FONT style="font-variant: SMALL-CAPS">Certain
    United States Federal Income and Estate Tax
    Consequences</FONT></A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    S-76
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <A HREF='#Y89359115'><FONT style="font-variant: SMALL-CAPS">Certain
    ERISA Considerations</FONT></A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    S-83
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <A HREF='#Y89359116'><FONT style="font-variant: SMALL-CAPS">Underwriting</FONT></A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    S-85
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <A HREF='#Y89359117'><FONT style="font-variant: SMALL-CAPS">Legal
    Matters</FONT></A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    S-88
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <A HREF='#Y89359118'><FONT style="font-variant: SMALL-CAPS">Experts</FONT></A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    S-88
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <A HREF='#Y89359119'><FONT style="font-variant: SMALL-CAPS">Available
    Information</FONT></A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    S-88
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <A HREF='#Y89359120'><FONT style="font-variant: SMALL-CAPS">Incorporation
    of Certain Documents by Reference</FONT></A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    S-88
</TD>
<TD>&nbsp;
</TD>
</TR>
</TABLE>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">

</DIV>

<DIV align="left">
<!-- /TOC -->
</DIV>

<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: transparent">

    <B><FONT style="font-family: 'Times New Roman', Times">Prospectus
    dated January&#160;28, 2011</FONT></B>
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>


<DIV align="left">
<!-- TOC -->
</DIV>

<DIV align="left">
<A name="Y89359tocpage"></A>
</DIV>

<TABLE border="0" width="100%" align="center" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
<!-- Table Width Row BEGIN -->
<TR style="font-size: 1pt" valign="bottom">
    <TD width="89%">&nbsp;</TD>	<!-- colindex=01 type=maindata -->
    <TD width="4%">&nbsp;</TD>	<!-- colindex=02 type=gutter -->
    <TD width="3%">&nbsp;</TD>	<!-- colindex=02 type=quadleft -->
    <TD width="1%">&nbsp;</TD>	<!-- colindex=02 type=maindata -->
    <TD width="3%">&nbsp;</TD>	<!-- colindex=02 type=quadright -->
</TR>
<!-- Table Width Row END -->
<!-- TableOutputHead -->
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>Page</B>
</TD>
</TR>
<TR style="line-height: 3pt; font-size: 1pt">
<TD>&nbsp;
</TD>
</TR>
<!-- TableOutputBody -->
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <FONT style="font-variant: SMALL-CAPS">About This Prospectus
    </FONT>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    1
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <FONT style="font-variant: SMALL-CAPS">Forward-Looking Statements
    </FONT>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    1
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <FONT style="font-variant: SMALL-CAPS">Available Information
    </FONT>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    2
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <FONT style="font-variant: SMALL-CAPS">Incorporation of Certain
    Documents By Reference
    </FONT>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    <FONT style="font-variant: SMALL-CAPS">3
    </FONT>
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <FONT style="font-variant: SMALL-CAPS">The Company
    </FONT>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    3
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <FONT style="font-variant: SMALL-CAPS">Risk Factors
    </FONT>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    4
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <FONT style="font-variant: SMALL-CAPS">Ratios of Earnings to
    Fixed Charges and Earnings to Combined Fixed Charges and
    Preferred Stock Dividends
    </FONT>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    4
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <FONT style="font-variant: SMALL-CAPS">Use of Proceeds
    </FONT>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    5
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <FONT style="font-variant: SMALL-CAPS">Description of Debt
    Securities
    </FONT>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    5
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <FONT style="font-variant: SMALL-CAPS">Description of Capital
    Stock
    </FONT>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    17
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <FONT style="font-variant: SMALL-CAPS">Description of Depositary
    Shares
    </FONT>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    20
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <FONT style="font-variant: SMALL-CAPS">Description of Stock
    Purchase Contracts and Stock Purchase Units
    </FONT>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    24
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <FONT style="font-variant: SMALL-CAPS">Description of Units
    </FONT>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    24
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <FONT style="font-variant: SMALL-CAPS">Description of Warrants
    </FONT>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    24
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <FONT style="font-variant: SMALL-CAPS">Plan of Distribution
    </FONT>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    25
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <FONT style="font-variant: SMALL-CAPS">Legal Matters
    </FONT>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    26
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <FONT style="font-variant: SMALL-CAPS">Experts
    </FONT>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    27
</TD>
<TD>&nbsp;
</TD>
</TR>
</TABLE>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">

</DIV>

<DIV align="left">
<!-- /TOC -->
</DIV>

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>

<CENTER style="font-size: 1pt; width: 18%; border-bottom: 1pt solid #000000"></CENTER>

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>
<!-- XBRL Pagebreak Begin -->

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <BR>
    S-i
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#Y89359tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<!-- XBRL Pagebreak End -->

<A name='Y89359101'>
<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: transparent">

    <B><FONT style="font-family: 'Times New Roman', Times">ABOUT
    THIS PROSPECTUS SUPPLEMENT</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    This prospectus supplement is part of a registration statement
    that we have filed with the Securities and Exchange Commission
    (&#147;SEC&#148;) utilizing a &#147;shelf&#148; registration
    process. Under this shelf process, we are offering to sell the
    securities described in this prospectus supplement, using this
    prospectus supplement and the accompanying prospectus. When we
    refer to &#147;prospectus&#148; we are referring to both this
    prospectus supplement as well as the accompanying prospectus.
    This prospectus supplement describes the specific terms of this
    offering. The accompanying prospectus and the information
    incorporated by reference therein describes our business and
    gives more general information, some of which may not apply to
    this offering. You should read this prospectus supplement
    together with the accompanying prospectus, including the
    documents incorporated by reference therein and herein, before
    making an investment in the securities offered by this
    prospectus supplement. If the information in this prospectus
    supplement or the information incorporated by reference in this
    prospectus supplement is inconsistent with the accompanying
    prospectus, the information in this prospectus supplement or the
    information incorporated by reference in this prospectus
    supplement will apply and will supersede that information in the
    accompanying prospectus.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    Unless otherwise stated or context otherwise requires, all
    references in this prospectus supplement to:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    &#147;K. Hovnanian&#148; are to K. Hovnanian Enterprises, Inc.,
    a California corporation;&#160;and
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    &#147;Hovnanian,&#148; &#147;us,&#148; &#147;we,&#148;
    &#147;our&#148; or &#147;Company&#148; are to Hovnanian
    Enterprises, Inc., a Delaware corporation, together with its
    consolidated subsidiaries, including K. Hovnanian.
</TD>
</TR>

</TABLE>

<A name='Y89359102'>
<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: transparent">

    <B><FONT style="font-family: 'Times New Roman', Times">INDUSTRY
    AND MARKET DATA</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    We obtained the market and competitive position data used
    throughout this prospectus supplement, the accompanying
    prospectus and the documents incorporated by reference in this
    prospectus supplement and the accompanying prospectus from our
    own research, surveys or studies conducted by third parties and
    industry or general publications. Industry publications and
    surveys generally state that they have obtained information from
    sources believed to be reliable, but do not guarantee the
    accuracy and completeness of such information. While we believe
    that each of these studies and publications is reliable, neither
    we nor the underwriters have independently verified such data
    and neither we nor the underwriters make any representation as
    to the accuracy of such information. Similarly, we believe our
    internal research is reliable, but it has not been verified by
    any independent sources.
</DIV>

<A name='Y89359103'>
<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: transparent">

    <B><FONT style="font-family: 'Times New Roman', Times">FORWARD-LOOKING
    STATEMENTS</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    This prospectus supplement, the accompanying prospectus and the
    documents incorporated by reference include
    &#147;forward-looking statements.&#148; Such statements involve
    known and unknown risks, uncertainties and other factors that
    may cause actual results, performance or achievements of the
    Company to be materially different from any future results,
    performance or achievements expressed or implied by the
    forward-looking statements. Although we believe that our plans,
    intentions and expectations reflected in, or suggested by such
    forward-looking statements are reasonable, we can give no
    assurance that such plans, intentions, or expectations will be
    achieved. Such risks, uncertainties and other factors include,
    but are not limited to:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    Changes in general and local economic and industry and business
    conditions and impacts of the sustained homebuilding downturn;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    Adverse weather and other environmental conditions and natural
    disasters;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    Changes in market conditions and seasonality of the
    Company&#146;s business;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    Changes in home prices and sales activity in the markets where
    the Company builds homes;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    Government regulation, including regulations concerning
    development of land, the home building, sales and customer
    financing processes, tax laws, and the environment;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    Fluctuations in interest rates and the availability of mortgage
    financing;
</TD>
</TR>

</TABLE>
<!-- XBRL Pagebreak Begin -->

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    S-ii
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#Y89359tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<!-- XBRL Pagebreak End -->

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    Shortages in, and price fluctuations of, raw materials and labor;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    The availability and cost of suitable land and improved lots;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    Levels of competition;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    Availability of financing to the Company;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    Utility shortages and outages or rate fluctuations;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    Levels of indebtedness and restrictions on the Company&#146;s
    operations and activities imposed by the agreements governing
    the Company&#146;s outstanding indebtedness;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    The Company&#146;s sources of liquidity;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    Changes in credit ratings;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    Availability of net operating loss carryforwards;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    Operations through joint ventures with third parties;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    Product liability litigation and warranty claims;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    Successful identification and integration of acquisitions;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    Significant influence of the Company&#146;s controlling
    stockholders;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    Geopolitical risks, terrorist acts and other acts of
    war;&#160;and
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    Other factors described in detail in our Annual Report on
    <FONT style="white-space: nowrap">Form&#160;10-K/A</FONT>
    for the year ended October&#160;31, 2010, and in this prospectus
    supplement under &#147;Risk Factors.&#148;
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    All forward-looking statements attributable to us or persons
    acting on our behalf are expressly qualified in their entirety
    by the cautionary statements and risk factors contained
    throughout this prospectus. Except as otherwise required by
    applicable securities laws, we undertake no obligation to
    publicly update or revise any forward-looking statements,
    whether as a result of new information, future events, changed
    circumstances or any other reason.
</DIV>
<!-- XBRL Pagebreak Begin -->

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <BR>
    S-iii
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#Y89359tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<!-- XBRL Pagebreak End -->
<DIV style="width: 100%; height: 9in; border-top: 1px solid #000000; padding-top: 12pt; border-right: 1px solid #000000; padding-right: 12pt; border-bottom: 1px solid #000000; padding-bottom: 12pt; border-left: 1px solid #000000; padding-left: 12pt"><!-- Begin box 1 -->

<A name='Y89359104'>
<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: transparent">

    <B><FONT style="font-family: 'Times New Roman', Times; font-variant: SMALL-CAPS">Summary</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <I>The following summary contains information about Hovnanian
    and the offering of the Units. It does not contain all of the
    information that may be important to you in making a decision to
    purchase the Units. For a more complete understanding of
    Hovnanian and the offering of the Units, we urge you to read
    this entire prospectus supplement, the accompanying prospectus
    and the documents incorporated by reference carefully, including
    the &#147;Risk Factors&#148; sections and our financial
    statements and the notes to those statements incorporated by
    reference herein.</I>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <I>Unless otherwise specifically indicated, all information in
    this prospectus supplement assumes the underwriters&#146; option
    to purchase additional Units is not exercised.</I>
</DIV>

<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: transparent">

    <B><FONT style="font-family: 'Times New Roman', Times">The
    Company</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    We design, construct, market, and sell single-family detached
    homes, attached townhomes and condominiums, mid-rise
    condominiums, urban infill and active adult homes in planned
    residential developments and are one of the nation&#146;s
    largest builders of residential homes. Founded in 1959 by Kevork
    Hovnanian, Hovnanian Enterprises, Inc. was incorporated in New
    Jersey in 1967 and reincorporated in Delaware in 1983. Since the
    incorporation of our predecessor company and including
    unconsolidated joint ventures, we have delivered in excess of
    291,000 homes, including 5,009 homes in fiscal 2010. The Company
    consists of two distinct operations: homebuilding and financial
    services. Our homebuilding operations consist of six segments:
    Northeast, Mid-Atlantic, Midwest, Southeast, Southwest and West.
    Our financial services operations provide mortgage loans and
    title services to the customers of our homebuilding operations.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    We are currently, excluding unconsolidated joint ventures,
    offering homes for sale in 192 communities in 40 markets in
    18&#160;states throughout the United States. Our operations span
    all significant aspects of the
    <FONT style="white-space: nowrap">home-buying</FONT>
    process&#160;&#151; from design, construction, and sale, to
    mortgage origination and title services. We market and build
    homes for first-time buyers, first-time and second-time
    <FONT style="white-space: nowrap">move-up</FONT>
    buyers, luxury buyers, active adult buyers, and empty nesters.
    We offer a variety of home styles at base prices ranging from
    $34,000 (low income housing) to $1,660,000 with an average sales
    price, including options, of $281,000 nationwide in fiscal 2010.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    We market and build homes that are constructed in 20 of the
    nation&#146;s top 50 housing markets. We segregate our
    homebuilding operations geographically into the following six
    segments:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    Northeast: New Jersey, New York, and Pennsylvania
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
     Mid-Atlantic:&#160;Delaware, Maryland, Virginia, West Virginia,
    and Washington,&#160;D.C.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    Midwest:&#160;Illinois, Kentucky, Minnesota, and Ohio
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    Southeast:&#160;Florida, Georgia, North Carolina, and South
    Carolina
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    Southwest:&#160;Arizona and Texas
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    West:&#160;California
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    Our corporate offices are located at 110&#160;West Front Street,
    P.O.&#160;Box&#160;500, Red Bank, New Jersey 07701, our
    telephone number is
    <FONT style="white-space: nowrap">732-747-7800,</FONT>
    and our Internet web site address is www.khov.com. Information
    on or accessible through our website is not a part of, or
    incorporated by reference in, this prospectus.
</DIV>

<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: transparent">

    <B><FONT style="font-family: 'Times New Roman', Times">Business
    Strategies</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    Due to the progressive weakening of demand in our homebuilding
    markets over the past several years, we have experienced
    declines in revenues and gross profit, sustained significant
    asset impairment charges, and incurred losses before income
    taxes in fiscal 2007, 2008, 2009, and 2010. Although the timing
    of a recovery in the housing market is unclear, because certain
    long-term fundamentals which support housing demand, namely
    population growth and household formation, remain solid, we
    believe the current negative conditions
</DIV>
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<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <BR>
    S-1
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#Y89359tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<DIV style="width: 100%; height: 9in; border-top: 1px solid #000000; padding-top: 12pt; border-right: 1px solid #000000; padding-right: 12pt; border-bottom: 1px solid #000000; padding-bottom: 12pt; border-left: 1px solid #000000; padding-left: 12pt"><!-- Begin box 1 -->
<!-- XBRL Pagebreak End -->

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    will moderate over time. Consequently, our primary focus while
    market conditions have been weak over the past several years has
    been to strengthen our financial condition by reducing
    inventories of homes and land, controlling and reducing
    construction and overhead costs, maximizing cash flows, reducing
    outstanding debt, and maintaining strong liquidity. However, in
    the first quarter of 2009, we began to see opportunities to
    purchase land at prices and terms that make economic sense in
    light of our sales prices and sales paces. As a result, we
    determined to either purchase or option certain new properties.
    In order to return to profitability, we will need to continue
    purchasing new land and that will generate good investment
    returns and drive greater operating efficiencies, as well as
    control expenses commensurate with our level of deliveries.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    In addition to our current focus on maintaining strong liquidity
    and evaluating new investment opportunities, we will continue to
    focus on our historic key business strategies. We believe that
    these strategies separate us from our competitors in the
    residential homebuilding industry and the adoption,
    implementation, and adherence to these principles will continue
    to benefit our business.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    Our goal is to become a significant builder in each of the
    selected markets in which we operate, which will enable us to
    achieve powers and economies of scale and differentiate
    ourselves from most of our competitors.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <B><I>We offer a broad product array to provide housing to a
    wide range of customers.</I></B>&#160;&#160;Our customers
    consist of first-time buyers, first-time and second-time
    <FONT style="white-space: nowrap">move-up</FONT>
    buyers, luxury buyers, active adult buyers, and empty nesters.
    Our diverse product array includes single-family detached homes,
    attached townhomes and condominiums, mid-rise condominiums,
    urban infill, and active adult homes.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <B><I>We are committed to customer satisfaction and quality in
    the homes that we build.</I></B>&#160;&#160;We recognize that
    our future success rests in the ability to deliver quality homes
    to satisfied customers. We seek to expand our commitment to
    customer service through a variety of quality initiatives. In
    addition, our focus remains on attracting and developing quality
    associates. We use several leadership development and mentoring
    programs to identify key individuals and prepare them for
    positions of greater responsibility within our Company.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <B><I>We focus on achieving high return on invested
    capital.</I></B>&#160;&#160;Each new community is evaluated
    based on its ability to meet or exceed internal rate of return
    requirements. Our belief is that the best way to create lasting
    value for our shareholders is through a strong focus on return
    on invested capital. However, given market conditions during the
    downturn, until 2009, it had been difficult to find new land
    investments that meet or exceed these rate of return
    requirements. Therefore, we have focused on managing the balance
    sheet by selling through our currently owned inventory and
    conserving cash to be prepared to invest in new land when market
    conditions are right. Since the first quarter of fiscal 2009, we
    have begun to see land investment opportunities that meet or
    exceed our underwriting requirements. New land purchases at
    pricing that will generate good investment returns are needed to
    return to profitability.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <B><I>We utilize a risk-averse land
    strategy.</I></B>&#160;&#160;We attempt to acquire land with a
    minimum cash investment and negotiate takedown options, thereby
    limiting the financial exposure to the amounts invested in
    property and predevelopment costs. This policy significantly
    reduces our risk and generally allows us to obtain necessary
    development approvals before acquisition of the land.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <B><I>We enter into homebuilding and land development joint
    ventures from time to time as a means of controlling lot
    positions, expanding our market opportunities, establishing
    strategic alliances, reducing our risk profile, leveraging our
    capital base, and enhancing our returns on
    capital.</I></B>&#160;&#160;Our homebuilding joint ventures are
    generally entered into with third-party investors to develop
    land and construct homes that are sold directly to homebuyers.
    Our land development joint ventures include those with
    developers and other homebuilders, as well as financial
    investors to develop finished lots for sale to the joint
    venture&#146;s members or other third parties.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <B><I>We manage our financial services operations to better
    serve all of our homebuyers.</I></B>&#160;&#160;Our current
    mortgage financing and title service operations enhance our
    contact with customers and allow us to coordinate the
    home-buying experience from beginning to end.
</DIV>
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    <BR>
    S-2
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<H5 align="left" style="page-break-before:always"><A HREF="#Y89359tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<DIV style="width: 100%; height: 9in; border-top: 1px solid #000000; padding-top: 12pt; border-right: 1px solid #000000; padding-right: 12pt; border-bottom: 1px solid #000000; padding-bottom: 12pt; border-left: 1px solid #000000; padding-left: 12pt"><!-- Begin box 1 -->
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    <B><FONT style="font-family: 'Times New Roman', Times">Related
    Transactions</FONT></B>
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: transparent">

    <B><FONT style="font-family: 'Times New Roman', Times">Concurrent
    Offerings</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    Concurrently with this offering, pursuant to a separate
    prospectus supplement, we are offering 11,750,000&#160;shares of
    our Class&#160;A common stock with a total price to public of
    approximately $50.5&#160;million (or 13,512,500&#160;shares,
    with a total price to public of approximately $58.1&#160;million
    if the underwriters exercise their
    <FONT style="white-space: nowrap">over-allotment</FONT>
    option with respect to that offering in full) in an underwritten
    public offering (the &#147;Common Stock Offering&#148;). We
    estimate that the net proceeds of the Common Stock Offering,
    after deducting the underwriting discount and estimated offering
    expenses, will be approximately $47.7&#160;million (or
    $54.9&#160;million if the underwriters exercise their
    over-allotment option with respect to that offering in full),
    although there can be no assurance that the Common Stock
    Offering will be completed.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    Concurrently with this offering, pursuant to a separate
    prospectus supplement, we are also offering $155.0&#160;million
    aggregate principal amount of our Senior Notes due 2015 (the
    &#147;Senior Notes&#148;), in an underwritten public offering
    (the &#147;Notes Offering&#148; and together with the Common
    Stock Offering, the &#147;Concurrent Offerings&#148;). We
    estimate that the net proceeds of the Notes Offering, after
    taking into account the original issue discount and deducting
    the underwriting discount and estimated offering expenses, will
    be approximately $147.9&#160;million, although there can be no
    assurance that the Notes Offering will be completed.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    The completion of the Notes Offering is contingent on the
    completion of this offering and the Common Stock Offering, but
    the completion of this offering and the Common Stock Offering
    are not contingent on the completion of each other or the Notes
    Offering.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: transparent">

    <B><FONT style="font-family: 'Times New Roman', Times">Tender
    Offers and Redemptions</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    On January&#160;31, 2011, we commenced (i)&#160;a cash tender
    offer (the &#147;2012 Senior Notes Tender Offer&#148;) for any
    and all of the approximately $35.5&#160;million outstanding
    aggregate principal amount of our 8%&#160;Senior Notes due 2012
    (the &#147;2012 Senior Notes&#148;), (ii)&#160;a cash tender
    offer (the &#147;2012 Senior Subordinated Notes Tender
    Offer&#148;) for any and all of the approximately
    $66.6&#160;million outstanding aggregate principal amount of our
    8<FONT style="vertical-align: text-top; font-size: 70%;">7</FONT>/<FONT style="font-size: 70%;">8</FONT>%&#160;Senior
    Subordinated Notes due 2012 (the &#147;2012 Senior Subordinated
    Notes&#148;), and (iii)&#160;a cash tender offer (the &#147;2013
    Notes Tender Offer&#148; and together with the 2012 Senior Notes
    Tender Offer and the 2012 Senior Subordinated Notes Tender
    Offer, the &#147;Tender Offers&#148; ) for any and all of the
    approximately $53.5&#160;million outstanding aggregate principal
    amount of our
    7<FONT style="vertical-align: text-top; font-size: 70%;">3</FONT>/<FONT style="font-size: 70%;">4</FONT>%&#160;Senior
    Subordinated Notes due 2013 (the &#147;2013 Notes&#148; and
    together with the 2012 Senior Notes and the 2012 Senior
    Subordinated Notes, the &#147;Tender Offer Notes&#148;). The
    consummation of each of the Tender Offers is conditioned upon
    the satisfaction, or waiver by us, of certain conditions,
    including the receipt of aggregate net cash proceeds from this
    offering and the Concurrent Offerings sufficient to finance the
    payment of the consideration to holders of the Tender Offer
    Notes that participate in the Tender Offers. Neither the
    completion of this offering nor the Concurrent Offerings is
    conditioned upon completion of the Tender Offers.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    All of the Tender Offer Notes are currently redeemable at our
    option and we currently expect that we will exercise our right
    to optionally redeem any and all Tender Offer Notes that have
    not been accepted and paid for in the Tender Offers (the
    &#147;Redemptions&#148;) at a price equal to 100% of the
    principal amount thereof, plus accrued unpaid interest to the
    redemption date, in the case of the 2012 Senior Notes and 2012
    Senior Subordinated Notes, and a price equal to 101.292% of the
    principal amount thereof, plus accrued and unpaid interest, in
    the case of the 2013 Notes.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    We intend to finance the Tender Offers
    <FONT style="white-space: nowrap">and/or</FONT> the
    Redemptions with a portion of the net proceeds of this offering
    and the Concurrent Offerings. The remaining net proceeds will be
    used for general corporate purposes. Credit Suisse Securities
    (USA) LLC will serve as dealer manager for the Tender Offers.
</DIV>
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    <BR>
    S-3
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<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<DIV style="width: 100%; height: 9in; border-top: 1px solid #000000; padding-top: 12pt; border-right: 1px solid #000000; padding-right: 12pt; border-bottom: 1px solid #000000; padding-bottom: 12pt; border-left: 1px solid #000000; padding-left: 12pt"><!-- Begin box 1 -->
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<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: transparent">

    <B><FONT style="font-family: 'Times New Roman', Times">The
    Offering</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <I>The summary below describes the principal terms of the Units,
    the purchase contracts and the amortizing notes. Certain of the
    terms and conditions described below are subject to important
    limitations and exceptions. The &#147;Description of the
    Units,&#148; &#147;Description of the Purchase Contracts&#148;
    and &#147;Description of the Amortizing Notes&#148; sections of
    this prospectus supplement contain a more detailed description
    of the terms and conditions of the Units, the purchase contracts
    and the amortizing notes. As used in this section, the term
    &#147;Hovnanian&#148; means Hovnanian Enterprises, Inc. and does
    not include K. Hovnanian Enterprises, Inc. or any other
    subsidiary of Hovnanian Enterprises, Inc.</I>
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: transparent">

    <B><FONT style="font-family: 'Times New Roman', Times">The
    Units</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent"><!-- TABLE 06 -->

<TR>
    <TD width="36%"></TD>
    <TD width="1%"></TD>
    <TD width="63%"></TD>
</TR>

<TR>
    <TD valign="top">
    Issuer</TD>
    <TD></TD>
    <TD valign="bottom">
    Hovnanian Enterprises, Inc., a Delaware corporation, and
    K.&#160;Hovnanian Enterprises, Inc., a California corporation.</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD valign="top">
    Number of Units offered</TD>
    <TD></TD>
    <TD valign="bottom">
    3,000,000 Units. We have also granted the underwriters an
    option, for a period of 30&#160;days from the date of this
    prospectus supplement, to purchase up to an additional 450,000
    Units, solely to cover over-allotments.</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD valign="top">
<DIV style="text-indent: -5%; margin-left: 5%">
    Stated amount and initial offering price of each Unit</DIV>
</TD>
    <TD></TD>
    <TD valign="bottom">
    $25 for each Unit.</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD valign="top">
    Components of each Unit</TD>
    <TD></TD>
    <TD valign="bottom">
    Each Unit is comprised of two parts:</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD valign="top">
</TD>
    <TD></TD>
    <TD valign="bottom">
<DIV style="text-indent: -9pt; margin-left: 9pt">
    &#149;&#160;a prepaid stock purchase contract issued by
    Hovnanian (a &#147;purchase contract&#148;); and</DIV>
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD valign="top">
</TD>
    <TD></TD>
    <TD valign="bottom">
<DIV style="text-indent: -9pt; margin-left: 9pt">
    &#149;&#160;a senior subordinated amortizing note issued by K.
    Hovnanian (an &#147;amortizing note&#148;).</DIV>
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD valign="top">
</TD>
    <TD></TD>
    <TD valign="bottom">
    Unless settled earlier at the holder&#146;s option or our
    option, each purchase contract will, subject to postponement in
    certain limited circumstances, automatically settle on
    February&#160;15, 2014 (such date, as so postponed (if
    applicable), the &#147;mandatory settlement date&#148;), and we
    will deliver not more than 5.8140&#160;shares and not less than
    4.7655&#160;shares of our Class&#160;A common stock per purchase
    contract, subject to adjustment, based upon the applicable
    settlement rate and applicable market value of our Class&#160;A
    common stock, as described below under &#147;Description of the
    Purchase Contracts&#160;&#151; Delivery of Class&#160;A Common
    Stock.&#148;</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD valign="top">
</TD>
    <TD></TD>
    <TD valign="bottom">
    No fractional shares of our Class&#160;A common stock will be
    issued to holders upon settlement of purchase contracts. In lieu
    of fractional shares, holders will be entitled to receive a cash
    payment of equivalent value calculated as described herein.
    Other than cash payments in lieu of fractional shares, the
    purchase contract holders will not receive any cash
    distributions under the purchase contracts.</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD valign="top">
</TD>
    <TD></TD>
    <TD valign="bottom">
    Each amortizing note will have an initial principal amount of
    $4.526049, will bear interest at the rate of 12.072% per annum
    and will have a final installment payment date of
    February&#160;15, 2014. On each February&#160;15, May&#160;15,
    August 15 and November 15 commencing on May&#160;15, 2011, K.
    Hovnanian will pay equal quarterly cash installments of
    $0.453125 per amortizing note (except for the May&#160;15, 2011
    installment payment, which will be $0.483334 per Amortizing
    Note), which cash payment in the aggregate per year will be
    equivalent to 7.25% per year with </TD>
</TR>
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    <BR>
    S-4
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<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<DIV style="width: 100%; height: 9in; border-top: 1px solid #000000; padding-top: 12pt; border-right: 1px solid #000000; padding-right: 12pt; border-bottom: 1px solid #000000; padding-bottom: 12pt; border-left: 1px solid #000000; padding-left: 12pt"><!-- Begin box 1 -->
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<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent"><!-- TABLE 06 -->

<TR>
    <TD width="36%"></TD>
    <TD width="1%"></TD>
    <TD width="63%"></TD>
</TR>

<TR>
    <TD valign="top">
</TD>
    <TD></TD>
    <TD valign="bottom">
    respect to each $25&#160;stated amount of Units. Each
    installment will constitute a payment of interest and a partial
    repayment of principal, allocated as set forth on the
    amortization schedule set forth under &#147;Description of the
    Amortizing Notes&#160;&#151; Amortization Schedule.&#148;</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD valign="top">
</TD>
    <TD></TD>
    <TD valign="bottom">
    The return to an investor on a Unit will depend upon the return
    provided by each component. The overall return will consist of
    the value of the shares of our Class&#160;A common stock
    delivered upon settlement of the purchase contracts and the cash
    installments paid on the amortizing notes.</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD valign="top">
    Limitation on beneficial ownership</TD>
    <TD></TD>
    <TD valign="bottom">
    In order to preserve the tax treatment of our net operating loss
    carryforwards under the Code, holders of Units and any separate
    purchase contracts will be subject to both a beneficial
    ownership limitation and a settlement limitation as described
    herein. In addition, as a Class&#160;A common stockholder upon
    settlement of your purchase contract, you will be subject to
    both our Rights Plan and the transfer restrictions of our
    amended Certificate of Incorporation. See &#147;Limitation on
    Beneficial Ownership of Class&#160;A Common Stock, Units and
    Separate Purchase Contracts.&#148;</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD valign="top">
<DIV style="text-indent: -5%; margin-left: 5%">
    Each Unit may be separated into its components</DIV>
</TD>
    <TD></TD>
    <TD valign="bottom">
    Each Unit may be separated by a holder into its constituent
    purchase contract and amortizing note on any business day during
    the period beginning on, and including, the business day
    immediately following the date of initial issuance of the Units
    to, but excluding, the third scheduled trading day immediately
    preceding February&#160;15, 2014 or any &#147;early mandatory
    settlement date,&#148; as defined below. Prior to separation,
    the purchase contracts and amortizing notes may only be
    purchased and transferred together as Units. See
    &#147;Description of the Units&#160;&#151; Separating and
    Recreating Units.&#148;</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD valign="top">
<DIV style="text-indent: -5%; margin-left: 5%">
    A Unit may be recreated from its components</DIV>
</TD>
    <TD></TD>
    <TD valign="bottom">
    If you hold a separate purchase contract and a separate
    amortizing note, you may combine the two components to recreate
    a Unit. See &#147;Description of the Units&#160;&#151;
    Separating and Recreating Units.&#148;</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD valign="top">
    Trading</TD>
    <TD></TD>
    <TD valign="bottom">
    We will apply to list the Units on the New York Stock Exchange,
    subject to satisfaction of its minimum listing standards with
    respect to the Units. If approved for listing, we expect trading
    on the New York Stock Exchange to begin within 30 calendar days
    after the Units are first issued. However, we will not initially
    apply to list the separate purchase contracts or the separate
    amortizing notes on any securities exchange or automated
    inter-dealer quotation system, but we may apply to list such
    separate purchase contracts and separate amortizing notes in the
    future as described under &#147;Description of the
    Units&#160;&#151; Listing of Securities.&#148; Prior to this
    offering, there has been no public market for the Units.</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD valign="top">
</TD>
    <TD></TD>
    <TD valign="bottom">
    Our Class&#160;A common stock is listed on The New York Stock
    Exchange under the symbol &#147;HOV.&#148;</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD valign="top">
    Use of proceeds</TD>
    <TD></TD>
    <TD valign="bottom">
    We estimate that the net proceeds to us from this offering,
    after deducting underwriting discounts and commissions and
    estimated </TD>
</TR>
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    <BR>
    S-5
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<H5 align="left" style="page-break-before:always"><A HREF="#Y89359tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<DIV style="width: 100%; height: 9in; border-top: 1px solid #000000; padding-top: 12pt; border-right: 1px solid #000000; padding-right: 12pt; border-bottom: 1px solid #000000; padding-bottom: 12pt; border-left: 1px solid #000000; padding-left: 12pt"><!-- Begin box 1 -->
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<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent"><!-- TABLE 06 -->

<TR>
    <TD width="36%"></TD>
    <TD width="1%"></TD>
    <TD width="63%"></TD>
</TR>

<TR>
    <TD valign="top">
</TD>
    <TD></TD>
    <TD valign="bottom">
    expenses of the offering, will be approximately
    $72.5&#160;million (or approximately $83.4&#160;million if the
    underwriters exercise their over-allotment option in full). We
    intend to use the net proceeds of this offering, together with
    the net proceeds from the Concurrent Offerings to finance the
    Tender Offers and/or the Redemptions, and for general corporate
    purposes. See &#147;&#151;Related Transactions&#148; above and
    &#147;Use of Proceeds.&#148;</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD valign="top">
<DIV style="text-indent: -5%; margin-left: 5%">
    United States federal income tax considerations</DIV>
</TD>
    <TD></TD>
    <TD valign="bottom">
    Although there is no authority directly on point and therefore
    the issue is not entirely free from doubt, each Unit will be
    treated as an investment unit composed of two separate
    instruments for U.S. federal income tax purposes: (i)&#160;a
    purchase contract and (ii)&#160;an amortizing note. Under this
    treatment, a holder of Units will be treated as if it held each
    component of the Units for U.S. federal income tax purposes. By
    acquiring a Unit, you will agree to treat (i)&#160;a Unit as an
    investment unit composed of two separate instruments in
    accordance with its form and (ii)&#160;the amortizing notes as
    indebtedness of K. Hovnanian for U.S. federal income tax
    purposes. If, however, the components of a Unit were treated as
    a single instrument, the U.S. federal income tax consequences
    could differ from the consequences described herein.</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD valign="top">
</TD>
    <TD></TD>
    <TD valign="bottom">
    Holders should consult their tax advisors regarding the tax
    treatment of an investment in Units and whether a purchase of a
    Unit is advisable in light of the investor&#146;s particular tax
    situation and the tax treatment described under &#147;Certain
    United States Federal Income and Estate Tax Consequences.&#148;</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD valign="top">
    <B>The Purchase Contracts</B> </TD>
    <TD></TD>
    <TD valign="bottom">
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD valign="top">
    Mandatory settlement date</TD>
    <TD></TD>
    <TD valign="bottom">
    February&#160;15, 2014, subject to postponement in limited
    circumstances.</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD valign="top">
    Mandatory settlement</TD>
    <TD></TD>
    <TD valign="bottom">
    On the mandatory settlement date, unless such purchase contract
    has been earlier settled, each purchase contract will
    automatically settle, and we will deliver a number of shares of
    our Class&#160;A common stock, based on the applicable
    settlement rate.</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD valign="top">
<DIV style="text-indent: -5%; margin-left: 5%">
    Settlement rate for the mandatory settlement date</DIV>
</TD>
    <TD></TD>
    <TD valign="bottom">
    The &#147;settlement rate&#148; for each purchase contract will
    be not more than 5.8140 shares and not less than 4.7655 shares
    of our Class&#160;A common stock (each subject to adjustment as
    described herein) depending on the applicable market value of
    our Class&#160;A common stock, calculated as described below.</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD valign="top">
</TD>
    <TD></TD>
    <TD valign="bottom">
<DIV style="text-indent: -9pt; margin-left: 9pt">
    &#149;&#160;If the applicable market value is equal to or
    greater than the threshold appreciation price (as defined
    below), you will receive 4.7655 shares of Class&#160;A common
    stock per purchase contract (the &#147;minimum settlement
    rate&#148;).</DIV>
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD valign="top">
</TD>
    <TD></TD>
    <TD valign="bottom">
<DIV style="text-indent: -9pt; margin-left: 9pt">
    &#149;&#160;If the applicable market value is greater than $4.30
    (the &#147;reference price&#148;) but less than the threshold
    appreciation price, you will receive a number of shares per
    purchase contract equal to $25, <I>divided by </I>the applicable
    market value.</DIV>
</TD>
</TR>

</TABLE>
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    <BR>
    S-6
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<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<DIV style="width: 100%; height: 9in; border-top: 1px solid #000000; padding-top: 12pt; border-right: 1px solid #000000; padding-right: 12pt; border-bottom: 1px solid #000000; padding-bottom: 12pt; border-left: 1px solid #000000; padding-left: 12pt"><!-- Begin box 1 -->
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<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent"><!-- TABLE 06 -->

<TR>
    <TD width="36%"></TD>
    <TD width="1%"></TD>
    <TD width="63%"></TD>
</TR>

<TR>
    <TD valign="top">
</TD>
    <TD></TD>
    <TD valign="bottom">
<DIV style="text-indent: -9pt; margin-left: 9pt">
    &#149;&#160;If the applicable market value is less than or equal
    to the reference price, you will receive 5.8140 shares of
    Class&#160;A common stock per purchase contract (the
    &#147;maximum settlement rate&#148;).</DIV>
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD valign="top">
</TD>
    <TD></TD>
    <TD valign="bottom">
    Each of the maximum settlement rate and the minimum settlement
    rate is subject to adjustment as described below under
    &#147;Description of the Purchase Contracts&#160;&#151;
    Adjustments to the Fixed Settlement Rates.&#148;</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD valign="top">
</TD>
    <TD></TD>
    <TD valign="bottom">
    The &#147;applicable market value&#148; means the average of the
    &#147;closing prices&#148; (as defined below) of our
    Class&#160;A common stock on each of the 20 consecutive trading
    days beginning on, and including, the 23rd scheduled trading day
    immediately preceding February&#160;15, 2014.</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD valign="top">
</TD>
    <TD></TD>
    <TD valign="bottom">
    The reference price is the public offering price of our
    Class&#160;A common stock in the common stock offering described
    above.</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD valign="top">
</TD>
    <TD></TD>
    <TD valign="bottom">
    The &#147;threshold appreciation price&#148; shall be equal to
    $25 <I>divided by </I>the minimum settlement rate (rounded to
    the nearest $0.0001). The threshold appreciation price, which is
    initially approximately $5.25, represents an approximately 22%
    appreciation over the reference price.</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD valign="top">
</TD>
    <TD></TD>
    <TD valign="bottom">
    No fractional shares of our Class&#160;A common stock will be
    issued to holders upon settlement of purchase contracts. In lieu
    of fractional shares, holders will be entitled to receive a cash
    payment of equivalent value calculated as described herein.
    Other than cash payments in lieu of fractional shares, the
    purchase contract holders will not receive any cash
    distributions.</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    The following table illustrates the settlement rate per purchase
    contract and the value of our Class&#160;A common stock issuable
    upon settlement on the mandatory settlement date, determined
    using the applicable market value shown, subject to adjustment.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE border="0" width="100%" align="center" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent"><!-- TABLE 01 -->
<!-- Table Width Row BEGIN -->
<TR style="font-size: 1pt" valign="bottom">
    <TD width="35%">&nbsp;</TD>	<!-- colindex=01 type=maindata -->
    <TD width="2%">&nbsp;</TD>	<!-- colindex=02 type=gutter -->
    <TD width="34%">&nbsp;</TD>	<!-- colindex=02 type=maindata -->
    <TD width="3%">&nbsp;</TD>	<!-- colindex=03 type=gutter -->
    <TD width="12%">&nbsp;</TD>	<!-- colindex=03 type=quadleft -->
    <TD width="1%">&nbsp;</TD>	<!-- colindex=03 type=maindata -->
    <TD width="12%">&nbsp;</TD>	<!-- colindex=03 type=quadright -->
</TR>
<!-- Table Width Row END -->
<!-- TableOutputHead -->
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom">
    <B>Value of Class A Common Stock<BR>
    </B>
</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="left" valign="bottom">
    <B>Applicable Market Value of Our<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom">
    <B>Delivered (Based on the<BR>
    </B>
</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="left" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>Class A Common Stock</B>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>Settlement Rate</B>
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>Applicable Market Value Thereof)</B>
</TD>
</TR>
<TR style="line-height: 3pt; font-size: 1pt">
<TD>&nbsp;
</TD>
</TR>
<!-- TableOutputBody -->
<TR valign="bottom">
<TD align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Less than or equal to $4.30
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="bottom">
    5.8140 shares of our Class A common stock
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    Less than $25
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Greater than $4.30 but less than the threshold appreciation price
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="bottom">
    A number of shares of our Class A common stock equal to $25
    <I>divided by </I>the applicable market value
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    $25
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Equal to or greater than the threshold appreciation price
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD align="left" valign="bottom">
    4.7655 shares of our Class A common stock
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    Greater than $25
</TD>
<TD>&nbsp;
</TD>
</TR>
</TABLE>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">

</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent"><!-- TABLE 06 -->

<TR>
    <TD width="36%"></TD>
    <TD width="1%"></TD>
    <TD width="63%"></TD>
</TR>

<TR>
    <TD valign="top">
    Early settlement at your election</TD>
    <TD></TD>
    <TD valign="bottom">
    At any time prior to 5:00&#160;p.m., New York City time, on the
    third scheduled trading day immediately preceding
    February&#160;15, 2014, you may settle any or all of your
    purchase contracts early, in which case we will deliver a number
    of shares of our Class&#160;A common stock per purchase contract
    equal to the minimum settlement rate, which is subject to
    adjustment as described below under &#147;Description of the
    Purchase Contracts&#160;&#151; Adjustments to the Fixed
    Settlement Rates.&#148; That is, the market value of our
    Class&#160;A </TD>
</TR>
<!-- XBRL Paragraph Pagebreak -->

</TABLE>
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</DIV><!-- End box 1 -->

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <BR>
    S-7
</DIV><!-- END PAGE WIDTH -->
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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#Y89359tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<DIV style="width: 100%; height: 9in; border-top: 1px solid #000000; padding-top: 12pt; border-right: 1px solid #000000; padding-right: 12pt; border-bottom: 1px solid #000000; padding-bottom: 12pt; border-left: 1px solid #000000; padding-left: 12pt"><!-- Begin box 1 -->
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<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent"><!-- TABLE 06 -->

<TR>
    <TD width="36%"></TD>
    <TD width="1%"></TD>
    <TD width="63%"></TD>
</TR>

<TR>
    <TD valign="top">
</TD>
    <TD></TD>
    <TD valign="bottom">
    common stock on the early settlement date will not affect the
    early settlement rate. Your right to settle your purchase
    contract prior to the third scheduled trading day immediately
    preceding February&#160;15, 2014 is subject to the delivery of
    your purchase contract.</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD valign="top">
</TD>
    <TD></TD>
    <TD valign="bottom">
    Upon early settlement at your election of a purchase contract
    that is a component of a Unit, the corresponding amortizing note
    will remain outstanding and beneficially owned by or registered
    in the name of, as the case may be, the holder who elected to
    settle the related purchase contract early.</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD valign="top">
<DIV style="text-indent: -5%; margin-left: 5%">
    Early settlement at your election upon a fundamental change</DIV>
</TD>
    <TD></TD>
    <TD valign="bottom">
    At any time prior to the third scheduled trading day immediately
    preceding February&#160;15, 2014, if a &#147;fundamental
    change&#148; (as defined herein) occurs, you may settle any or
    all of your purchase contracts early. If you elect to settle
    your purchase contracts early in connection with such
    fundamental change, you will receive a number of shares of our
    Class&#160;A common stock based on the &#147;fundamental change
    early settlement rate&#148; as described under &#147;Description
    of the Purchase Contracts&#160;&#151; Early Settlement Upon a
    Fundamental Change.&#148;</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD valign="top">
</TD>
    <TD></TD>
    <TD valign="bottom">
    Upon early settlement at your election in connection with a
    fundamental change of a purchase contract that is a component of
    a Unit, the corresponding amortizing note will remain
    outstanding and beneficially owned by or registered in the name
    of, as the case may be, the holder who elected to settle the
    related purchase contract early upon such fundamental change.</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD valign="top">
<DIV style="text-indent: -5%; margin-left: 5%">
    Early mandatory settlement at our election</DIV>
</TD>
    <TD></TD>
    <TD valign="bottom">
    We may elect to settle all, but not less than all, outstanding
    purchase contracts early at the &#147;early mandatory settlement
    rate&#148; (as described under &#147;Description of the Purchase
    Contracts&#160;&#151; Early Settlement at Our Election&#148;)
    upon a date fixed by us upon not less than five business
    days&#146; notice (the &#147;early mandatory settlement
    date&#148;).</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD valign="top">
</TD>
    <TD></TD>
    <TD valign="bottom">
    The &#147;early mandatory settlement rate&#148; will be the
    maximum settlement rate, unless the closing price of our
    Class&#160;A common stock for 20 or more trading days in a
    period of 30 consecutive trading days ending on the trading day
    immediately preceding the &#147;notice date&#148; (as defined
    under &#147;&#151;&#160;Early Settlement at Our Election&#148;
    below) exceeds 130% of the threshold appreciation price in
    effect on each such trading day, in which case the &#147;early
    mandatory settlement rate&#148; will be the minimum settlement
    rate.</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD valign="top">
</TD>
    <TD></TD>
    <TD valign="bottom">
    If we elect to settle all the purchase contracts early, you will
    have the right to require K. Hovnanian to repurchase your
    amortizing notes, except in certain circumstances, on the
    repurchase date and at the repurchase price as described under
    &#147;Description of the Amortizing Notes&#160;&#151; Repurchase
    of Amortizing Notes at the Option of the Holder.&#148;</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD valign="top">
    Limitation on beneficial ownership</TD>
    <TD></TD>
    <TD valign="bottom">
    In order to preserve the tax treatment of our net operating loss
    carryforwards under the Code, holders of Units and any separate </TD>
</TR>
<!-- XBRL Paragraph Pagebreak -->

</TABLE>
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</DIV><!-- End box 1 -->

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <BR>
    S-8
</DIV><!-- END PAGE WIDTH -->
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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#Y89359tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<DIV style="width: 100%; height: 9in; border-top: 1px solid #000000; padding-top: 12pt; border-right: 1px solid #000000; padding-right: 12pt; border-bottom: 1px solid #000000; padding-bottom: 12pt; border-left: 1px solid #000000; padding-left: 12pt"><!-- Begin box 1 -->
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<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent"><!-- TABLE 06 -->

<TR>
    <TD width="36%"></TD>
    <TD width="1%"></TD>
    <TD width="63%"></TD>
</TR>

<TR>
    <TD valign="top">
</TD>
    <TD></TD>
    <TD valign="bottom">
    purchase contracts will be subject to both a beneficial
    ownership limitation and a settlement limitation as described
    herein. In addition, as a Class&#160;A common stockholder upon
    settlement of your purchase contract, you will be subject to
    both our Rights Plan and the transfer restrictions of our
    amended Certificate of Incorporation. See &#147;Limitation on
    Beneficial Ownership of Class&#160;A Common Stock, Units and
    Separate Purchase Contracts.&#148;</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD valign="top">
    <B>The Amortizing Notes</B> </TD>
    <TD></TD>
    <TD valign="bottom">
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD valign="top">
    Issuer</TD>
    <TD></TD>
    <TD valign="bottom">
    K. Hovnanian Enterprises, Inc., a California corporation</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD valign="top">
<DIV style="text-indent: -5%; margin-left: 5%">
    Initial principal amount of each amortizing note</DIV>
</TD>
    <TD></TD>
    <TD valign="bottom">
    $4.526049</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD valign="top">
    Installment payments</TD>
    <TD></TD>
    <TD valign="bottom">
    Each installment payment of $0.453125 per amortizing note
    (except for the May&#160;15, 2011 installment payment, which
    will be $0.483334 per amortizing note) will be paid in cash and
    will constitute a partial repayment of principal and a payment
    of interest, computed at an annual rate of 12.072%. Interest
    will be calculated on the basis of a
    <FONT style="white-space: nowrap">360-day</FONT> year
    consisting of twelve
    <FONT style="white-space: nowrap">30-day</FONT>
    months. Payments will be applied first to the interest due and
    payable and then to the reduction of the unpaid principal
    amount, allocated as set forth on the amortization schedule set
    forth under &#147;Description of the Amortizing
    Notes&#160;&#151; Amortization Schedule.&#148;</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD valign="top">
    Installment payment dates</TD>
    <TD></TD>
    <TD valign="bottom">
    Each February&#160;15, May&#160;15, August 15 and
    November&#160;15, commencing on May&#160;15, 2011, with a final
    installment payment date of February&#160;15, 2014.</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD valign="top">
    Senior Subordinated Guarantees</TD>
    <TD></TD>
    <TD valign="bottom">
    Hovnanian Enterprises, Inc., the parent corporation of
    K.&#160;Hovnanian, and most of the parent&#146;s existing and
    future subsidiaries (collectively, the &#147;Guarantors&#148;)
    will, jointly and severally, unconditionally guarantee on a
    senior subordinated basis all of K.&#160;Hovnanian&#146;s
    obligations under the amortizing notes. If K.&#160;Hovnanian
    cannot make payments on the amortizing notes when they are due,
    the Guarantors must make the payments instead.</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD valign="top">
</TD>
    <TD></TD>
    <TD valign="bottom">
    As of the date of this prospectus supplement, our home mortgage
    subsidiaries, our joint ventures and subsidiaries holding
    interests in our joint ventures and certain of our title
    insurance subsidiaries are not Guarantors.</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD valign="top">
<DIV style="text-indent: -5%; margin-left: 5%">
    Ranking of the amortizing notes and subsidiary guarantees</DIV>
</TD>
    <TD></TD>
    <TD valign="bottom">
    The amortizing notes are senior subordinated obligations of
    K.&#160;Hovnanian and will not be secured by any collateral.
    Your right to payment under the amortizing notes will be:</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD valign="top">
</TD>
    <TD></TD>
    <TD valign="bottom">
<DIV style="text-indent: -9pt; margin-left: 9pt">
    &#149;&#160;junior to the rights of secured creditors to the
    extent of their security in K. Hovnanian&#146;s assets;</DIV>
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD valign="top">
</TD>
    <TD></TD>
    <TD valign="bottom">
<DIV style="text-indent: -9pt; margin-left: 9pt">
    &#149;&#160;subordinated in right of payment to all K.
    Hovnanian&#146;s existing and future &#147;Senior
    Indebtedness&#148; (as defined under &#147;Description of the
    Amortizing Notes&#160;&#151; Subordination&#148;);</DIV>
</TD>
</TR>

</TABLE>
<!-- XBRL Pagebreak Begin -->
</DIV><!-- End box 1 -->

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <BR>
    S-9
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#Y89359tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<DIV style="width: 100%; height: 9in; border-top: 1px solid #000000; padding-top: 12pt; border-right: 1px solid #000000; padding-right: 12pt; border-bottom: 1px solid #000000; padding-bottom: 12pt; border-left: 1px solid #000000; padding-left: 12pt"><!-- Begin box 1 -->
<!-- XBRL Pagebreak End -->

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent"><!-- TABLE 06 -->

<TR>
    <TD width="36%"></TD>
    <TD width="1%"></TD>
    <TD width="63%"></TD>
</TR>

<TR>
    <TD valign="top">
</TD>
    <TD></TD>
    <TD valign="bottom">
<DIV style="text-indent: -9pt; margin-left: 9pt">
    &#149;&#160;equal with the rights of creditors under other
    existing and future unsecured senior subordinated debt of K.
    Hovnanian, if any; and</DIV>
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD valign="top">
</TD>
    <TD></TD>
    <TD valign="bottom">
<DIV style="text-indent: -9pt; margin-left: 9pt">
    &#149;&#160;senior to the rights of creditors under existing and
    future debt that is expressly subordinated to the amortizing
    notes, if any.</DIV>
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD valign="top">
</TD>
    <TD></TD>
    <TD valign="bottom">
    The senior subordinated guarantees of the amortizing notes are
    the senior subordinated obligations of the Guarantors and will
    not be secured by any collateral. Your right to payment under
    any senior subordinated guarantee will be:</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD valign="top">
</TD>
    <TD></TD>
    <TD valign="bottom">
<DIV style="text-indent: -9pt; margin-left: 9pt">
    &#149;&#160;junior to the rights of secured creditors of the
    relevant Guarantor to the extent of their security in the
    relevant Guarantor&#146;s assets;</DIV>
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD valign="top">
</TD>
    <TD></TD>
    <TD valign="bottom">
<DIV style="text-indent: -9pt; margin-left: 9pt">
    &#149;&#160;subordinated to the rights of creditors under the
    relevant Guarantor&#146;s existing and future Senior
    Indebtedness;</DIV>
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD valign="top">
</TD>
    <TD></TD>
    <TD valign="bottom">
<DIV style="text-indent: -9pt; margin-left: 9pt">
    &#149;&#160;equal with the rights of creditors under the
    relevant Guarantor&#146;s other existing and future unsecured
    senior subordinated debt, if any; and</DIV>
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD valign="top">
</TD>
    <TD></TD>
    <TD valign="bottom">
<DIV style="text-indent: -9pt; margin-left: 9pt">
    &#149;&#160;senior to the rights of creditors under the relevant
    Guarantor&#146;s existing and future debt that is expressly
    subordinated to such senior subordinated guarantee, if any.</DIV>
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD valign="top">
</TD>
    <TD></TD>
    <TD valign="bottom">
    See &#147;Description of Amortizing Notes&#160;&#151;
    Ranking&#148; below.</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD valign="top">
</TD>
    <TD></TD>
    <TD valign="bottom">
    At October&#160;31, 2010, after giving effect to the completion
    of this offering and the Concurrent Offerings and the
    application of the net proceeds therefrom, K. Hovnanian and the
    Guarantors would have had:</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD valign="top">
</TD>
    <TD></TD>
    <TD valign="bottom">
<DIV style="text-indent: -9pt; margin-left: 9pt">
    &#149;&#160;approximately $797.2&#160;million of secured
    indebtedness outstanding ($784.6&#160;million, net of discount);
    and</DIV>
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD valign="top">
</TD>
    <TD></TD>
    <TD valign="bottom">
<DIV style="text-indent: -9pt; margin-left: 9pt">
    &#149;&#160;approximately $832.7&#160;million of senior
    unsecured notes ($827.2&#160;million, net of discount).</DIV>
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD valign="top">
</TD>
    <TD></TD>
    <TD valign="bottom">
    In addition, after giving effect to the use of proceeds from
    this offering and the Concurrent Offerings, the amortizing notes
    will be our only senior subordinated indebtedness outstanding
    and we will not have any other senior subordinated notes or
    subordinated notes.</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD valign="top">
</TD>
    <TD></TD>
    <TD valign="bottom">
    As of October&#160;31, 2010, our non-Guarantor subsidiaries had
    approximately $90.0&#160;million of liabilities, including trade
    payables, but excluding intercompany obligations.</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD valign="top">
<DIV style="text-indent: -5%; margin-left: 5%">
    Repurchase of amortizing notes at the option of the holder</DIV>
</TD>
    <TD></TD>
    <TD valign="bottom">
    If we elect to settle the purchase contracts early, holders will
    have the right to require us to repurchase their amortizing
    notes for cash at the repurchase price as described under
    &#147;Description of the Amortizing
    Notes&#160;&#151;&#160;Repurchase of Amortizing Notes at the
    Option of the Holder.&#148;</TD>
</TR>

</TABLE>
<!-- XBRL Pagebreak Begin -->
</DIV><!-- End box 1 -->

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <BR>
    S-10
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#Y89359tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<DIV style="width: 100%; height: 9in; border-top: 1px solid #000000; padding-top: 12pt; border-right: 1px solid #000000; padding-right: 12pt; border-bottom: 1px solid #000000; padding-bottom: 12pt; border-left: 1px solid #000000; padding-left: 12pt"><!-- Begin box 1 -->
<!-- XBRL Pagebreak End -->

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: transparent">

    <B><FONT style="font-family: 'Times New Roman', Times">SUMMARY
    FINANCIAL INFORMATION</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <I>The following table presents summary historical consolidated
    financial and other data of Hovnanian Enterprises, Inc. and
    subsidiaries as of and for the years ended October&#160;31,
    2010, 2009, 2008, 2007 and 2006. We derived the summary
    consolidated statement of operations and other data for the
    years ended October&#160;31, 2010, 2009, 2008, and the summary
    consolidated balance sheet data as of October 31 2010 and 2009
    from Hovnanian&#146;s audited consolidated financial statements
    incorporated by reference herein. The summary consolidated
    statement of operations and other data for the years ended
    October&#160;31, 2007 and 2006 and the summary consolidated
    balance sheet data as of October&#160;31, 2008, 2007 and 2006
    have been derived from Hovnanian&#146;s audited consolidated
    financial statements not incorporated by reference herein. You
    should read this data in conjunction with
    &#147;Management&#146;s Discussion and Analysis of Financial
    Condition and Results of Operations&#148; incorporated by
    reference herein and our consolidated financial statements and
    related notes for the three years ended October&#160;31, 2010,
    incorporated by reference herein.</I>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE border="0" width="100%" align="center" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
<!-- Table Width Row BEGIN -->
<TR style="font-size: 1pt" valign="bottom">
    <TD width="40%">&nbsp;</TD>	<!-- colindex=01 type=maindata -->
    <TD width="2%">&nbsp;</TD>	<!-- colindex=02 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=02 type=lead -->
    <TD width="7%" align="right">&nbsp;</TD>	<!-- colindex=02 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=02 type=hang1 -->
    <TD width="3%">&nbsp;</TD>	<!-- colindex=03 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=03 type=lead -->
    <TD width="7%" align="right">&nbsp;</TD>	<!-- colindex=03 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=03 type=hang1 -->
    <TD width="3%">&nbsp;</TD>	<!-- colindex=04 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=04 type=lead -->
    <TD width="8%" align="right">&nbsp;</TD>	<!-- colindex=04 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=04 type=hang1 -->
    <TD width="3%">&nbsp;</TD>	<!-- colindex=05 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=05 type=lead -->
    <TD width="7%" align="right">&nbsp;</TD>	<!-- colindex=05 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=05 type=hang1 -->
    <TD width="3%">&nbsp;</TD>	<!-- colindex=06 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=06 type=lead -->
    <TD width="7%" align="right">&nbsp;</TD>	<!-- colindex=06 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=06 type=hang1 -->
</TR>
<!-- Table Width Row END -->
<!-- TableOutputHead -->
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="18" align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>Year Ended</B>
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>October&#160;31,<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>October&#160;31,<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>October&#160;31,<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>October&#160;31,<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>October&#160;31,<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>2010</B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>2009</B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>2008</B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>2007</B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>2006</B>
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="18" align="center" valign="bottom">
    <B>(Dollars in thousands, except per share data)</B>
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="line-height: 3pt; font-size: 1pt">
<TD>&nbsp;
</TD>
</TR>
<!-- TableOutputBody -->
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <B>Statement of Operations and Other Data</B>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Revenues
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    1,371,842
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    1,596,290
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    3,308,111
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    4,798,921
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    6,148,235
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Inventory impairment loss and land option write-offs
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    135,699
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    659,475
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    710,120
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    457,773
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    336,204
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Gain on extinguishment of debt
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    25,047
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    410,185
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Income (loss) from unconsolidated joint ventures
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    956
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    (46,041
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    (36,600
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    (28,223
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    15,385
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    (Loss) income before income taxes excluding land-related
    charges, intangible impairments and gain on extinguishment of
    debt(1)
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    (184,630
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    (379,118
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    (391,323
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    (20,887
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    581,360
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    (Loss) income before income taxes
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    (295,282
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    (672,019
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    (1,168,048
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    (646,966
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    233,106
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    State and Federal income tax (benefit) provision
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    (297,870
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    44,693
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    (43,458
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    (19,847
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    83,573
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="font-size: 1pt">
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Net income (loss)
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    2,588
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    (716,712
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    (1,124,590
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    (627,119
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    149,533
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Less: preferred stock dividends
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    10,674
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    10,675
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="font-size: 1pt">
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Net income (loss) attributable to common stockholders
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    2,588
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    (716,712
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    (1,124,590
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    (637,793
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    138,858
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="font-size: 1pt">
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Per share data:
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Basic:
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Income (loss) per common share
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    0.03
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    (9.16
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    (16.04
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    (10.11
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    2.21
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Weighted average number of common shares outstanding
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    78,691
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    78,238
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    70,131
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    63,079
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    62,822
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Assuming dilution:
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Income (loss) per common share
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    0.03
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    (9.16
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    (16.04
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    (10.11
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    2.14
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Weighted average number of common shares outstanding
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    79,683
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    78,238
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    70,131
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    63,079
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    64,838
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
</TABLE>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">

</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>
<!-- XBRL Pagebreak Begin -->
</DIV><!-- End box 1 -->

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <BR>
    S-11
</DIV><!-- END PAGE WIDTH -->
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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#Y89359tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<DIV style="width: 100%; height: 9in; border-top: 1px solid #000000; padding-top: 12pt; border-right: 1px solid #000000; padding-right: 12pt; border-bottom: 1px solid #000000; padding-bottom: 12pt; border-left: 1px solid #000000; padding-left: 12pt"><!-- Begin box 1 -->
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<TABLE border="0" width="100%" align="center" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
<!-- Table Width Row BEGIN -->
<TR style="font-size: 1pt" valign="bottom">
    <TD width="41%">&nbsp;</TD>	<!-- colindex=01 type=maindata -->
    <TD width="2%">&nbsp;</TD>	<!-- colindex=02 type=gutter -->
    <TD width="4%" align="right">&nbsp;</TD>	<!-- colindex=02 type=lead -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=02 type=body -->
    <TD width="4%" align="left">&nbsp;</TD>	<!-- colindex=02 type=hang1 -->
    <TD width="3%">&nbsp;</TD>	<!-- colindex=03 type=gutter -->
    <TD width="4%" align="right">&nbsp;</TD>	<!-- colindex=03 type=lead -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=03 type=body -->
    <TD width="4%" align="left">&nbsp;</TD>	<!-- colindex=03 type=hang1 -->
    <TD width="3%">&nbsp;</TD>	<!-- colindex=04 type=gutter -->
    <TD width="4%" align="right">&nbsp;</TD>	<!-- colindex=04 type=lead -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=04 type=body -->
    <TD width="4%" align="left">&nbsp;</TD>	<!-- colindex=04 type=hang1 -->
    <TD width="3%">&nbsp;</TD>	<!-- colindex=05 type=gutter -->
    <TD width="4%" align="right">&nbsp;</TD>	<!-- colindex=05 type=lead -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=05 type=body -->
    <TD width="4%" align="left">&nbsp;</TD>	<!-- colindex=05 type=hang1 -->
    <TD width="3%">&nbsp;</TD>	<!-- colindex=06 type=gutter -->
    <TD width="4%" align="right">&nbsp;</TD>	<!-- colindex=06 type=lead -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=06 type=body -->
    <TD width="4%" align="left">&nbsp;</TD>	<!-- colindex=06 type=hang1 -->
</TR>
<!-- Table Width Row END -->
<!-- TableOutputHead -->
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom">
    <B>October&#160;31,<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom">
    <B>October&#160;31,<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom">
    <B>October&#160;31,<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom">
    <B>October&#160;31,<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom">
    <B>October&#160;31,<BR>
    </B>
</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>2010</B>
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>2009</B>
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>2008</B>
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>2007</B>
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>2006</B>
</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="19" align="center" valign="bottom">
    <B>(Dollars in thousands)</B>
</TD>
</TR>
<TR style="line-height: 3pt; font-size: 1pt">
<TD>&nbsp;
</TD>
</TR>
<!-- TableOutputBody -->
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <B>Consolidated Balance Sheet Data</B>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Total Assets
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    1,817,560
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    2,024,577
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    3,637,322
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    4,540,548
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    5,480,035
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Mortgages, term loans, revolving credit agreements, and notes
    payable
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    98,613
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    77,364
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    107,913
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    410,298
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    319,943
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Senior secured notes, senior notes and senior subordinated notes
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    1,616,347
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    1,751,701
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    2,505,805
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    1,910,600
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    2,049,778
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Total equity deficit
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    (337,938
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    (348,868
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    330,264
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    1,321,803
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    1,942,163
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
</TABLE>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">

</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    Important indicators of our future results are recently signed
    contracts and home contract backlog for future deliveries. Our
    sales contracts and homes in contract backlog, which primarily
    use base sales prices by segment, are set forth below:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE border="0" width="100%" align="center" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
<!-- Table Width Row BEGIN -->
<TR style="font-size: 1pt" valign="bottom">
    <TD width="35%">&nbsp;</TD>	<!-- colindex=01 type=maindata -->
    <TD width="2%">&nbsp;</TD>	<!-- colindex=02 type=gutter -->
    <TD width="4%" align="right">&nbsp;</TD>	<!-- colindex=02 type=lead -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=02 type=body -->
    <TD width="4%" align="left">&nbsp;</TD>	<!-- colindex=02 type=hang1 -->
    <TD width="3%">&nbsp;</TD>	<!-- colindex=03 type=gutter -->
    <TD width="4%" align="right">&nbsp;</TD>	<!-- colindex=03 type=lead -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=03 type=body -->
    <TD width="4%" align="left">&nbsp;</TD>	<!-- colindex=03 type=hang1 -->
    <TD width="3%">&nbsp;</TD>	<!-- colindex=04 type=gutter -->
    <TD width="4%" align="right">&nbsp;</TD>	<!-- colindex=04 type=lead -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=04 type=body -->
    <TD width="4%" align="left">&nbsp;</TD>	<!-- colindex=04 type=hang1 -->
    <TD width="3%">&nbsp;</TD>	<!-- colindex=05 type=gutter -->
    <TD width="3%" align="right">&nbsp;</TD>	<!-- colindex=05 type=lead -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=05 type=body -->
    <TD width="3%" align="left">&nbsp;</TD>	<!-- colindex=05 type=hang1 -->
    <TD width="3%">&nbsp;</TD>	<!-- colindex=06 type=gutter -->
    <TD width="3%" align="right">&nbsp;</TD>	<!-- colindex=06 type=lead -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=06 type=body -->
    <TD width="3%" align="left">&nbsp;</TD>	<!-- colindex=06 type=hang1 -->
    <TD width="3%">&nbsp;</TD>	<!-- colindex=07 type=gutter -->
    <TD width="3%" align="right">&nbsp;</TD>	<!-- colindex=07 type=lead -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=07 type=body -->
    <TD width="3%" align="left">&nbsp;</TD>	<!-- colindex=07 type=hang1 -->
</TR>
<!-- Table Width Row END -->
<!-- TableOutputHead -->
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="11" nowrap align="center" valign="bottom">
    <B>Net Contracts(2)<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="11" nowrap align="center" valign="bottom">
&nbsp;
</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="11" nowrap align="center" valign="bottom">
    <B>for the Year<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="11" nowrap align="center" valign="bottom">
    <B>Contract Backlog as of<BR>
    </B>
</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="11" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>Ended October&#160;31,</B>
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="11" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>October&#160;31,</B>
</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>2010</B>
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>2009</B>
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>2008</B>
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>2010</B>
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>2009</B>
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>2008</B>
</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="23" nowrap align="center" valign="bottom">
    <B>(Dollars in thousands)</B>
</TD>
</TR>
<TR style="line-height: 3pt; font-size: 1pt">
<TD>&nbsp;
</TD>
</TR>
<!-- TableOutputBody -->
<TR valign="bottom" style="background: #CCEEFF">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <B>Northeast:</B>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 20pt">
    Dollars
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    193,826
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    350,515
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    381,401
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    94,363
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    196,262
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    215,604
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 20pt">
    Homes
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    497
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    783
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    934
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    236
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    457
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    497
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <B>Mid-Atlantic:</B>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 20pt">
    Dollars
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    236,095
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    281,194
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    313,405
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    106,589
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    150,819
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    165,871
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 20pt">
    Homes
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    629
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    789
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    880
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    262
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    386
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    385
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <B>Midwest:</B>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 20pt">
    Dollars
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    72,347
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    95,764
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    106,887
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    34,188
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    46,418
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    61,108
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 20pt">
    Homes
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    408
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    482
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    497
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    222
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    253
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    291
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <B>Southeast:</B>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 20pt">
    Dollars
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    76,799
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    103,173
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    132,245
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    20,212
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    35,970
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    45,657
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 20pt">
    Homes
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    331
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    461
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    584
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    82
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    135
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    163
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <B>Southwest:</B>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 20pt">
    Dollars
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    393,943
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    377,292
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    518,565
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    88,123
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    77,418
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    100,305
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 20pt">
    Homes
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    1,753
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    1,798
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    2,285
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    337
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    351
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    420
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <B>West:</B>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 20pt">
    Dollars
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    144,782
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    220,369
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    421,292
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    27,304
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    52,666
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    57,642
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 20pt">
    Homes
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    588
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    914
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    1,366
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    110
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    190
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    151
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <B>Consolidated total:</B>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 20pt">
    Dollars
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    1,117,792
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    1,428,307
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    1,873,795
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    370,779
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    559,553
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    646,187
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 20pt">
    Homes
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    4,206
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    5,227
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    6,546
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    1,249
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    1,772
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    1,907
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <B>Unconsolidated joint ventures:</B>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 20pt">
    Dollars
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    114,740
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    56,886
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    221,858
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    67,112
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    88,263
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    157,167
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 20pt">
    Homes
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    266
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    193
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    540
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    145
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    159
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    263
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <B>Totals:</B>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 20pt">
    Dollars
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    1,232,532
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    1,485,193
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    2,095,653
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    437,891
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    647,816
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    803,354
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 20pt">
    Homes
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    4,472
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    5,420
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    7,086
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    1,394
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    1,931
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    2,170
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
</TABLE>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">

</DIV>
<!-- XBRL Pagebreak Begin -->
</DIV><!-- End box 1 -->

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    S-12
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#Y89359tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<DIV style="width: 100%; height: 9in; border-top: 1px solid #000000; padding-top: 12pt; border-right: 1px solid #000000; padding-right: 12pt; border-bottom: 1px solid #000000; padding-bottom: 12pt; border-left: 1px solid #000000; padding-left: 12pt"><!-- Begin box 1 -->
<!-- XBRL Pagebreak End -->

<DIV style="font-size: 1pt; margin-left: 0%; width: 13%;  align: left; border-bottom: 1pt solid #000000"></DIV>

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>



<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">

<TR>
    <TD width="2%"></TD>
    <TD width="1%"></TD>
    <TD width="97%"></TD>
</TR>

<TR>
    <TD align="right" valign="top">
    (1) </TD>
    <TD></TD>
    <TD valign="bottom">
    (Loss) income before income-taxes excluding land-related
    charges, intangible impairments and gain on extinguishment of
    debt is not a financial measure calculated in accordance with
    U.S. generally accepted accounting principles
    (&#147;GAAP&#148;). The most directly comparable GAAP financial
    measure is (Loss) income before income taxes. The reconciliation
    of (Loss) income before income taxes excluding land-related
    charges, intangible impairments and gain on extinguishment of
    debt to (Loss) income before income taxes is presented below.
    (Loss) income before income taxes excluding land-related
    charges, intangible impairments and gain on extinguishment of
    debt should be considered in addition to, but not as a
    substitute for, (loss) income before income taxes, net income
    (loss) and other measures of financial performance prepared in
    accordance with GAAP that are presented on the financial
    statements and notes included in Hovnanian&#146;s public
    filings. Additionally, the Company&#146;s calculation of (Loss)
    income before income taxes excluding land-related charges,
    intangible impairments and gain on extinguishment of debt may be
    different than the calculation used by other companies, and,
    therefore, comparability may be affected. Management believes
    (Loss) income before income taxes excluding land-related
    charges, intangible impairments and gain on extinguishment of
    debt to be relevant and useful information because it provides a
    better metric for our operating performance.</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD valign="top">
</TD>
    <TD></TD>
    <TD valign="bottom">
    Reconciliation of (Loss) income before income taxes excluding
    land-related charges, intangible impairments and gain on
    extinguishment of debt to (loss) income before income taxes:</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE border="0" width="100%" align="center" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
<!-- Table Width Row BEGIN -->
<TR style="font-size: 1pt" valign="bottom">
    <TD width="39%">&nbsp;</TD>	<!-- colindex=01 type=maindata -->
    <TD width="2%">&nbsp;</TD>	<!-- colindex=02 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=02 type=lead -->
    <TD width="7%" align="right">&nbsp;</TD>	<!-- colindex=02 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=02 type=hang1 -->
    <TD width="3%">&nbsp;</TD>	<!-- colindex=03 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=03 type=lead -->
    <TD width="7%" align="right">&nbsp;</TD>	<!-- colindex=03 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=03 type=hang1 -->
    <TD width="3%">&nbsp;</TD>	<!-- colindex=04 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=04 type=lead -->
    <TD width="9%" align="right">&nbsp;</TD>	<!-- colindex=04 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=04 type=hang1 -->
    <TD width="3%">&nbsp;</TD>	<!-- colindex=05 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=05 type=lead -->
    <TD width="7%" align="right">&nbsp;</TD>	<!-- colindex=05 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=05 type=hang1 -->
    <TD width="3%">&nbsp;</TD>	<!-- colindex=06 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=06 type=lead -->
    <TD width="7%" align="right">&nbsp;</TD>	<!-- colindex=06 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=06 type=hang1 -->
</TR>
<!-- Table Width Row END -->
<!-- TableOutputHead -->
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="18" align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>Year Ended</B>
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>October&#160;31,<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>October&#160;31,<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>October&#160;31,<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>October&#160;31,<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>October&#160;31,<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>2010</B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>2009</B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>2008</B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>2007</B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>2006</B>
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="18" align="center" valign="bottom">
    <B>(Dollars in thousands)</B>
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="line-height: 3pt; font-size: 1pt">
<TD>&nbsp;
</TD>
</TR>
<!-- TableOutputBody -->
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    (Loss) income before income taxes
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    (295,282
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    (672,019
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    (1,168,048
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    (646,966
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    233,106
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Inventory impairment loss and land option write-offs
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    135,699
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    659,475
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    710,120
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    457,773
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    336,204
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Goodwill and definite life intangible impairments
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    35,363
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    135,206
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    4,241
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Unconsolidated joint venture investment, intangible and
    land-related charges
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    43,611
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    31,242
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    33,100
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    7,809
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Gain on extinguishment of debt
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    (25,047
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    (410,185
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="font-size: 1pt">
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    (Loss) income before income taxes excluding land-related
    charges, intangible impairments and gain on extinguishment of
    debt
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    (184,630
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    (379,118
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    (391,323
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    (20,887
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    581,360
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="font-size: 1pt">
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
</TABLE>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">

</DIV>

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">

<TR>
    <TD width="2%"></TD>
    <TD width="1%"></TD>
    <TD width="97%"></TD>
</TR>

<TR>
    <TD align="right" valign="top">
    (2) </TD>
    <TD></TD>
    <TD valign="bottom">
    Net contracts are defined as new contracts during the period for
    the purchase of homes, less cancellations of prior contracts in
    the same period.</TD>
</TR>

</TABLE>
</DIV><!-- End box 1 -->
<!-- XBRL Pagebreak Begin -->

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <BR>
    S-13
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#Y89359tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<!-- XBRL Pagebreak End -->

<A name='Y89359105'>
<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: transparent">

    <B><FONT style="font-family: 'Times New Roman', Times">RISK
    FACTORS</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <I>An investment in the Units involves material risks. You
    should carefully consider the risks set forth below, as well as
    the other information contained in this prospectus supplement
    and the accompanying prospectus, before deciding to invest in
    the Units. The occurrence of any of the following risks could
    materially and adversely affect our business, financial
    condition, results of operations, cash flows and the value of
    the Units, any separate purchase contracts or separate
    amortizing notes, and our Class&#160;A common stock. In such
    case, the trading price of the Units, any separate purchase
    contracts or separate amortizing notes,
    <FONT style="white-space: nowrap">and/or</FONT> our
    Class&#160;A common stock could decline, and you could lose all
    or part of your investment. Additional risks and uncertainties
    not currently known to us or that we currently deem to be
    immaterial may also materially adversely affect our business,
    financial condition, results of operations and cash flows.</I>
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: transparent">

    <B><FONT style="font-family: 'Times New Roman', Times">Risks
    Related to Our Business</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: transparent">

    <B><I><FONT style="font-family: 'Times New Roman', Times">The
    homebuilding industry is significantly affected by changes in
    general and local economic conditions, real estate markets, and
    weather and other environmental conditions, which could affect
    our ability to build homes at prices our customers are willing
    or able to pay, could reduce profits that may not be recaptured,
    could result in cancellation of sales contracts, and could
    affect our liquidity.</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    The homebuilding industry is cyclical, has from time to time
    experienced significant difficulties, and is significantly
    affected by changes in general and local economic conditions
    such as:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    Employment levels and job growth;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    Availability of financing for home buyers;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    Interest rates;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    Foreclosure rates;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    Inflation;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    Adverse changes in tax laws;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    Consumer confidence;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    Housing demand;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    Population growth;&#160;and
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    Availability of water supply in locations in which we operate.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    Turmoil in the financial markets could affect our liquidity. In
    addition, our cash balances are primarily invested in short-term
    government-backed instruments. The remaining cash balances are
    held at numerous financial institutions and may, at times,
    exceed insurable amounts. We believe we help to mitigate this
    risk by depositing our cash in major financial institutions and
    diversifying our investments. In addition, our homebuilding
    operations often require us to obtain letters of credit. In
    connection with the issuance of our senior secured first lien
    notes in the fourth quarter of fiscal 2009, we terminated our
    revolving credit facility and refinanced the borrowing capacity
    thereunder. In addition, we entered into certain stand alone
    letter of credit facilities, and agreements pursuant to which
    all of the outstanding letters of credit under our revolving
    credit facility were replaced with letters of credit issued
    under such new letter of credit facilities and agreements.
    However, we may need additional letters of credit above the
    amounts provided under these new letter of credit facilities and
    agreements. If we are unable to obtain such additional letters
    of credit as needed to operate our business, we may be adversely
    affected.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    Weather conditions and natural disasters such as hurricanes,
    tornadoes, earthquakes, floods, droughts, fires and other
    environmental conditions can harm the local homebuilding
    business. Our business in Florida was adversely affected in late
    2005 and into 2006 due to the effect of Hurricane Wilma on
    materials and labor availability and pricing. Conversely,
    Hurricane Ike, which hit Houston in September 2008, did not have
    an
</DIV>
<!-- XBRL Paragraph Pagebreak -->
<!-- XBRL Pagebreak Begin -->

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <BR>
    S-14
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#Y89359tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<!-- XBRL Pagebreak End -->

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    effect on materials and labor availability or pricing, but did
    affect the volume of home sales in subsequent weeks.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    The difficulties described above could cause us to take longer
    and incur more costs to build our homes. We may not be able to
    recapture increased costs by raising prices in many cases
    because we fix our prices up to 12&#160;months in advance of
    delivery by signing home sales contracts. In addition, some home
    buyers may cancel or not honor their home sales contracts
    altogether.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: transparent">

    <B><I><FONT style="font-family: 'Times New Roman', Times">The
    homebuilding industry is undergoing a significant and sustained
    downturn which has, and could continue to, materially and
    adversely affect our business, liquidity, and results of
    operations.</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    The homebuilding industry is now experiencing a significant and
    sustained downturn. An industry-wide softening of demand for new
    homes has resulted from a lack of consumer confidence, decreased
    availability of mortgage financing, and large supplies of resale
    and new home inventories, among other factors. In addition, an
    oversupply of alternatives to new homes, such as rental
    properties, resale homes, and foreclosures, has depressed prices
    and reduced margins for the sale of new homes. Industry
    conditions had a material adverse effect on our business and
    results of operations in fiscal years 2007 through 2010 and may
    continue to materially adversely affect our business and results
    of operations in fiscal 2011. Further, we substantially
    increased our inventory through fiscal 2006, which required
    significant cash outlays and which has increased our price and
    margin exposure as we continue to work through this inventory.
    Looking forward, if the housing market continues to deteriorate
    it will become more difficult to generate positive cash flow.
    General economic conditions in the U.S.&#160;remain weak. Market
    volatility has been unprecedented and extraordinary in the last
    several years, and the resulting economic turmoil may continue
    to exacerbate industry conditions or have other unforeseen
    consequences, leading to uncertainty about future conditions in
    the homebuilding industry. Continuation or worsening of this
    downturn or general economic conditions would continue to have a
    material adverse effect on our business, liquidity, and results
    of operations.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    In addition, an increase in the default rate on the mortgages we
    originate may adversely affect our ability to sell mortgages or
    the pricing we receive upon the sale of mortgages. Although
    substantially all of the mortgage loans we originate are sold in
    the secondary mortgage market on a servicing released,
    non-recourse basis, we remain liable for certain limited
    representations, such as fraud, and warranties related to loan
    sales. As default rates rise, this may increase our potential
    exposure regarding mortgage loan sales because investors may
    seek to have us buy back or make whole investors for mortgages
    we previously sold. To date, we have not made significant
    payments related to our mortgage loans but because of the
    uncertainties inherent to these matters, actual future payments
    could differ significantly from our currently estimated amounts.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    There can be no assurances that government responses to the
    disruptions in the financial markets will restore consumer
    confidence, stabilize the markets, or increase liquidity and the
    availability of credit, or whether any such results will be
    sustainable. The housing market has benefited from a number of
    government programs, including:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    Tax credits for home buyers provided by the federal government
    and certain state governments, including California;&#160;and
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    Support of the mortgage market, including through purchases of
    mortgage-backed securities by The Federal Reserve Bank and the
    underwriting of a substantial amount of new mortgages by the
    Federal Housing Administration (&#147;FHA&#148;) and other
    governmental agencies.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    These programs are expected to wind down over time; for example
    the California tax credit ended in the fourth quarter of fiscal
    2009 and the federal tax credit expired in April 2010. In
    addition, in fiscal 2010, the U.S.&#160;Department of Housing
    and Urban Development (&#147;HUD&#148;) tightened FHA
    underwriting standards. Housing markets may further decline as
    these programs are modified or terminated.
</DIV>
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    <BR>
    S-15
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<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: transparent">

    <B><I><FONT style="font-family: 'Times New Roman', Times">Leverage
    places burdens on our ability to comply with the terms of our
    indebtedness, may restrict our ability to operate, may prevent
    us from fulfilling our obligations, and may adversely affect our
    financial condition.</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    We have a significant amount of debt.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    Our debt, as of October&#160;31, 2010, including the debt of the
    subsidiaries that guarantee our debt, was $1,630.6&#160;million
    ($1,616.3&#160;million net of discount);&#160;and
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    our debt service payments for the
    <FONT style="white-space: nowrap">12-month</FONT>
    period ended October&#160;31, 2010 were $165.7&#160;million,
    which includes interest incurred of $152.1&#160;million and
    mandatory principal payments on our corporate debt under the
    terms of our indentures of $13.6&#160;million, but which does
    not include principal and interest on nonrecourse secured debt,
    debt of our financial subsidiaries and fees under our letter of
    credit facilities and agreements.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    In addition, as of October&#160;31, 2010, we had
    $89.5&#160;million in aggregate outstanding face amount of
    letters of credit issued under various letter of credit
    facilities and agreements, which were collateralized by
    $92.3&#160;million of cash. Our fees for these letters of credit
    for the 12&#160;months ended October&#160;31, 2020, which are
    based on both the used and unused portion of the facilities and
    agreements, were $1.4&#160;million. We also had substantial
    contractual commitments and contingent obligations, including
    approximately $359.1&#160;million of performance bonds as of
    October&#160;31, 2010. See &#147;Management&#146;s Discussion
    and Analysis of Financial Condition and Results of
    Operations&#151;Contractual Obligations&#148; in our Annual
    Report on
    <FONT style="white-space: nowrap">Form&#160;10-K/A</FONT>
    incorporated by reference herein.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    Our significant amount of debt could have important
    consequences. For example, it could:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    Limit our ability to obtain future financing for working
    capital, capital expenditures, acquisitions, debt service
    requirements, or other requirements;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    Require us to dedicate a substantial portion of our cash flow
    from operations to the payment of our debt and reduce our
    ability to use our cash flow for other purposes;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    Limit our flexibility in planning for, or reacting to, changes
    in our business;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    Place us at a competitive disadvantage because we have more debt
    than some of our competitors;&#160;and
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    Make us more vulnerable to downturns in our business and general
    economic conditions.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    Our ability to meet our debt service and other obligations will
    depend upon our future performance. We are engaged in businesses
    that are substantially affected by changes in economic cycles.
    Our revenues and earnings vary with the level of general
    economic activity in the markets we serve. Our businesses are
    also affected by customer sentiment and financial, political,
    business, and other factors, many of which are beyond our
    control. The factors that affect our ability to generate cash
    can also affect our ability to raise additional funds for these
    purposes through the sale of equity securities, the refinancing
    of debt, or the sale of assets. Changes in prevailing interest
    rates may affect our ability to meet our debt service
    obligations to the extent we have any floating rate
    indebtedness. A higher interest rate on our debt service
    obligations could result in lower earnings or increased losses.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: transparent">

    <B><I><FONT style="font-family: 'Times New Roman', Times">Our
    sources of liquidity are limited and may not be sufficient to
    meet our needs.</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    In connection with the issuance of our senior secured first lien
    notes in the fourth quarter of fiscal 2009, we terminated our
    revolving credit facility and refinanced the borrowing capacity
    thereunder. Because we no longer have a revolving credit
    facility, we are dependent on our current cash balance and
    future cash flows from operations (which may not be positive) to
    enable us to service our indebtedness, to cover our operating
    expenses,
    <FONT style="white-space: nowrap">and/or</FONT> to
    fund our other liquidity needs. In addition, we may need to
    refinance all or a portion of our debt on or before maturity,
    which we may not be able to do on favorable terms or at all. If
    our cash flows and capital resources are insufficient to fund
    our debt service obligations or we are unable to refinance our
    indebtedness, we may be forced to reduce or delay investments
    and capital expenditures, or to sell assets, seek additional
    capital, or restructure our indebtedness. These alternative
    measures may not be successful and may
</DIV>
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    <BR>
    S-16
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<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    not permit us to meet our debt service obligations. We have also
    entered into certain cash collateralized letter of credit
    agreements and facilities that require us to maintain specified
    amounts of cash in segregated accounts as collateral to support
    our letters of credit issued thereunder, which will affect the
    amount of cash we have available for other uses. If our
    available cash and capital resources are insufficient to meet
    our debt service obligations, we could face substantial
    liquidity problems and might be required to dispose of material
    assets or operations to meet our debt service and other
    obligations. We may not be able to consummate those dispositions
    or the proceeds from the dispositions may not be adequate to
    meet any debt service obligations then due.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: transparent">

    <B><I><FONT style="font-family: 'Times New Roman', Times">Restrictive
    covenants in our debt instruments may restrict our ability to
    operate and if our financial performance worsens, we may not be
    able to undertake transactions within the restrictions of our
    debt instruments.</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    The indentures governing our outstanding debt securities impose
    certain restrictions on our operations and activities. The most
    significant restrictions relate to debt incurrence, creating
    liens, sales of assets, cash distributions, including paying
    dividends on common and preferred stock, capital stock and debt
    repurchases, and investments by us and certain of our
    subsidiaries. Because of these restrictions, we are currently
    prohibited from paying dividends on our preferred stock and
    anticipate that we will remain prohibited for the foreseeable
    future.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    The restrictions in our debt instruments could prohibit or
    restrict our activities such as undertaking capital, raising or
    restructuring activities or entering into other transactions. In
    such a situation, we may be unable to amend the instrument or
    obtain a waiver. In addition, if we fail to make timely payments
    on this debt and other material indebtedness, our debt under
    these debt instruments could become due and payable prior to
    maturity. In such a situation, there can be no assurance that we
    would be able to obtain alternative financing. Either situation
    could have a material adverse effect on the solvency of the
    Company.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: transparent">

    <B><I><FONT style="font-family: 'Times New Roman', Times">The
    terms of our debt instruments allow us to incur additional
    indebtedness.</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    Under the terms of our indebtedness under our indentures, we
    have the ability, subject to our debt covenants, to incur
    additional amounts of debt. The incurrence of additional
    indebtedness could magnify the risks described above. In
    addition, certain obligations such as standby letters of credit
    and performance bonds issued in the ordinary course of business,
    including those issued under our stand-alone letter of credit
    agreements and facilities, are not considered indebtedness under
    our indentures (and may be secured), and therefore, are not
    subject to limits in our debt covenants.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: transparent">

    <B><I><FONT style="font-family: 'Times New Roman', Times">We
    could be adversely affected by a negative change in our credit
    rating.</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    Our ability to access capital on favorable terms is a key factor
    in our ability to service our indebtedness to cover our
    operating expenses, and to fund our other liquidity needs. On
    March&#160;16, 2009, Fitch Ratings lowered the Company&#146;s
    issuer default rating to CCC from B-. On April&#160;7, 2009,
    Moody&#146;s Investor Services affirmed our corporate family
    rating of Caa1, with a negative outlook. On April&#160;1, 2009,
    Standard&#160;&#038; Poor&#146;s (&#147;S&#038;P&#148;) lowered
    our B-corporate credit rating to CCC, with a negative outlook.
    On September&#160;14, 2010, S&#038;P affirmed our corporate
    credit rating of CCC+ but revised our outlook from developing to
    negative. Downgrades may make it more difficult and costly for
    us to access capital. Therefore, any further downgrade by any of
    the principal credit agencies may exacerbate these difficulties.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: transparent">

    <B><I><FONT style="font-family: 'Times New Roman', Times">Our
    business is seasonal in nature and our quarterly operating
    results can fluctuate.</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    Our quarterly operating results generally fluctuate by season.
    Historically, a large percentage of our agreements of sale have
    been entered into in the winter and spring. The construction of
    a customer&#146;s home typically begins after signing the
    agreement of sale and can take 12&#160;months or more to
    complete.
    <FONT style="white-space: nowrap">Weather-related</FONT>
    problems, typically in the fall, late winter and early spring,
    can delay starts or closings and increase costs and thus reduce
    profitability. In addition, delays in opening communities could
    have an adverse effect on our sales and revenues. Due to these
    factors, our quarterly operating results will likely continue to
    fluctuate.
</DIV>
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    <BR>
    S-17
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    <B><I><FONT style="font-family: 'Times New Roman', Times">Our
    success depends on the availability of suitable undeveloped land
    and improved lots at acceptable prices and our having sufficient
    liquidity to fund such investments.</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    Our success in developing land and in building and selling homes
    depends in part upon the continued availability of suitable
    undeveloped land and improved lots at acceptable prices. The
    availability of undeveloped land and improved lots for purchase
    at favorable prices depends on a number of factors outside of
    our control, including the risk of competitive over-bidding on
    land and lots and restrictive governmental regulation. Should
    suitable land opportunities become less available, the number of
    homes we may be able to build and sell would be reduced, which
    would reduce revenue and profits. In addition, our ability to
    make land purchases will depend upon us having sufficient
    liquidity to fund such purchases. We may be at a disadvantage in
    competing for land due to our significant debt obligations,
    which require substantial cash resources.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: transparent">

    <B><I><FONT style="font-family: 'Times New Roman', Times">Raw
    material and labor shortages and price fluctuations could delay
    or increase the cost of home construction and adversely affect
    our operating results.</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    The homebuilding industry has from time to time experienced raw
    material and labor shortages. In particular, shortages and
    fluctuations in the price of lumber or in other important raw
    materials could result in delays in the start or completion of,
    or increase the cost of, developing one or more of our
    residential communities. In addition, we contract with
    subcontractors to construct our homes. Therefore, the timing and
    quality of our construction depends on the availability, skill,
    and cost of our subcontractors. Delays or cost increases caused
    by shortages and price fluctuations could harm our operating
    results, the impact of which may be further affected depending
    on our ability to raise sales prices to offset increased costs.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: transparent">

    <B><I><FONT style="font-family: 'Times New Roman', Times">Changes
    in economic and market conditions could result in the sale of
    homes at a loss or holding land in inventory longer than
    planned, the cost of which can be significant.</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    Land inventory risk can be substantial for homebuilders. We must
    continuously seek and make acquisitions of land for expansion
    into new markets and for replacement and expansion of land
    inventory within our current markets. The market value of
    undeveloped land, buildable lots, and housing inventories can
    fluctuate significantly as a result of changing economic and
    market conditions. In the event of significant changes in
    economic or market conditions, we may have to sell homes at a
    loss or hold land in inventory longer than planned. In the case
    of land options, we could choose not to exercise them, in which
    case we would write off the value of these options. Inventory
    carrying costs can be significant and can result in losses in a
    poorly performing project or market. The assessment of
    communities for indication of impairment is performed quarterly.
    While we consider available information to determine what we
    believe to be our best estimates as of the reporting period,
    these estimates are subject to change in future reporting
    periods as facts and circumstances change. See
    &#147;Management&#146;s Discussion and Analysis of Financial
    Condition and Results of Operations&#151;Critical Accounting
    Policies&#148; in our Annual Report on
    <FONT style="white-space: nowrap">Form&#160;10-K/A</FONT>
    incorporated by reference herein. For example, during 2010,
    2009, and 2008, we decided not to exercise many option contracts
    and walked away from land option deposits and predevelopment
    costs, which resulted in land option write-offs of
    $13.2&#160;million, $45.4&#160;million and $114.1&#160;million,
    respectively. Also, in 2010, 2009, and 2008, as a result of the
    difficult market conditions, we recorded inventory impairment
    losses on owned property of $122.5&#160;million,
    $614.1&#160;million, and $596.0&#160;million, respectively. If
    market conditions continue to worsen, additional inventory
    impairment losses and land option write-offs will likely be
    necessary.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: transparent">

    <B><I><FONT style="font-family: 'Times New Roman', Times">Home
    prices and sales activities in the California, Maryland, New
    Jersey, Texas and Virginia markets have a large impact on our
    results of operations because we conduct a significant portion
    of our business in these markets.</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    We presently conduct a significant portion of our business in
    the California, Maryland, New Jersey, Texas and Virginia
    markets. Home prices and sales activities in these markets and
    in most of the other markets in which we operate have declined
    from time to time, particularly as a result of slow economic
    growth. In particular, market conditions in California,
    Maryland, New Jersey and Virginia have declined significantly
    since the end of 2006. Furthermore, precarious economic and
    budget situations at the state government level
</DIV>
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<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    may adversely affect the market for our homes in those affected
    areas. If home prices and sales activity decline in one or more
    of the markets in which we operate, our costs may not decline at
    all or at the same rate and may negatively impact our results of
    operations.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: transparent">

    <B><I><FONT style="font-family: 'Times New Roman', Times">Because
    almost all of our customers require mortgage financing,
    increases in interest rates or the decreased availability of
    mortgage financing could impair the affordability of our homes,
    lower demand for our products, limit our marketing
    effectiveness, and limit our ability to fully realize our
    backlog.</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    Virtually all of our customers finance their acquisitions
    through lenders providing mortgage financing. Increases in
    interest rates or decreases in availability of mortgage
    financing could lower demand for new homes because of the
    increased monthly mortgage costs to potential home buyers. Even
    if potential customers do not need financing, changes in
    interest rates and mortgage availability could make it harder
    for them to sell their existing homes to potential buyers who
    need financing. This could prevent or limit our ability to
    attract new customers as well as our ability to fully realize
    our backlog because our sales contracts generally include a
    financing contingency. Financing contingencies permit the
    customer to cancel its obligation in the event mortgage
    financing at prevailing interest rates, including financing
    arranged or provided by us, is unobtainable within the period
    specified in the contract. This contingency period is typically
    four to eight weeks following the date of execution of the sales
    contract.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    Starting in 2007, many lenders have been significantly
    tightening their underwriting standards, and many subprime and
    other alternative mortgage products are no longer being made
    available in the marketplace. If these trends continue and
    mortgage loans continue to be difficult to obtain, the ability
    and willingness of prospective buyers to finance home purchases
    or to sell their existing homes will be adversely affected,
    which will adversely affect our operating results. In addition,
    we believe that the availability of mortgage financing,
    including Federal National Mortgage Association, Federal Home
    Loan Mortgage Corp, and FHA/VA financing, is an important factor
    in marketing many of our homes. In addition, in fiscal 2010, HUD
    tightened FHA underwriting standards. Any limitations or
    restrictions on the availability of those types of financing
    could reduce our sales.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: transparent">

    <B><I><FONT style="font-family: 'Times New Roman', Times">Increases
    in the costs of owning a home could prevent potential customers
    from buying our homes and adversely affect our business or
    financial results.</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    Significant expenses of owning a home, including mortgage
    interest expenses and real estate taxes, generally are
    deductible expenses for an individual&#146;s federal, and in
    some cases state, income taxes, subject to limitations under
    current tax law and policy. If the federal government or a state
    government were to change its income tax laws to eliminate or
    substantially limit these income tax deductions, as has been
    discussed from time to time, the after-tax cost of owning a new
    home would increase for many of our potential customers. The
    loss or reduction of these homeowner tax deductions, if such tax
    law changes were enacted without any offsetting legislation,
    would adversely impact demand for and sales prices of new homes,
    including ours. In addition, increases in property tax rates or
    fees on developers by local governmental authorities, as
    experienced in response to reduced federal and state funding or
    to fund local initiatives such as funding schools or road
    improvements, can adversely affect the ability of potential
    customers to obtain financing or their desire to purchase new
    homes, and can have an adverse impact on our business and
    financial results.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: transparent">

    <B><I><FONT style="font-family: 'Times New Roman', Times">We
    conduct certain of our operations through unconsolidated joint
    ventures with independent third parties in which we do not have
    a controlling interest. These investments involve risks and are
    highly illiquid.</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    We currently operate through a number of unconsolidated
    homebuilding and land development joint ventures with
    independent third parties in which we do not have a controlling
    interest. At October&#160;31, 2010, we had invested an aggregate
    of $38.0&#160;million in these joint ventures, including
    advances to these joint ventures of approximately
    $13.5&#160;million. In addition, as part of our strategy, we
    intend to continue to evaluate additional joint venture
    opportunities.
</DIV>
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<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    These investments involve risks and are highly illiquid. There
    are a limited number of sources willing to provide acquisition,
    development, and construction financing to land development and
    homebuilding joint ventures, and as market conditions become
    more challenging, it may be difficult or impossible to obtain
    financing for our joint ventures on commercially reasonable
    terms. Recently, we have been unable to obtain financing for
    newly created joint ventures. In addition, we lack a controlling
    interest in these joint ventures and, therefore, are usually
    unable to require that our joint ventures sell assets or return
    invested capital, make additional capital contributions, or take
    any other action without the vote of at least one of our venture
    partners. Therefore, absent partner agreement, we will be unable
    to liquidate our joint venture investments to generate cash.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: transparent">

    <B><I><FONT style="font-family: 'Times New Roman', Times">Homebuilders
    are subject to a number of federal, local, state, and foreign
    laws and regulations concerning the development of land, the
    homebuilding, sales, and customer financing processes and
    protection of the environment, which can cause us to incur
    delays and costs associated with compliance and which can
    prohibit or restrict our activity in some regions or
    areas.</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    We are subject to extensive and complex regulations that affect
    the development and home building, sales, and customer financing
    processes, including zoning, density, building standards, and
    mortgage financing. These regulations often provide broad
    discretion to the administering governmental authorities. This
    can delay or increase the cost of development or homebuilding.
    In light of recent developments in the home building industry
    and the financial markets, federal, state, or local governments
    may seek to adopt regulations that limit or prohibit
    homebuilders from providing mortgage financing to their
    customers. If adopted, any such regulations could adversely
    affect future revenues and earnings. In addition, some state and
    local governments in markets where we operate have approved, and
    others may approve, slow-growth or no-growth initiatives that
    could negatively impact the availability of land and building
    opportunities within those areas. Approval of these initiatives
    could adversely affect our ability to build and sell homes in
    the affected markets
    <FONT style="white-space: nowrap">and/or</FONT> could
    require the satisfaction of additional administrative and
    regulatory requirements, which could result in slowing the
    progress or increasing the costs of our homebuilding operations
    in these markets. Any such delays or costs could have a negative
    effect on our future revenues and earnings.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    We also are subject to a variety of local, state, federal, and
    foreign laws and regulations concerning protection of health and
    the environment. The particular environmental laws that apply to
    any given community vary greatly according to the community
    site, the site&#146;s environmental conditions, and the present
    and former uses of the site. These environmental laws may result
    in delays, may cause us to incur substantial compliance,
    remediation,
    <FONT style="white-space: nowrap">and/or</FONT> other
    costs and can prohibit or severely restrict development and
    homebuilding activity.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    For example, the Company was engaged in discussions with the
    U.S.&#160;Environmental Protection Agency (EPA) and the
    U.S.&#160;Department of Justice (DOJ) regarding alleged
    violations of storm water discharge requirements. In resolution
    of this matter, in April 2010 we agreed to the terms of a
    consent decree with the EPA, DOJ and the states of Virginia,
    Maryland, West Virginia and the District of Columbia
    (collectively the States). The consent decree was approved by
    the federal district court in August 2010. Under the terms of
    the consent decree, we have paid a fine of $1.0&#160;million
    collectively to the United States and the States named above and
    have agreed to perform under the terms of the consent decree for
    a minimum of three years, which includes implementing certain
    operational and training measures nationwide to facilitate
    ongoing compliance with storm water regulations. More recently,
    the New York State Department of Environmental Conservation is
    seeking a civil penalty from us in connection with notices of
    violation for allegedly failing to comply with a storm water
    permit at an incomplete project in the state of New York; and
    the New Jersey Department of Environmental Protection has
    contacted us regarding violations it asserts occurred when one
    of our contractors demolished a structure in New Jersey prior to
    obtaining a storm water permit. Although we do not know the
    final outcomes, we believe any penalties and any other impacts
    of these two matters will not have a material adverse effect on
    us.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    We anticipate that increasingly stringent requirements will be
    imposed on developers and homebuilders in the future. Although
    we cannot predict the effect of these requirements, they could
    result in time-consuming and expensive compliance programs and
    in substantial expenditures, which could cause delays and
    increase
</DIV>
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<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    our cost of operations. In addition, the continued effectiveness
    of permits already granted or approvals already obtained is
    dependent upon many factors, some of which are beyond our
    control, such as changes in policies, rules, and regulations and
    their interpretation and application.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: transparent">

    <B><I><FONT style="font-family: 'Times New Roman', Times">Product
    liability litigation and warranty claims that arise in the
    ordinary course of business may be costly.</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    As a homebuilder, we are subject to construction defect and home
    warranty claims arising in the ordinary course of business. Such
    claims are common in the homebuilding industry and can be
    costly. In addition, the amount and scope of coverage offered by
    insurance companies is currently limited, and this coverage may
    be further restricted and become more costly. If we are not able
    to obtain adequate insurance against such claims, we may
    experience losses that could hurt our financial results. Our
    financial results could also be adversely affected if we were to
    experience an unusually high number of claims or unusually
    severe claims. Recently, other homebuilders in Alabama, Florida,
    Louisiana, Mississippi and Texas have had construction defect
    claims associated with allegedly defective drywall manufactured
    in China (Chinese Drywall) that may be responsible for noxious
    smells and accelerated corrosion of certain metals in the home.
    We have currently identified 10 homes with Chinese Drywall that
    must be remediated, and we have been notified of 19 more homes
    that potentially have Chinese Drywall that may need remediation.
    These homes are located in our Florida and Houston markets. The
    estimated costs of the remediations of these homes are reserved.
    If additional homes are identified to have this issue, or our
    actual costs to remediate differ from our current estimated
    costs, it may require us to revise our warranty reserves.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: transparent">

    <B><I><FONT style="font-family: 'Times New Roman', Times">We
    compete on several levels with homebuilders that may have
    greater sales and financial resources, which could hurt future
    earnings.</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    We compete not only for home buyers but also for desirable
    properties, financing, raw materials, and skilled labor often
    within larger subdivisions designed, planned, and developed by
    other homebuilders. Our competitors include other local,
    regional, and national homebuilders, some of which have greater
    sales and financial resources.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    The competitive conditions in the homebuilding industry together
    with current market conditions have, and could continue to,
    result in:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    difficulty in acquiring suitable land at acceptable prices;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    increased selling incentives;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    lower sales;&#160;or
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    delays in construction.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    Any of these problems could increase costs
    <FONT style="white-space: nowrap">and/or</FONT> lower
    profit margins.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: transparent">

    <B><I><FONT style="font-family: 'Times New Roman', Times">We may
    have difficulty in obtaining the additional financing required
    to operate and develop our business.</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    Our operations require significant amounts of cash, and we may
    be required to seek additional capital, whether from sales of
    equity or borrowing additional money, for the future growth and
    development of our business. The terms or availability of
    additional capital is uncertain. Moreover, the indentures for
    our outstanding debt securities contain provisions that restrict
    the debt we may incur in the future and our ability to pay
    dividends on equity. If we are not successful in obtaining
    sufficient capital, it could reduce our sales and may hinder our
    future growth and results of operations. In addition, pledging
    substantially all of our assets to support our first, second and
    third lien senior secured notes may make it more difficult to
    raise additional financing in the future.
</DIV>
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    <B><I><FONT style="font-family: 'Times New Roman', Times">Our
    future growth may include additional acquisitions of companies
    that may not be successfully integrated and may not achieve
    expected benefits.</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    Acquisitions of companies have contributed to our historical
    growth and may again be a component of our growth strategy in
    the future. In the future, we may acquire businesses, some of
    which may be significant. As a result of acquisitions of
    companies, we may need to seek additional financing and
    integrate product lines, dispersed operations, and distinct
    corporate cultures. These integration efforts may not succeed or
    may distract our management from operating our existing
    business. Additionally, we may not be able to enhance our
    earnings as a result of acquisitions. Our failure to
    successfully identify and manage future acquisitions could harm
    our operating results.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: transparent">

    <B><I><FONT style="font-family: 'Times New Roman', Times">Utility
    shortages and outages or rate fluctuations could have an adverse
    effect on our operations.</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    In prior years, the areas in which we operate in California have
    experienced power shortages, including periods without
    electrical power, as well as significant fluctuations in utility
    costs. We may incur additional costs and may not be able to
    complete construction on a timely basis if such power
    shortages/outages and utility rate fluctuations continue.
    Furthermore, power shortages and outages, such as the blackout
    that occurred in 2003 in the Northeast, and rate fluctuations
    may adversely affect the regional economies in which we operate,
    which may reduce demand for our homes. Our operations may be
    adversely affected if further rate fluctuations
    <FONT style="white-space: nowrap">and/or</FONT> power
    shortages and outages occur in California, the Northeast, or in
    our other markets.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: transparent">

    <B><I><FONT style="font-family: 'Times New Roman', Times">Geopolitical
    risks and market disruption could adversely affect our operating
    results and financial condition.</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    Geopolitical events, such as the aftermath of the war with Iraq
    and the continuing involvement in Iraq and Afghanistan, may have
    a substantial impact on the economy and the housing market. The
    terrorist attacks on the World Trade Center and the Pentagon on
    September&#160;11, 2001 had an impact on our business and the
    occurrence of similar events in the future cannot be ruled out.
    The war and the continuing involvement in Iraq and Afghanistan,
    terrorism, and related geopolitical risks have created many
    economic and political uncertainties, some of which may have
    additional material adverse effects on the U.S.&#160;economy,
    and our customers and, in turn, our results of operations and
    financial condition.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: transparent">

    <B><FONT style="font-family: 'Times New Roman', Times">Risks
    Related to Ownership of the Units, Separate Purchase Contracts,
    Separate Amortizing Notes and Class&#160;A Common
    Stock</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: transparent">

    <B><I><FONT style="font-family: 'Times New Roman', Times">You
    will bear the risk that the market value of our Class&#160;A
    common stock may decline.</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    The market price for our Class&#160;A common stock has been and
    may continue to be volatile. As the price of our Class&#160;A
    common stock on the New York Stock Exchange constantly changes,
    it is impossible to predict whether the price of our
    Class&#160;A common stock will rise or fall. Trading prices of
    our Class&#160;A common stock will be influenced by our
    financial conditions, operating results and prospects and by
    economic, financial and whether the price of our Class&#160;A
    common stock will rise or fall. Trading prices of our
    Class&#160;A common stock will be influenced by our financial
    conditions, operating results and prospects and by economic,
    financial and other factors, such as prevailing interest rates,
    interest rate volatility and changes in our industry and
    competitors. In addition, general market conditions, including
    the level of, and fluctuations in, the trading prices of stocks
    generally, and sales of substantial amounts of Class&#160;A
    common stock by us in the market, or the perception that such
    sales could occur, could affect the price of shares of our
    Class&#160;A common stock.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    The purchase contracts, pursuant to which we will deliver to you
    shares of our Class&#160;A common stock, are components of the
    Units. The number of shares of Class&#160;A common stock that
    you will receive upon settlement of a purchase contract on the
    mandatory settlement date, whether as a component of a Unit or a
    separate purchase contract, will depend upon the applicable
    market value, which is equal to the average of the daily closing
    prices of our Class&#160;A common stock on each of the 20
    consecutive trading days beginning on, and including, the
    23rd&#160;scheduled trading day immediately preceding
    February&#160;15, 2014. There can be no assurance that the
    market value of the Class&#160;A common stock received by you
    will be equal to or greater than the reference price of $4.30.
    If the applicable market value of our Class&#160;A common stock
    is less than the
</DIV>
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    reference price, then the market value of the Class&#160;A
    common stock issued to you on the mandatory settlement date
    (assuming that the market value is the same as the applicable
    market value of the Class&#160;A common stock) will be less than
    the effective price per share paid by you for such Class&#160;A
    common stock on the date of issuance of the Units. Furthermore,
    because we will in no event deliver more than 5.8140&#160;shares
    (subject to adjustment as described herein) upon settlement of a
    purchase contact, the market value of the Class&#160;A common
    stock delivered to you upon any early settlement may be less
    than the effective price per share paid to you for such
    Class&#160;A common stock on the date of the issuance of the
    Units. Therefore, you assume the entire risk that the market
    value of our Class&#160;A common stock may decline before the
    mandatory settlement date, early settlement date, fundamental
    change early settlement date or early mandatory settlement date,
    as applicable. Any decline in the market value of our
    Class&#160;A common stock may be substantial.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: transparent">

    <B><I><FONT style="font-family: 'Times New Roman', Times">The
    opportunity for equity appreciation provided by an investment in
    the Units is less than that provided by a direct investment in
    our Class&#160;A common stock.</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    The aggregate market value of our Class&#160;A common stock
    delivered to you upon settlement of a purchase contract on the
    mandatory settlement date generally will exceed the
    $25&#160;stated amount of each Unit only if the applicable
    market value of our Class&#160;A common stock exceeds the
    threshold appreciation price. Therefore, during the period prior
    to the mandatory settlement date, an investment in a Unit
    affords less opportunity for equity appreciation than a direct
    investment in our Class&#160;A common stock. If the applicable
    market value exceeds the reference price but is less than the
    threshold appreciation price, you will realize no equity
    appreciation on our Class&#160;A common stock above the
    reference price. Furthermore, if the applicable market value
    exceeds the threshold appreciation price, you would receive only
    a portion of the appreciation in the market value of the shares
    of our Class&#160;A common stock you would have received had you
    purchased shares of Class&#160;A common stock with $25 at the
    public offering price in the concurrent common stock offering.
    See &#147;Description of the Purchase Contracts&#160;&#151;
    Delivery of Class&#160;A Common Stock&#148; for a table showing
    the number of shares of Class&#160;A common stock that you would
    receive at various applicable market values.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: transparent">

    <B><I><FONT style="font-family: 'Times New Roman', Times">Our
    net operating loss carryforwards could be substantially limited
    if we experience an ownership change as defined in the Internal
    Revenue Code. As a Class&#160;A common stockholder upon
    settlement of your purchase contract you will be subject to both
    our Rights Plan and the transfer restrictions of our amended
    Certificate of Incorporation.</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    Based on recent impairments and our current financial
    performance, we generated a federal net operating loss
    carryforward of $904.9&#160;million through the year ended
    October&#160;31, 2010, and we may generate net operating loss
    carryforwards in future years.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    Section&#160;382 of the Internal Revenue Code contains rules
    that limit the ability of a company that undergoes an ownership
    change, which is generally any change in ownership of more than
    50% of its stock over a three-year period, to utilize its net
    operating loss carryforwards and certain built-in losses
    recognized in years after the ownership change. These rules
    generally operate by focusing on ownership shifts among
    stockholders owning directly or indirectly 5% or more of the
    stock of a company and any change in ownership arising from a
    new issuance of stock by the company.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    If we undergo an ownership change for purposes of
    Section&#160;382 as a result of this issuance, the concurrent
    offerings or future transactions involving our stock, including
    purchases or sales of stock between 5% shareholders, our ability
    to use our net operating loss carryforwards and to recognize
    certain built-in losses would be subject to the limitations of
    Section&#160;382. Depending on the resulting limitation, a
    significant portion of our net operating loss carryforwards
    could expire before we would be able to use them. A limitation
    imposed under Section&#160;382 on our ability to utilize our net
    operating loss carryforwards could have a negative impact on our
    financial position and results of operations.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    In August 2008, we announced that the Board adopted a
    shareholder rights plan (the &#147;Rights Plan&#148;) designed
    to preserve shareholder value and the value of certain tax
    assets primarily associated with net loss carryforwards and
    <FONT style="white-space: nowrap">built-in</FONT>
    losses under Section&#160;382 of the Code, and on
    December&#160;5, 2008, our stockholders
</DIV>
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<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    approved the Board&#146;s decision to adopt the Rights Plan. The
    Rights Plan is intended to act as a deterrent to any person or
    group acquiring 4.9% or more of our outstanding Class&#160;A
    common stock (any such person an &#147;Acquiring Person&#148;),
    without the approval of the Company&#146;s board of directors.
    Subject to the terms, provisions and conditions of the rights
    plan, if and when they become exercisable, each right would
    entitle its holder to purchase from the Company one
    ten-thousandth of a share of the Company&#146;s Series&#160;B
    Junior Preferred Stock for a purchase price of $35.00. The
    rights will not be exercisable until the earlier of (i)&#160;10
    business days after a public announcement by us that a person or
    group has become an Acquiring Person and (ii)&#160;10 business
    days after the commencement of a tender or exchange offer by a
    person or group for 4.9% of the Class&#160;A common stock. If
    issued, each fractional share of Series&#160;B Junior Preferred
    Stock would give the stockholder approximately the same
    dividend, voting and liquidation rights as does one share of the
    Company&#146;s Class&#160;A common stock. However, prior to
    exercise, a right does not give its holder any rights as a
    stockholder of the Company, including without limitation any
    dividend, voting or liquidation rights. See &#147;Limitation on
    Beneficial Ownership of Class A Common Stock, Units and Separate
    Purchase Contracts.&#148;
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    In addition, on December&#160;5, 2008, our stockholders approved
    an amendment to our Certificate of Incorporation to restrict
    certain transfers of our stock in order to preserve the tax
    treatment of our net operating loss carryforwards and built-in
    losses under Section&#160;382 of the Code. Subject to certain
    exceptions pertaining to pre-existing 5% stockholders and
    Class&#160;B stockholders, the transfer restrictions in the
    amended Certificate of Incorporation generally restrict any
    direct or indirect transfer (such as transfers of the
    Company&#146;s stock that result from the transfer of interests
    in other entities that own the Company&#146;s stock) if the
    effect would be to: (i)&#160;increase the direct or indirect
    ownership of the Company&#146;s stock by any person (or public
    group) from less than 5% to 5% or more of the Company&#146;s
    stock; (ii)&#160;increase the percentage of the Company&#146;s
    stock owned directly or indirectly by a person (or public group)
    owning or deemed to own 5% or more of the Company&#146;s stock;
    or (iii)&#160;create a new &#147;public group&#148; (as defined
    in the applicable Treasury regulations). See &#147;Limitation on
    Beneficial Ownership of Class A Common Stock, Units and Separate
    Purchase Contracts.&#148;
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    Holders that receive shares of our Class&#160;A common stock
    upon settlement of the purchase contracts will be subject to
    both the limitations imposed by the Rights Plan and the amended
    Certificate of Incorporation and you should carefully consider
    these limitations prior to your investment.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: transparent">

    <B><I><FONT style="font-family: 'Times New Roman', Times">Beneficial
    ownership of Units and separate purchase contracts will be
    restricted while the Section&#160;382 ownership blocker is in
    effect. In addition, beneficial owners of Units and separate
    purchase contracts cannot receive shares of Class&#160;A common
    stock in settlement of their purchase contracts in excess of the
    amount described below while the Section&#160;382 settlement
    blocker is in effect with respect to such purchase
    contracts.</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    The purchase contract agreement governing the Units and separate
    purchase contracts provides that no person may purchase a Unit
    or separate purchase contract, and no beneficial owner of Units
    or separate purchase contracts will be permitted to purchase any
    additional Units or separate purchase contracts, if as a result
    of such acquisition, such person would Beneficially Own (as
    defined below) 4.9% or more of our Class&#160;A common stock
    (the &#147;Section 382 Ownership Blocker&#148;).  To determine
    whether 4.9% or more of our Class&#160;A common stock is
    Beneficially Owned, such person shall: (1)&#160;take into
    account all shares of Class&#160;A common stock Beneficially
    Owned by such person, (2) assume that such person Beneficially
    Owns the number of shares of our Class A common stock issuable
    upon settlement of the Units or separate purchase contracts
    based on the maximum settlement rate and (3)&#160;deem the
    number of shares of Class A common stock calculated pursuant to
    clause&#160;(2) to be outstanding for purposes of the
    calculation with respect to such person, in the case of
    clauses&#160;(2) and (3),&#160;without taking into account the
    Section 382 settlement blocker described below. In addition, in
    the event that a beneficial owner of Units or separate purchase
    contracts acquires shares or additional shares of Class A common
    stock, as applicable, such beneficial owner may not beneficially
    own Units or separate purchase contracts to the extent such
    acquisition of our Class A common stock causes such beneficial
    owner to Beneficially Own 4.9% or more of the outstanding Class
    A common stock, calculated for this purpose in the same manner
    as described in the immediately preceding sentence. For purposes
    of the Section 382 Ownership Blocker, the terms
    &#147;Beneficially Own&#148; and &#147;Beneficial Owner&#148;
    shall be as defined in the Rights Plan (for the
</DIV>
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<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    avoidance of doubt, regardless of whether such Rights Plan is
    then in effect). See &#147;Limitation on Beneficial Ownership of
    Class&#160;A Common Stock, Units and Separate Purchase
    Contracts&#160;&#151; Units and Separate Purchase
    Contracts&#160;&#151; Section&#160;382 Ownership Blocker.&#148;
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    Additionally, under the purchase contract agreement governing
    the Units and separate purchase contracts, no beneficial owner
    of Units or separate purchase contracts will be entitled to
    receive shares of our Class&#160;A common stock upon settlement
    of the purchase contracts of such beneficial owner, and any
    delivery of shares of our Class&#160;A common stock upon
    settlement of such purchase contracts will be void and of no
    effect, to the extent (but only to the extent) that such receipt
    or delivery would cause such beneficial owner to become an
    Acquiring Person (as such term is defined in the Rights Plan
    (for the avoidance of doubt, regardless of whether the Rights
    Plan is then in effect)), unless such beneficial owner has
    received prior approval of our board of directors (the
    &#147;Section&#160;382 settlement blocker&#148;). If any
    delivery of shares of our Class&#160;A common stock owed to a
    beneficial owner upon settlement of purchase contracts is not
    made, in whole or in part, as a result of the Section&#160;382
    settlement blocker, our obligation to make such delivery shall
    not be extinguished and we shall deliver such shares as promptly
    as practicable after such delivery would not result in such
    beneficial owner being an Acquiring Person (as such term is
    defined in the Rights Plan) and such beneficial owner gives
    notice thereof to us. Such beneficial owner will not be entitled
    to any compensation for any loss of value or settlement
    opportunity. See &#147;Limitation on Beneficial Ownership of
    Class&#160;A Common Stock, Units and Separate Purchase
    Contracts&#160;&#151; Units and Separate Purchase
    Contracts&#160;&#151; Section 382 Settlement Blocker.&#148;
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: transparent">

    <B><I><FONT style="font-family: 'Times New Roman', Times">We may
    not be able to settle your purchase contracts and deliver shares
    of our Class&#160;A common stock, or make payments on the
    amortizing notes, in the event that we file for
    bankruptcy.</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    Pursuant to the terms of the purchase contract agreement, your
    purchase contracts will automatically accelerate upon the
    occurrence of specified events of bankruptcy, insolvency or
    reorganization with respect to Hovnanian. A bankruptcy court may
    prevent us from delivering our Class&#160;A common stock to you
    in settlement of your purchase contracts. In such circumstances,
    we expect that your resulting claim for damages will rank
    equally with the claims of our Class&#160;A common stockholders,
    in which case you will only be able to recover damages to the
    extent holders of our Class&#160;A common stock receive any
    recovery. See &#147;Description of the Purchase
    Contracts&#160;&#151; Consequences of Bankruptcy.&#148;
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    In addition, with respect to the amortizing notes, bankruptcy
    law generally prohibits the payment of pre-bankruptcy debt by a
    company that has commenced a bankruptcy case while the case is
    pending. If K.&#160;Hovnanian becomes a debtor in a bankruptcy
    case, so long as the case was pending, you would likely not
    receive timely payments of principal or interest due under the
    amortizing note component of the Units and the subordination
    provisions of the notes would give the holders of &#147;Senior
    Indebtedness&#148; (as defined under &#147;Description of the
    Amortizing Notes&#160;&#151; Subordination&#148;) a prior right
    to receive any distributions on account of your claim until they
    were paid in full.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: transparent">

    <B><I><FONT style="font-family: 'Times New Roman', Times">Future
    sales of substantial amounts of our Class&#160;A common stock
    could affect the market price of our Class&#160;A common
    stock.</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    Future sales of substantial numbers of our Class&#160;A common
    stock, or securities convertible or exchangeable into shares of
    our Class&#160;A common stock, into the public market, future
    issuances of substantial numbers of additional shares of
    Class&#160;A common stock in connection with any future
    acquisitions or pursuant to employee benefit plans and future
    issuances of shares of Class&#160;A common stock upon exercise
    of options or warrants, conversion of Class&#160;B common stock
    upon sale thereof or settlement of the purchase contracts, or
    perceptions that those sales, issuances
    <FONT style="white-space: nowrap">and/or</FONT>
    exercises, conversions or settlements could occur, could
    adversely affect the prevailing market price of our Class&#160;A
    common stock and our ability to raise capital in the future.
</DIV>
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    <B><I><FONT style="font-family: 'Times New Roman', Times">The
    trading prices for the Units, the purchase contracts and the
    amortizing notes will be directly affected by the trading prices
    for our Class&#160;A common stock, the general level of interest
    rates and our credit quality, each of which is impossible to
    predict.</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    It is impossible to predict whether the prices of our
    Class&#160;A common stock, interest rates or our credit quality
    will rise or fall. Trading prices of the Class&#160;A common
    stock will be influenced by general stock market conditions and
    our operating results and business prospects and other factors
    described elsewhere in these &#147;Risk Factors.&#148;
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    The market for our Class&#160;A common stock likely will
    influence, and be influenced by, any market that develops for
    the Units or the separate purchase contracts. For example,
    investors&#146; anticipation of the distribution into the market
    of the additional shares of Class&#160;A common stock issuable
    upon settlement of the purchase contracts could depress the
    price of our Class&#160;A common stock and increase the
    volatility of the Class&#160;A common stock price, which could
    in turn depress the price of the Units or the separate purchase
    contracts. The price of our Class&#160;A common stock also could
    be affected by possible sales of such Class&#160;A common stock
    by investors who view the Units as a more attractive means of
    equity participation in Hovnanian and by hedging or arbitrage
    trading activity that is likely to develop involving the Units,
    separate purchase contracts and the Class&#160;A common stock.
    The arbitrage activity could, in turn, affect the trading prices
    of the Units, the separate purchase contracts and the
    Class&#160;A common stock.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: transparent">

    <B><I><FONT style="font-family: 'Times New Roman', Times">Our
    controlling stockholders are able to exercise significant
    influence over us.</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    Members of the Hovnanian family, including Ara K. Hovnanian, our
    chairman of the board, president and chief executive officer,
    have voting control, through personal holdings, the limited
    partnership established for members of Mr.&#160;Hovnanian&#146;s
    family and family trusts, of Class&#160;A and Class&#160;B
    common stock that enables them to cast approximately 70% of the
    votes that may be cast by the holders of our outstanding
    Class&#160;A and Class&#160;B common stock combined. Their
    combined stock ownership enables them to exert significant
    control over us, including power to control the election of the
    Board and to approve matters presented to our stockholders. This
    concentration of ownership may also make some transactions,
    including mergers or other changes in control, more difficult or
    impossible without their support. Also, because of their
    combined voting power, circumstances may occur in which their
    interests could be in conflict with the interests of other
    stakeholders.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: transparent">

    <B><I><FONT style="font-family: 'Times New Roman', Times">Our
    issuance of preferred stock may cause our Class&#160;A common
    stock price to decline, which may negatively impact your
    investment.</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    Our board of directors is authorized to issue additional series
    of shares of preferred stock without any action on the part of
    our stockholders. Our board of directors also has the power,
    without stockholder approval, to set the terms of any such
    series of shares of preferred stock that may be issued,
    including voting rights, conversion rights, dividend rights,
    preferences over our Class&#160;A common stock or our
    Series&#160;A preferred stock with respect to dividends or if we
    liquidate, dissolve or wind up our business and other terms. If
    we issue cumulative preferred stock in the future that has
    preference over our Class&#160;A common stock with respect to
    the payment of dividends or upon our liquidation, dissolution or
    winding up, or if we issue preferred stock with voting rights
    that dilute the voting power of our Class&#160;A common stock,
    the market price of our Class&#160;A common stock could
    decrease, which may negatively impact your investment.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: transparent">

    <B><I><FONT style="font-family: 'Times New Roman', Times">Developments
    in the equity-linked and convertible securities markets may
    adversely affect the market value of the Units.</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    Governmental actions that interfere with the ability of
    equity-linked and convertible securities investors to effect
    short sales of the underlying shares of Class&#160;A common
    stock could significantly affect the market value of the Units.
    Such government actions would make the convertible arbitrage
    strategy that many equity-linked
</DIV>
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    <BR>
    S-26
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<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    and convertible securities investors employ difficult to execute
    for outstanding equity-linked or convertible securities of any
    company whose shares of Class&#160;A common stock are subject to
    such actions.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    At an open meeting on February&#160;24, 2010, the SEC adopted a
    new short sale price test through an amendment to Rule&#160;201
    of Regulation&#160;SHO. The amendments to Rule&#160;201 became
    effective on May&#160;10, 2010 and restrict short selling when
    the price of a &#147;covered security&#148; has triggered a
    &#147;circuit breaker&#148; by falling at least 10% in one day,
    at which point short sale orders can be displayed or executed
    only if the order price is above the current national best bid,
    subject to certain limited exceptions. Compliance with the
    amendments to Rule&#160;201 was required by November&#160;10,
    2010. Because our Class&#160;A common stock is a &#147;covered
    security,&#148; the new restrictions may interfere with the
    ability of investors in, and potential purchasers of, the Units,
    to effect short sales in our Class&#160;A common stock and
    conduct the convertible arbitrage strategy that we believe they
    will employ, or seek to employ, with respect to the Units.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    In addition, on June&#160;10, 2010, the SEC approved a six-month
    pilot (the &#147;circuit breaker pilot&#148;) pursuant to which
    several national securities exchanges and the Financial Industry
    Regulatory Authority, Inc. (&#147;FINRA&#148;) adopted rules to
    halt trading in securities included in the S&#038;P 500 Index if
    the price of any such security moves 10% or more from a sale in
    a five-minute period. On September&#160;10, 2010, the SEC
    approved an expansion of the circuit breaker pilot to include
    component securities of the Russell 1000 Index and over 300
    exchange traded funds. Our Class&#160;A common stock is not
    included in either the S&#038;P 500 Index or the Russell 1000
    Index and therefore is not subject to the circuit breaker pilot
    at this time. However, the SEC could further expand the circuit
    breaker pilot in the future or adopt other rules that limit
    trading in response to market volatility. Any such additional
    regulatory actions may decrease or prevent an increase in the
    market price
    <FONT style="white-space: nowrap">and/or</FONT>
    liquidity of our Class&#160;A common stock
    <FONT style="white-space: nowrap">and/or</FONT>
    interfere with the ability of investors in, and potential
    purchasers of, the Units, to effect hedging transactions in or
    relating to our Class&#160;A common stock and conduct the
    convertible arbitrage strategy that we believe they will employ,
    or will seek to employ, with respect to the Units
    <FONT style="white-space: nowrap">and/or</FONT>
    separate purchase contracts.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    Although the direction and magnitude of the effect that the
    amendments to Regulation&#160;SHO, the circuit breaker pilot and
    any additional regulations may have on the trading price and the
    liquidity of the Units will depend on a variety of factors, many
    of which cannot be determined at this time, past regulatory
    actions have had a significant impact on the trading prices and
    liquidity of convertible debt instruments. For example, in
    September 2008, the SEC issued emergency orders generally
    prohibiting short sales in the Class&#160;A common stock of a
    variety of financial services companies while Congress worked to
    provide a comprehensive legislative plan to stabilize the credit
    and capital markets. The orders made the convertible arbitrage
    strategy that many convertible debt investors employ difficult
    to execute and adversely affected both the liquidity and trading
    price of convertible notes issued by many of the financial
    services companies subject to the prohibition. Any governmental
    actions that restrict the ability of investors in, or potential
    purchasers of, the Units to effect short sales in our
    Class&#160;A common stock or to implement hedging strategies,
    including the recently adopted amendments to
    Regulation&#160;SHO, could similarly adversely affect the
    trading price and the liquidity of the Units
    <FONT style="white-space: nowrap">and/or</FONT>
    separate purchase contracts.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: transparent">

    <B><I><FONT style="font-family: 'Times New Roman', Times">You
    may receive shares of Class&#160;A common stock upon settlement
    of the purchase contracts that are lower in value than the price
    of the Class&#160;A common stock just prior to the mandatory
    settlement date.</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    Because the applicable market value of the Class&#160;A common
    stock is determined over the 20 consecutive trading days
    beginning on, and including, the 23rd&#160;scheduled trading day
    immediately preceding February&#160;15, 2014, the number of
    shares of Class&#160;A common stock delivered for each purchase
    contract may, on the mandatory settlement date, be greater than
    or less than the number that would have been delivered based on
    the closing price of the Class&#160;A common stock on the last
    trading day in such 20 trading day period. In addition, you will
    bear the risk of fluctuations in the market price of the shares
    of Class&#160;A common stock deliverable upon settlement of the
    purchase contracts between the end of such period and the date
    such shares are delivered.
</DIV>
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    <BR>
    S-27
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<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: transparent">

    <B><I><FONT style="font-family: 'Times New Roman', Times">If you
    elect to settle your purchase contracts early, you may not
    receive the same return on your investment as purchasers whose
    purchase contracts are settled on the mandatory settlement
    date.</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    Holders of the Units or separate purchase contracts have the
    option to settle their purchase contracts early at any time
    beginning on, and including, the business day immediately
    following the date of initial issuance of the Units until the
    third scheduled trading day immediately preceding
    February&#160;15, 2014. However, if you settle your purchase
    contracts prior to the third scheduled trading day immediately
    preceding February&#160;15, 2014, you will receive for each
    purchase contract a number of shares of Class&#160;A common
    stock equal to the minimum settlement rate, regardless of the
    current market value of our Class&#160;A common stock, unless
    you elect to settle your purchase contracts early in connection
    with a fundamental change, in which case you will be entitled to
    settle your purchase contracts at the fundamental change early
    settlement rate, which may be greater than the minimum
    settlement rate. In either case, you may not receive the same
    return on your investment as purchasers whose purchase contracts
    are settled on the mandatory settlement date.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: transparent">

    <B><I><FONT style="font-family: 'Times New Roman', Times">Upon
    issuance of the Units, our Class&#160;A common stock will incur
    immediate dilution.</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    Upon issuance of the Units, which includes a purchase contract
    component, our Class&#160;A common stock will incur immediate
    and substantial net tangible book value dilution on a per share
    basis.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: transparent">

    <B><I><FONT style="font-family: 'Times New Roman', Times">We may
    issue additional shares of our Class&#160;A common stock, which
    may dilute the value of our Class&#160;A common stock but may
    not trigger an anti-dilution adjustment under the terms of the
    purchase contracts.</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    The trading price of our Class&#160;A common stock may be
    adversely affected if we issue additional shares of our
    Class&#160;A common stock. The number of shares of Class&#160;A
    common stock issuable upon settlement of the purchase contracts
    is subject to adjustment only for certain events, including, but
    not limited to, the issuance of stock dividends on our
    Class&#160;A common stock, the issuance of certain rights or
    warrants, subdivisions, combinations, distributions of capital
    stock, indebtedness or assets, certain cash dividends and
    certain issuer tender or exchange offers. The number of shares
    of Class&#160;A common stock deliverable upon settlement is not
    subject to adjustment for other events that may adversely affect
    the value of our Class&#160;A common stock, such as employee
    stock options grants, offerings of our Class&#160;A common stock
    for cash (including under the concurrent common stock offering),
    certain exchanges of our Class&#160;A common stock for other
    Hovnanian securities or in connection with acquisitions and
    other transactions. The terms of the Units do not restrict our
    ability to offer our Class&#160;A common stock in the future or
    to engage in other transactions that could dilute our
    Class&#160;A common stock, which may adversely affect the value
    of the Units and separate purchase contracts.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: transparent">

    <B><I><FONT style="font-family: 'Times New Roman', Times">The
    fundamental change early settlement rate may not adequately
    compensate you.</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    If a &#147;fundamental change&#148; occurs and you elect to
    exercise your fundamental change early settlement right, you
    will be entitled to settle your purchase contracts at the
    fundamental change early settlement rate. Although the
    fundamental change early settlement rate is designed to
    compensate you for the lost option value of your purchase
    contracts as a result of the early settlement of the purchase
    contracts, this feature may not adequately compensate you for
    such loss. In addition, if the stock price in the fundamental
    change is greater than $25.00&#160;per share (subject to
    adjustment), this feature of the purchase contracts will not
    compensate you for any additional loss suffered in connection
    with a fundamental change. See &#147;Description of the Purchase
    Contracts&#160;&#151; Early Settlement Upon a Fundamental
    Change.&#148;
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    Our obligation to settle the purchase contracts at the
    fundamental change early settlement rate could be considered a
    penalty, in which case the enforceability thereof would be
    subject to general principles of reasonableness of economic
    remedies.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: transparent">

    <B><I><FONT style="font-family: 'Times New Roman', Times">Unlike
    the terms of our other debt securities, the amortizing notes
    will not provide holders with the right to require the Company
    to repurchase them upon a fundamental change.</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    The terms of our existing debt securities, including the senior
    notes being offered concurrently with the Units, provide that
    upon the occurrence of certain corporate events, including
    certain events that would
</DIV>
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    <BR>
    S-28
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<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    constitute a &#147;fundamental change&#148; as defined under
    &#147;Description of the Purchase Contracts&#148;, holders will
    have the right to require us to repurchase their debt
    securities. The terms of the indenture governing the amortizing
    notes do not provide holders of amortizing notes with any such
    repurchase right. Accordingly, holders of our amortizing notes
    will bear the risk that any such fundamental change occurs and
    adversely affects our capital structure, credit ratings or the
    value of the amortizing notes.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: transparent">

    <B><I><FONT style="font-family: 'Times New Roman', Times">Until
    you acquire our Class&#160;A common stock, you are not entitled
    to any rights with respect to our Class&#160;A common stock, but
    you are subject to all changes made with respect to our
    Class&#160;A common stock.</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    Until you acquire our Class&#160;A common stock, you are not
    entitled to any rights with respect to our Class&#160;A common
    stock, including voting rights and rights to receive any
    dividends or other distributions on our Class&#160;A common
    stock, but you are subject to all changes affecting the
    Class&#160;A common stock. You will have the rights with respect
    to shares of our Class&#160;A common stock only when you become
    the holder of record of such shares. You will be deemed to be
    the holder of record of shares of our Class&#160;A common stock
    issuable upon settlement of the purchase contracts as follows:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    in the case of settlement of purchase contracts on the mandatory
    settlement date, as of 5:00&#160;p.m., New&#160;York City time,
    on the last trading day of the 20 trading day period during
    which the applicable market value is determined;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    in the case of settlement of purchase contracts in connection
    with any early settlement at the holder&#146;s option, as of
    5:00&#160;p.m., New York City time, on the early settlement date;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    in the case of settlement of purchase contracts following
    exercise of a holder&#146;s fundamental change early settlement
    right, as of 5:00&#160;p.m., New York City time, on the date
    such right is exercised;&#160;and
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    in the case of settlement of purchase contracts following
    exercise by us of our early mandatory settlement right, as of
    5:00&#160;p.m., New York City time, on the notice date.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    For example, in the event that an amendment is proposed to our
    certificate of incorporation or bylaws requiring stockholder
    approval and the record date for determining the stockholders of
    record entitled to vote on the amendment occurs prior to the
    date you are deemed the owner of the shares of our Class&#160;A
    common stock, you will not be entitled to vote on the amendment,
    although you will nevertheless be subject to any changes in the
    powers, preferences or special rights of our Class&#160;A common
    stock once you become a stockholder.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: transparent">

    <B><I><FONT style="font-family: 'Times New Roman', Times">We do
    not expect to pay dividends to holders of our Class&#160;A
    common stock.</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    Certain debt instruments to which we are a party contain
    restrictions on the payment of cash dividends. As a result of
    the most restrictive of these provisions, we are not currently
    able to pay any cash dividends and anticipates that we will be
    prohibited from doing so for the foreseeable future. We have
    never paid cash dividends on our Class&#160;A common stock nor
    do we currently intend to pay cash dividends on our Class&#160;A
    common stock. Other than the payment of dividends on our
    Series&#160;A preferred stock (if permitted by our debt
    instruments), our board of directors presently intends to retain
    all earnings, if any, for use in our business operations.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: transparent">

    <B><I><FONT style="font-family: 'Times New Roman', Times">The
    secondary market for the Units, the purchase contracts and the
    amortizing notes may be illiquid.</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    We will apply to list the Units on the New York Stock Exchange,
    subject to satisfaction of its minimum listing standards with
    respect to the Units. However, even if we do so apply to list
    the Units, we cannot assure you that the Units will be approved
    for listing. If the Units are approved for listing, we expect
    that the Units will begin trading on the New York Stock Exchange
    within 30 calendar days after the Units are first issued. In
    addition, the underwriters have advised us that they intend to
    make a market in the Units, but the underwriters are not
    obligated to do so. However, listing on the New York Stock
    Exchange does not guarantee that a trading market will develop,
    and the underwriters may discontinue market making at any time
    in their sole discretion without prior notice to Unit holders.
    Accordingly we cannot assure you that a liquid trading market
</DIV>
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    <BR>
    S-29
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    will develop for the Units (or, if developed, that a liquid
    trading market will be maintained), that you will be able to
    sell Units at a particular time or that the prices you receive
    when you sell will be favorable.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    Beginning on the business day immediately succeeding the date of
    initial issuance of the Units, purchasers of Units will be able
    to separate each Unit into a purchase contract and an amortizing
    note. We are unable to predict how the separate purchase
    contracts or the separate amortizing notes will trade in the
    secondary market, or whether that market will be liquid or
    illiquid. We will not initially apply to list the separate
    purchase contracts or the separate amortizing notes on any
    securities exchange or automated
    <FONT style="white-space: nowrap">inter-dealer</FONT>
    quotation system, but we may apply to list such separate
    purchase contracts and separate amortizing notes in the future
    as described herein. If (i)&#160;a sufficient number of Units
    are separated into separate purchase contracts and separate
    amortizing notes and traded separately such that applicable
    listing requirements are met and (ii)&#160;a sufficient number
    of holders of such separate purchase contracts and separate
    amortizing notes request that we list such separate purchase
    contracts and separate amortizing notes, we may endeavor to list
    such separate purchase contracts and separate amortizing notes
    on an exchange of our choosing (which may or may not be the New
    York Stock Exchange) subject to applicable listing requirements.
    However, even if we do so apply to list such separate purchase
    contracts or separate amortizing notes, we cannot assure you
    that such securities will be approved for listing.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: transparent">

    <B><I><FONT style="font-family: 'Times New Roman', Times">The
    purchase contract agreement will not be qualified under the
    Trust&#160;Indenture Act, and the obligations of the purchase
    contract agent are limited.</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    The purchase contract agreement between us and the purchase
    contract agent will not be qualified as an indenture under the
    Trust&#160;Indenture Act of 1939, and the purchase contract
    agent will not be required to qualify as a trustee under the
    Trust&#160;Indenture Act. Thus, you will not have the benefit of
    the protection of the Trust&#160;Indenture Act with respect to
    the purchase contract agreement or the purchase contract agent.
    The amortizing notes constituting a part of the Units will be
    issued pursuant to an indenture, which has been qualified under
    the Trust&#160;Indenture Act. Accordingly, if you hold Units,
    you will have the benefit of the protections of the
    Trust&#160;Indenture Act only to the extent applicable to the
    amortizing notes. The protections generally afforded the holder
    of a security issued under an indenture that has been qualified
    under the Trust&#160;Indenture Act include:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    disqualification of the indenture trustee for &#147;conflicting
    interests,&#148; as defined under the Trust&#160;Indenture Act;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    provisions preventing a trustee that is also a creditor of the
    issuer from improving its own credit position at the expense of
    the security holders immediately prior to or after a default
    under such indenture;&#160;and
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    the requirement that the indenture trustee deliver reports at
    least annually with respect to certain matters concerning the
    indenture trustee and the securities.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: transparent">

    <B><I><FONT style="font-family: 'Times New Roman', Times">The
    amortizing notes and the senior subordinated guarantees are
    unsecured obligations and will be junior to all of our existing
    and future secured indebtedness to the extent of the collateral
    securing such indebtedness.</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    The amortizing notes and the senior subordinated guarantees will
    not be secured by any of our assets and will be junior to any of
    our existing and future secured indebtedness. Accordingly, in
    the event of our bankruptcy, liquidation or any similar
    proceeding, our assets which serve as collateral under our
    secured indebtedness would be made available to satisfy our
    obligations under any secured indebtedness we may have before
    any payments are made on the amortizing notes and the senior
    subordinated guarantees. At October&#160;31, 2010, we had
    approximately $797.2&#160;million of secured indebtedness
    outstanding. The aggregate book value of the real property
    collateral securing this indebtedness was approximately
    $759.5&#160;million, as of October&#160;31, 2010, which does not
    include the impact of inventory investments, home deliveries, or
    impairments thereafter and which may differ from the appraised
    value. In addition, cash collateralizing our secured
    indebtedness was $300.0&#160;million as of October&#160;31,
    2010, which includes $92.3&#160;million of restricted cash
    collateralizing certain letters of credit. Subsequent to such
    date, cash uses include general business operations and real
    estate and
</DIV>
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    <BR>
    S-30
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<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    other investments. Subject to the limits in the indenture under
    which the amortizing notes will be issued and our other existing
    debt instruments, we will be able to incur additional secured
    obligations. See &#147;Description of the Amortizing Notes.&#148;
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: transparent">

    <B><I><FONT style="font-family: 'Times New Roman', Times">The
    amortizing notes and the senior subordinated guarantees will be
    subordinated to some of our debt and other
    liabilities.</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    The amortizing notes and the senior subordinated guarantees will
    be subordinated to all of our existing and future Senior
    Indebtedness of K. Hovnanian and the Guarantors, respectively.
    Senior Indebtedness includes all indebtedness of K. Hovnanian
    and the Guarantors under our senior notes, and also includes
    lease obligations and the deferred and unpaid balance of the
    purchase price of any property, other than certain accounts
    payable and other indebtedness to trade creditors created in the
    ordinary course of business, as well as other debt and
    obligations. As a result of the subordination of the amortizing
    notes and the senior subordinated guarantees, if K. Hovnanian or
    any Guarantor becomes insolvent or enters into a bankruptcy or
    similar proceeding, then the holders of K. Hovnanian&#146;s or
    that Guarantor&#146;s Senior Indebtedness must be paid in full
    before a holder of amortizing notes is paid.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    In addition, K. Hovnanian and the Guarantors cannot make any
    cash payments to a holder of amortizing notes if K. Hovnanian or
    such Guarantor has failed to make payments to holders of its
    Senior Indebtedness. Under certain circumstances, K. Hovnanian
    and the Guarantors cannot make any payments to a holder of
    amortizing notes for a period of up to 120&#160;days if K.
    Hovnanian or a Guarantor has defaulted, other than failures to
    make payments, under Senior Indebtedness covenants. See
    &#147;Description of the Amortizing Notes&#160;&#151;
    Subordination&#148; for a more complete description of the
    subordination provisions of the amortizing notes and the senior
    subordinated guarantees.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    At October&#160;31, 2010, after giving effect to the completion
    of this offering and the Concurrent Offerings and the
    application of the net proceeds therefrom, K. Hovnanian and the
    Guarantors would have had:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    approximately $797.2&#160;million of secured indebtedness
    outstanding ($784.6&#160;million, net of discount);&#160;and
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    approximately $832.7&#160;million of senior unsecured notes
    ($827.2&#160;million, net of discount).
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    In addition, after giving effect to the use of proceeds from
    this offering and the Concurrent Offerings, the amortizing notes
    will be our only senior subordinated indebtedness outstanding
    and we will not have any other senior subordinated notes or
    subordinated notes.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    As of October&#160;31, 2010, our non-Guarantor subsidiaries had
    approximately $90.0&#160;million of liabilities, including trade
    payables, but excluding intercompany obligations.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    The indenture will not contain any limitation on the ability of
    K. Hovnanian and the Guarantors to incur additional
    indebtedness, including indebtedness that is Senior Indebtedness.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: transparent">

    <B><I><FONT style="font-family: 'Times New Roman', Times">The
    amortizing notes and the senior subordinated guarantees will be
    structurally subordinated to indebtedness of our non-Guarantor
    subsidiaries.</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    The amortizing notes and the senior subordinated guarantees will
    be structurally subordinated to the indebtedness (including
    trade payables) of any non-Guarantor subsidiary to the extent of
    the value of their assets, and holders of the amortizing notes
    will not have any claim as a creditor against any non-Guarantor
    subsidiary. In addition, the indenture under which the
    amortizing notes will be issued permits, subject to certain
    limitations, non-Guarantor subsidiaries to incur additional
    indebtedness and will not contain any limitation on the amount
    of liabilities (such as trade payables) that may be incurred by
    them. At October&#160;31, 2010, our non-Guarantor subsidiaries
    had $90.0&#160;million of outstanding liabilities, including
    trade payables, but excluding intercompany obligations.
</DIV>
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    <BR>
    S-31
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<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: transparent">

    <B><I><FONT style="font-family: 'Times New Roman', Times">Federal
    and state laws allow courts, under specific circumstances, to
    void senior subordinated guarantees and to require you to return
    payments received from Guarantors.</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    Although you will be direct creditors of the Guarantors by
    virtue of the senior subordinated guarantees, existing or future
    creditors of any Guarantor could avoid or subordinate that
    Guarantor&#146;s senior subordinated guarantee under the
    fraudulent conveyance laws if they were successful in
    establishing that:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    the senior subordinated guarantee was incurred with fraudulent
    intent;&#160;or
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    the Guarantor did not receive fair consideration or reasonably
    equivalent value for issuing its senior subordinated
    guarantee&#160;and
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="6%"></TD>
    <TD width="2%"></TD>
    <TD width="92%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    was insolvent at the time of the senior subordinated guarantee;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    was rendered insolvent by reason of the senior subordinated
    guarantee;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    was engaged in a business or transaction for which its assets
    constituted unreasonably small capital to carry on its
    business;&#160;or
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    intended to incur, or believed that it would incur, debt beyond
    its ability to pay such debt as it matured.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    The measures of insolvency for purposes of determining whether a
    fraudulent conveyance occurred vary depending upon the laws of
    the relevant jurisdiction and upon the valuation assumptions and
    methodology applied by the court. Generally, however, a company
    would be considered insolvent for purposes of the foregoing if:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    the sum of the company&#146;s debts, including contingent,
    unliquidated and unmatured liabilities, is greater than all of
    such company&#146;s property at a fair valuation;&#160;or
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    if the present fair saleable value of the company&#146;s assets
    is less than the amount that will be required to pay the
    probable liability on its existing debts as they become absolute
    and matured.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    We cannot assure you as to what standard a court would apply in
    order to determine whether a Guarantor was &#147;insolvent&#148;
    as of the date its senior subordinated guarantee was issued, and
    we cannot assure you that, regardless of the method of
    valuation, a court would not determine that any Guarantors were
    insolvent on that date. The senior subordinated guarantees of
    subsidiaries of Hovnanian could be subject to the claim that,
    since the senior subordinated guarantees were incurred for the
    benefit of Hovnanian and K. Hovnanian, and only indirectly for
    the benefit of the Guarantors, the obligations of the Guarantors
    thereunder were incurred for less than reasonably equivalent
    value or fair consideration.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: transparent">

    <B><I><FONT style="font-family: 'Times New Roman', Times">Corporate
    benefit laws and other limitations on guarantees may adversely
    affect the validity and enforceability of the senior
    subordinated guarantees of the amortizing notes.</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    The senior subordinated guarantees of the amortizing notes by
    the Guarantors provide the holders of the amortizing notes with
    a direct claim against the assets of the Guarantors. The senior
    subordinated guarantees, however, will be limited to the maximum
    amount that can be guaranteed by a particular Guarantor without
    rendering the senior subordinated guarantee, as it relates to
    that Guarantor, voidable or otherwise ineffective under
    applicable law. This limit may not be effective to protect the
    guarantees from being voided under fraudulent transfer laws or
    may eliminate any Guarantor&#146;s obligations or reduce such
    Guarantor&#146;s obligations to an amount that effectively makes
    the guarantee worthless. In a recent Florida bankruptcy case, a
    similar limit was found to be ineffective to protect the
    guarantees. In addition, enforcement of any of these senior
    subordinated guarantees against any Guarantor will be subject to
    certain defenses available to Guarantors generally. These laws
    and defenses include those that relate to fraudulent conveyance
    or transfer (as described in the preceding risk factor),
    voidable preference, corporate purpose or benefit, preservation
    of share capital, thin capitalization and regulations or
    defenses affecting the rights of creditors generally. If one or
    more of these laws and defenses are applicable, a Guarantor may
    have no liability or decreased liability under its senior
    subordinated guarantee.
</DIV>
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    <BR>
    S-32
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<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: transparent">

    <B><I><FONT style="font-family: 'Times New Roman', Times">If we
    default on our obligations to pay our other indebtedness, we may
    not be able to make payments on the amortizing
    notes.</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    Any default under the agreements governing our other
    indebtedness and the remedies sought by the holders of such
    indebtedness, could prevent us from paying principal of, and
    interest on, the amortizing notes (including, without
    limitation, installment payments) and substantially decrease the
    market value of the amortizing notes. If we are unable to
    generate sufficient cash flow and are otherwise unable to obtain
    funds necessary to meet required payments of principal, premium,
    if any, and interest on our other indebtedness, or if we
    otherwise fail to comply with the various covenants in our debt
    instruments, we could be in default under the terms of the
    agreements governing our other indebtedness. In the event of
    such default:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    the holders of such indebtedness may be able to cause all of our
    available cash flow to be used to pay such indebtedness and, in
    any event, could elect to declare all the funds borrowed
    thereunder to be due and payable, together with accrued and
    unpaid interest; and/or
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    we could be forced into bankruptcy or liquidation.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    If our operating performance declines, we may in the future need
    to amend or modify the agreements governing our indebtedness or
    seek concessions from the holders of such indebtedness.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: transparent">

    <B><I><FONT style="font-family: 'Times New Roman', Times">The
    U.S. federal income tax consequences relating to the Units are
    uncertain.</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    No statutory, judicial or administrative authority directly
    addresses the characterization of the Units or instruments
    similar to the Units for U.S.&#160;federal income tax purposes.
    As a result, some aspects of the U.S.&#160;federal income tax
    consequences of an investment in the Units are not certain.
    Specifically, the amortizing notes and the purchase contracts
    could potentially be recharacterized as a single instrument for
    U.S.&#160;federal income tax purposes, in which case
    (i)&#160;&#147;U.S.&#160;holders&#148; (as defined below under
    &#147;Certain United States Federal Income and Estate Tax
    Consequences&#160;&#151; U.S.&#160;Holders&#148;) could be
    required to recognize the entire amount of each installment
    payment on the amortizing notes, rather than merely the portion
    of such payment denominated as interest, as income and
    (ii)&#160;payments of principal and interest made to
    <FONT style="white-space: nowrap">&#147;non-U.S.&#160;holders&#148;</FONT>
    (as defined below under &#147;Certain United States Federal
    Income and Estate Tax Consequences&#160;&#151; Non-U.S.
    Holders&#148;) on the amortizing notes could be subject to
    U.S.&#160;withholding tax. We have not sought any rulings
    concerning the treatment of the Units, and the tax consequences
    described in &#147;Certain United States Federal Income and
    Estate Tax Consequences&#148; are not binding on the Internal
    Revenue Service or the courts, either of which could disagree
    with the explanations or conclusions contained therein. Even if
    the components of a Unit are respected as separate instruments
    for U.S.&#160;federal income tax purposes, (i)&#160;the
    amortizing notes could be recharacterized as equity for
    U.S.&#160;federal income tax purposes, in which case payments of
    interest to
    <FONT style="white-space: nowrap">non-U.S.&#160;holders</FONT>
    on the amortizing notes could potentially be subject to
    U.S.&#160;withholding tax and (ii)&#160;the purchase contracts
    could be treated as Hovnanian&#146;s stock on the date of
    issuance, in which case the tax consequences of the purchase,
    ownership and disposition thereof would be substantially the
    same as the tax consequences described herein. Holders should
    consult their tax advisors regarding potential alternative tax
    characterizations of the Units.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: transparent">

    <B><I><FONT style="font-family: 'Times New Roman', Times">You
    may be subject to tax upon an adjustment to the settlement rate
    of the purchase contracts even though you do not receive a
    corresponding cash distribution.</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    The settlement rate of the purchase contracts is subject to
    adjustment in certain circumstances, including the payment of
    certain cash dividends or upon a fundamental change. If the
    settlement rate is adjusted as a result of a distribution that
    is taxable to our Class&#160;A common stockholders, such as a
    cash dividend, you will be deemed to have received for
    U.S.&#160;federal income tax purposes a taxable dividend to the
    extent of our earnings and profits without the receipt of any
    cash. If you are a
    <FONT style="white-space: nowrap">&#147;non-U.S.&#160;holder&#148;</FONT>
    (as defined in &#147;Certain United States Federal Income and
    Estate Tax Consequences&#160;&#151;
    <FONT style="white-space: nowrap">Non-U.S.&#160;Holders&#148;),</FONT>
    such deemed dividend may be subject to U.S.&#160;federal
    withholding tax (currently at a 30% rate, or such lower rate as
    may be specified by an applicable income tax treaty), which may
    be withheld from shares of Class&#160;A common stock or sales
    proceeds subsequently paid or credited to you. See &#147;Certain
    United States Federal Income and Estate Tax Considerations.&#148;
</DIV>
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    <BR>
    S-33
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<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<!-- XBRL Pagebreak End -->

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: transparent">

    <B><I><FONT style="font-family: 'Times New Roman', Times"><FONT style="white-space: nowrap">Non-U.S.</FONT>
    holders who own, or in certain cases have owned, directly or
    constructively, more than a certain ownership threshold may be
    subject to U.S. federal income tax on gain realized on (and,
    under certain circumstances, withholding tax on the proceeds of)
    the disposition of the Units, purchase contracts and shares of
    our Class&#160;A common stock.</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    Because we have significant U.S.&#160;real estate holdings, we
    believe that we currently are a &#147;United States real
    property holding corporation&#148; (USRPHC) for
    U.S.&#160;federal income tax purposes. As a result, a
    <FONT style="white-space: nowrap">&#147;non-U.S.&#160;holder&#148;</FONT>
    (as defined in &#147;Certain United States Federal Income Tax
    and Estate Consequences&#160;&#151;
    <FONT style="white-space: nowrap">Non-U.S.&#160;Holders&#148;)</FONT>
    will generally be subject to U.S.&#160;federal income tax on
    gain realized on (and with respect to the purchase contracts,
    possibly U.S.&#160;federal withholding tax on the proceeds of) a
    sale or other disposition of the Units or the purchase contracts
    or shares of our Class&#160;A common stock if such
    <FONT style="white-space: nowrap">non-U.S.&#160;holder</FONT>
    exceeds certain ownership thresholds. So long as our
    Class&#160;A common stock continues to be regularly traded on an
    established securities market, (i)&#160;a
    <FONT style="white-space: nowrap">non-U.S.&#160;holder</FONT>
    will not be subject to U.S.&#160;federal income tax on the
    disposition of our Class&#160;A common stock if the
    <FONT style="white-space: nowrap">non-U.S.&#160;holder</FONT>
    has not held (at any time during the shorter of the five year
    period preceding the date of disposition or the
    <FONT style="white-space: nowrap">non-U.S.&#160;holder&#146;s</FONT>
    holding period) more than 5% (actually or constructively) of our
    total outstanding Class&#160;A common stock, and (ii)&#160;a
    <FONT style="white-space: nowrap">non-U.S.&#160;holder</FONT>
    will not be subject to U.S.&#160;federal income tax on the
    disposition of our purchase contracts (x)&#160;if, as a result
    of the Units being deemed regularly traded, the purchase
    contracts are considered to be regularly traded, and on the date
    acquired by the
    <FONT style="white-space: nowrap">non-U.S.&#160;holder,</FONT>
    the purchase contracts held by the
    <FONT style="white-space: nowrap">non-U.S.&#160;holder</FONT>
    had a fair market value less than or equal to 5% of the fair
    market value of all the purchase contracts, or (y)&#160;if the
    purchase contracts are not considered to be regularly traded, on
    the date such purchase contracts were acquired by the
    <FONT style="white-space: nowrap">non-U.S.&#160;holder</FONT>
    the purchase contracts had a fair market value less than or
    equal to 5% of the fair market value of our Class&#160;A common
    stock. In addition, if the purchase contracts are not considered
    to be &#147;regularly traded&#148; for these purposes, a
    <FONT style="white-space: nowrap">non-U.S.&#160;holder</FONT>
    will be subject to withholding upon a disposition of our
    purchase contracts if on the date acquired by the
    <FONT style="white-space: nowrap">non-U.S.&#160;holder,</FONT>
    the purchase contracts had a fair market value greater than 5%
    of the fair market value of our Class&#160;A common stock.
    <FONT style="white-space: nowrap">Non-U.S.&#160;holders</FONT>
    should consult their own U.S.&#160;income tax advisors
    concerning the consequences of disposing of Units, purchase
    contracts or shares of Class&#160;A common stock.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: transparent">

    <B><I><FONT style="font-family: 'Times New Roman', Times">We may
    not have the ability to raise the funds necessary to repurchase
    the amortizing notes following the exercise of our early
    mandatory settlement right, and our debt outstanding at that
    time may contain limitations on our ability to repurchase the
    amortizing notes.</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    If we elect to exercise our early mandatory settlement right,
    holders of the amortizing notes will have the right to require
    K. Hovnanian to repurchase the amortizing notes on the
    repurchase date at the repurchase price described under
    &#147;Description of the Amortizing Notes&#160;&#151; Repurchase
    of Amortizing Notes at the Option of the Holder.&#148; However,
    neither K. Hovnanian nor the Guarantors may have enough
    available cash or be able to obtain financing at the time K.
    Hovnanian is required to make repurchases of amortizing notes
    surrendered for repurchase. In addition, the ability of K.
    Hovnanian and the Guarantors to pay the repurchase price for the
    amortizing notes may be limited by agreements governing our
    current and future indebtedness. Our failure to repurchase
    amortizing notes at a time when the repurchase is required by
    the indenture would constitute a default under the indenture. A
    default under the indenture could also lead to a default under
    agreements governing our indebtedness outstanding at that time.
    If the repayment of the related indebtedness were to be
    accelerated after any applicable notice or grace periods,
    neither K. Hovnanian nor the Guarantors may have sufficient
    funds to repay the indebtedness and the repurchase price for the
    amortizing notes.
</DIV>
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    <BR>
    S-34
</DIV><!-- END PAGE WIDTH -->
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<H5 align="left" style="page-break-before:always"><A HREF="#Y89359tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<!-- XBRL Pagebreak End -->

<A name='Y89359106'>
<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: transparent">

    <B><FONT style="font-family: 'Times New Roman', Times">USE OF
    PROCEEDS</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    We expect to receive net proceeds from this offering of
    approximately $72.5&#160;million (or $83.4&#160;million if the
    underwriters exercise their over-allotment option in full),
    after deducting underwriting discounts and estimated transaction
    expenses payable by us. In addition, we expect that the net
    proceeds from the Common Stock Offering will be approximately
    $47.7&#160;million (or approximately $54.9&#160;million if the
    underwriters for the Common Stock Offering exercise their
    over-allotment option in full) and the net proceeds from the
    concurrent Notes Offering will be approximately
    $147.9&#160;million, after deducting underwriting discounts and
    estimated transaction expenses payable by us. There can be no
    assurance that the Common Stock Offering or the Notes Offering
    will be completed.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    We intend to use the net proceeds of this offering, together
    with the net proceeds from the Concurrent Offerings, to fund the
    Tender Offers
    <FONT style="white-space: nowrap">and/or</FONT> the
    Redemptions, and for general corporate purposes. The interest
    rate of each series of Tender Offer Notes is set forth in
    &#147;Summary&#160;&#151; Related Transactions&#160;&#151;
    Tender Offers and Redemptions.&#148;
</DIV>
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<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <BR>
    S-35
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<H5 align="left" style="page-break-before:always"><A HREF="#Y89359tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<!-- XBRL Pagebreak End -->

<A name='Y89359107'>
<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: transparent">

    <B><FONT style="font-family: 'Times New Roman', Times">CAPITALIZATION</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    The following table sets forth our homebuilding cash and cash
    equivalents and our capitalization as of October&#160;31, 2010,
    on:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    an actual basis;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    an as adjusted basis to give effect to the sale of Units (but
    not the use of proceeds therefrom);&#160;and
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    an as further adjusted basis to give effect to the Concurrent
    Offerings and the application of the estimated proceeds from
    this offering and the Concurrent Offerings.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    This information should be read in conjunction with
    &#147;Management&#146;s Discussion and Analysis of Financial
    Condition and Results of Operations&#148; incorporated by
    reference herein and our financial statements and related notes
    incorporated by reference herein.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE border="0" width="100%" align="center" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
<!-- Table Width Row BEGIN -->
<TR style="font-size: 1pt" valign="bottom">
    <TD width="62%">&nbsp;</TD>	<!-- colindex=01 type=maindata -->
    <TD width="2%">&nbsp;</TD>	<!-- colindex=02 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=02 type=lead -->
    <TD width="7%" align="right">&nbsp;</TD>	<!-- colindex=02 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=02 type=hang1 -->
    <TD width="3%">&nbsp;</TD>	<!-- colindex=03 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=03 type=lead -->
    <TD width="10%" align="right">&nbsp;</TD>	<!-- colindex=03 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=03 type=hang1 -->
    <TD width="3%">&nbsp;</TD>	<!-- colindex=04 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=04 type=lead -->
    <TD width="7%" align="right">&nbsp;</TD>	<!-- colindex=04 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=04 type=hang1 -->
</TR>
<!-- Table Width Row END -->
<!-- TableOutputHead -->
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="10" align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>As of October&#160;31, 2010</B>
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>As Further<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>Adjusted for<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>As Adjusted for<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>Concurrent<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>Actual</B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>Sale of Units</B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>Offerings(7)</B>
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="10" align="center" valign="bottom">
    <B>(Unaudited)</B>
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="10" align="center" valign="bottom">
    <B>(In thousands, except for share numbers and footnotes)</B>
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="line-height: 3pt; font-size: 1pt">
<TD>&nbsp;
</TD>
</TR>
<!-- TableOutputBody -->
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Homebuilding Cash and Cash Equivalents, Excluding Restricted Cash
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    359,124
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    431,574
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    465,413
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Restricted Cash(1)
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    108,983
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    108,983
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    108,983
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="font-size: 1pt">
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 20pt">
    Total Homebuilding Cash and Cash Equivalents(2)
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    468,107
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    540,557
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    574,396
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="font-size: 1pt">
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Debt(3):
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Nonrecourse Land Mortgages
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    4,313
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    4,313
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    4,313
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Nonrecourse Mortgages Secured by Operating Property
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    20,657
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    20,657
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    20,657
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    10<FONT style="vertical-align: text-top; font-size: 70%;">5</FONT>/<FONT style="font-size: 70%;">8</FONT>%&#160;Senior
    Secured Notes due 2016
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    772,415
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    772,415
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    772,415
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    11<FONT style="vertical-align: text-top; font-size: 70%;">1</FONT>/<FONT style="font-size: 70%;">2</FONT>%
    Senior Secured Notes due 2013
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    475
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    475
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    475
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    18%&#160;Senior Secured Notes due 2017
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    11,702
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    11,702
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    11,702
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    8%&#160;Senior Notes due 2012
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    35,475
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    35,475
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    6<FONT style="vertical-align: text-top; font-size: 70%;">1</FONT>/<FONT style="font-size: 70%;">2</FONT>%&#160;Senior
    Notes due 2014
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    54,373
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    54,373
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    54,373
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    6<FONT style="vertical-align: text-top; font-size: 70%;">3</FONT>/<FONT style="font-size: 70%;">8</FONT>%&#160;Senior
    Notes due 2014
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    29,214
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    29,214
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    29,214
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    6<FONT style="vertical-align: text-top; font-size: 70%;">1</FONT>/<FONT style="font-size: 70%;">4</FONT>%&#160;Senior
    Notes due 2015
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    52,720
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    52,720
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    52,720
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    11<FONT style="vertical-align: text-top; font-size: 70%;">7</FONT>/<FONT style="font-size: 70%;">8</FONT>%&#160;Senior
    Notes due 2015 offered concurrently(4)
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    151,052
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    6<FONT style="vertical-align: text-top; font-size: 70%;">1</FONT>/<FONT style="font-size: 70%;">4</FONT>%&#160;Senior
    Notes due 2016
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    171,616
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    171,616
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    171,616
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    7<FONT style="vertical-align: text-top; font-size: 70%;">1</FONT>/<FONT style="font-size: 70%;">2</FONT>%&#160;Senior
    Notes due 2016
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    172,269
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    172,269
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    172,269
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    8<FONT style="vertical-align: text-top; font-size: 70%;">5</FONT>/<FONT style="font-size: 70%;">8</FONT>%&#160;Senior
    Notes due 2017
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    195,918
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    195,918
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    195,918
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    8<FONT style="vertical-align: text-top; font-size: 70%;">7</FONT>/<FONT style="font-size: 70%;">8</FONT>%&#160;Senior
    Subordinated Notes due 2012
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    66,639
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    66,639
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    7<FONT style="vertical-align: text-top; font-size: 70%;">3</FONT>/<FONT style="font-size: 70%;">4</FONT>%&#160;Senior
    Subordinated Notes due 2013
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    53,531
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    53,531
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Tangible Equity Units Senior Subordinated Amortizing Notes that
    are components of the Units offered hereby
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    &#151;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    13,578
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    13,578
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="font-size: 1pt">
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 20pt">
    Total Debt(3)
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    1,641,317
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    1,654,895
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    1,650,302
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="font-size: 1pt">
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Equity:
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Preferred Stock, $.01&#160;par value; 100,000&#160;Shares
    authorized; 5,600&#160;Shares of 7.625% Series&#160;A Preferred
    Stock issued at October&#160;31, 2010 with a liquidation
    preference of $140,000
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    135,299
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    135,299
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    135,299
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Common Stock, Class&#160;A, $.01&#160;par value;
    200,000,000&#160;Shares authorized; 74,809,683&#160;Shares
    issued at October&#160;31, 2010, actual and as adjusted
    (including 11,694,720&#160;shares held in treasury) and
    86,559,683&#160;Shares issued as further adjusted (including
    11,694,720&#160;Shares held in treasury)(5)
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    748
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    748
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    866
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
</TABLE>
<!-- XBRL Pagebreak Begin -->

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <BR>
    S-36
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#Y89359tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<!-- XBRL Pagebreak End -->
<!-- XBRL Table Pagebreak -->

<TABLE border="0" width="100%" align="center" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
<!-- Table Width Row BEGIN -->
<TR style="font-size: 1pt" valign="bottom">
    <TD width="62%">&nbsp;</TD>	<!-- colindex=01 type=maindata -->
    <TD width="2%">&nbsp;</TD>	<!-- colindex=02 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=02 type=lead -->
    <TD width="7%" align="right">&nbsp;</TD>	<!-- colindex=02 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=02 type=hang1 -->
    <TD width="3%">&nbsp;</TD>	<!-- colindex=03 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=03 type=lead -->
    <TD width="10%" align="right">&nbsp;</TD>	<!-- colindex=03 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=03 type=hang1 -->
    <TD width="3%">&nbsp;</TD>	<!-- colindex=04 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=04 type=lead -->
    <TD width="7%" align="right">&nbsp;</TD>	<!-- colindex=04 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=04 type=hang1 -->
</TR>
<!-- Table Width Row END -->
<!-- TableOutputHead -->
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="10" align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>As of October&#160;31, 2010</B>
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>As Further<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>Adjusted for<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>As Adjusted for<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>Concurrent<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>Actual</B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>Sale of Units</B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>Offerings(7)</B>
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="10" align="center" valign="bottom">
    <B>(Unaudited)</B>
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="10" align="center" valign="bottom">
    <B>(In thousands, except for share numbers and footnotes)</B>
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="line-height: 3pt; font-size: 1pt">
<TD>&nbsp;
</TD>
</TR>
<!-- TableOutputBody -->
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Common Stock, Class&#160;B, $.01&#160;par value (Convertible to
    Class&#160;A at time of sale); 30,000,000&#160;Shares
    authorized; 15,256,543&#160;Shares issued at October&#160;31,
    2010 (including 691,748&#160;Shares held in treasury)
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    153
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    153
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    153
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Paid in Capital&#160;&#151; Common Stock(6)
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    463,908
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    523,242
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    570,823
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Accumulated Deficit
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    (823,419
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    (823,419
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    (825,233
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Treasury Stock&#160;&#151; at Cost
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    (115,257
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    (115,257
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    (115,257
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
</TR>
<TR valign="bottom" style="font-size: 1pt">
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Total Hovnanian Enterprises, Inc. Stockholders&#146; Equity
    Deficit
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    (338,568
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    (279,234
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    (233,349
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
</TR>
<TR valign="bottom" style="font-size: 1pt">
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Noncontrolling Interest in Consolidated Joint Ventures
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    630
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    630
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    630
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="font-size: 1pt">
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Total Equity Deficit(5)
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    (337,938
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    (278,604
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    (232,719
</TD>
<TD nowrap align="left" valign="bottom">
    )
</TD>
</TR>
<TR valign="bottom" style="font-size: 1pt">
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Total Capitalization
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    1,303,379
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    1,376,291
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    1,417,583
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="font-size: 1pt">
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
</TABLE>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">

</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV style="font-size: 1pt; margin-left: 0%; width: 13%;  align: left; border-bottom: 1pt solid #000000"></DIV>

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>



<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">

<TR>
    <TD width="2%"></TD>
    <TD width="1%"></TD>
    <TD width="97%"></TD>
</TR>

<TR>
    <TD align="right" valign="top">
    (1) </TD>
    <TD></TD>
    <TD valign="bottom">
    As of October&#160;31, 2010, &#147;Restricted Cash&#148;
    includes $92.3&#160;million of cash collateralizing our letter
    of credit agreements and facilities, $14.5&#160;million of cash
    collateralizing our surety bonds and $2.2&#160;million for
    customers&#146; deposits, which are restricted from our use.</TD>
</TR>


<TR style="line-height: 3pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD align="right" valign="top">
    (2) </TD>
    <TD></TD>
    <TD valign="bottom">
    As of October&#160;31, 2010, cash of K. Hovnanian, Hovnanian and
    the restricted subsidiaries acting as guarantors under K.
    Hovnanian&#146;s indentures collateralizing our secured
    indebtedness was $300.0&#160;million (which included
    $92.3&#160;million of restricted cash collateralizing certain
    letters of credit). See &#147;Risk
    Factors&#160;&#151;&#160;Risks Related to Ownership of the
    Units, Separate Purchase Contracts, Separate Amortizing Notes
    and Class&#160;A Common Stock&#160;&#151; The amortizing notes
    and the senior subordinated guarantees are unsecured obligations
    and will be junior to all of our existing and future secured
    indebtedness to the extent of the collateral securing such
    indebtedness.&#148;</TD>
</TR>


<TR style="line-height: 3pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD align="right" valign="top">
    (3) </TD>
    <TD></TD>
    <TD valign="bottom">
    References to our consolidated debt in this prospectus
    supplement exclude debt of $73.6&#160;million under our secured
    master repurchase agreements, which are short-term borrowing
    facilities used by our mortgage banking subsidiary.</TD>
</TR>


<TR style="line-height: 3pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD align="right" valign="top">
    (4) </TD>
    <TD></TD>
    <TD valign="bottom">
    As further adjusted reflects gross proceeds of
    $155.0&#160;million, net of original issue discount of
    approximately $3.948&#160;million, which will accrete over the
    life of the Senior Notes and be amortized into interest expense.
    Does not reflect the underwriters&#146; discount.</TD>
</TR>


<TR style="line-height: 3pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD align="right" valign="top">
    (5) </TD>
    <TD></TD>
    <TD valign="bottom">
    (a)&#160;As further adjusted includes shares of our Class&#160;A
    common stock issued in the Common Stock Offering and (b)&#160;as
    adjusted and as further adjusted excludes shares of our
    Class&#160;A common stock issuable upon settlement of the
    purchase contracts that are components of the Units offered
    hereby.</TD>
</TR>


<TR style="line-height: 3pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD align="right" valign="top">
    (6) </TD>
    <TD></TD>
    <TD valign="bottom">
    We have accounted for the purchase contracts that are components
    of the Units offered hereby as equity and recorded
    $59.3&#160;million, the initial fair value of these contracts,
    net of the underwriters&#146; discount and estimated offering
    expenses allocated to the purchase contracts, as additional paid
    in capital as of October&#160;31, 2010.</TD>
</TR>


<TR style="line-height: 3pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD align="right" valign="top">
    (7) </TD>
    <TD></TD>
    <TD valign="bottom">
    Assumes that all of the Tender Offer Notes are tendered and
    purchased in the Tender Offers on the date of issuance of the
    Senior Notes offered in the Notes Offering (expected to be
    February&#160;14, 2011) at an aggregate purchase price of
    approximately $161.8&#160;million, including estimated fees and
    expenses related to the Tender Offers.</TD>
</TR>

</TABLE>
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<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    S-37
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#Y89359tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<!-- XBRL Pagebreak End -->

<A name='Y89359108'>
<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: transparent">

    <B><FONT style="font-family: 'Times New Roman', Times">PRICE
    RANGE OF COMMON STOCK; DIVIDEND POLICY</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    Our Class&#160;A common stock is listed on the New York Stock
    Exchange under the symbol &#147;HOV.&#148; The following table
    sets forth the high and low closing sales prices for
    transactions involving our Class&#160;A common stock during each
    fiscal quarter, as reported on the New York Stock Exchange
    Composite Tape.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE border="0" width="100%" align="center" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
<!-- Table Width Row BEGIN -->
<TR style="font-size: 1pt" valign="bottom">
    <TD width="85%">&nbsp;</TD>	<!-- colindex=01 type=maindata -->
    <TD width="2%">&nbsp;</TD>	<!-- colindex=02 type=gutter -->
    <TD width="2%" align="right">&nbsp;</TD>	<!-- colindex=02 type=lead -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=02 type=body -->
    <TD width="2%" align="left">&nbsp;</TD>	<!-- colindex=02 type=hang1 -->
    <TD width="3%">&nbsp;</TD>	<!-- colindex=03 type=gutter -->
    <TD width="2%" align="right">&nbsp;</TD>	<!-- colindex=03 type=lead -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=03 type=body -->
    <TD width="2%" align="left">&nbsp;</TD>	<!-- colindex=03 type=hang1 -->
</TR>
<!-- Table Width Row END -->
<!-- TableOutputHead -->
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>High</B>
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>Low</B>
</TD>
</TR>
<TR style="line-height: 3pt; font-size: 1pt">
<TD>&nbsp;
</TD>
</TR>
<!-- TableOutputBody -->
<TR valign="bottom" style="background: #CCEEFF">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <B>2011:</B>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    November&#160;1, 2010 through February&#160;3, 2011
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    4.96
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    3.54
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <B>2010:</B>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 20pt">
    Quarter ended October&#160;31, 2010
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    4.65
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    3.42
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 20pt">
    Quarter ended July&#160;31, 2010
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    7.99
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    3.47
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 20pt">
    Quarter ended April&#160;30, 2010
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    7.23
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    3.55
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 20pt">
    Quarter ended January&#160;31, 2010
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    4.40
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    3.54
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <B>2009:</B>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 20pt">
    Quarter ended October&#160;31, 2009
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    5.61
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    3.42
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 20pt">
    Quarter ended July&#160;31, 2009
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    3.25
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    1.81
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 20pt">
    Quarter ended April&#160;30, 2009
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    2.93
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    0.58
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 20pt">
    Quarter ended January&#160;31, 2009
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    4.99
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    1.61
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
</TABLE>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">

</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    On February&#160;3, 2011, the last reported sale price of our
    Class&#160;A common stock on the New York Exchange was $4.49 per
    share. As of January&#160;18, our Class&#160;A common stock was
    held of record by approximately 541 holders and our Class&#160;B
    common stock was held of record by approximately 260 holders.
    There is no established public trading market for our
    Class&#160;B common stock and in order to trade Class&#160;B
    common stock, the shares must be converted into Class&#160;A
    common stock on a
    <FONT style="white-space: nowrap">one-for-one</FONT>
    basis.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    Certain debt instruments to which we are a party contain
    restrictions on the payment of cash dividends. As a result of
    the most restrictive of these provisions, we are not currently
    able to pay any cash dividends. We have never paid a cash
    dividend to common stockholders.
</DIV>
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<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <BR>
    S-38
</DIV><!-- END PAGE WIDTH -->
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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#Y89359tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<!-- XBRL Pagebreak End -->

<A name='Y89359109'>
<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: transparent">

    <B><FONT style="font-family: 'Times New Roman', Times">DESCRIPTION
    OF THE UNITS</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    We are offering 3,000,000 Units (or 3,450,000 Units if the
    underwriters exercise their over-allotment option in full), each
    with a stated amount of $25. Each Unit is comprised of a prepaid
    stock purchase contract issued by Hovnanian (a &#147;purchase
    contract&#148;) and a senior subordinated amortizing note issued
    by K. Hovnanian (an &#147;amortizing note&#148;). The following
    summary of the terms of the Units, the summary of the terms of
    the purchase contracts set forth under the caption
    &#147;Description of the Purchase Contracts&#148; and the
    summary of the terms of the amortizing notes set forth under the
    caption &#147;Description of the Amortizing Notes&#148; in this
    prospectus supplement contain a description of all of the
    material terms of the Units and their components but are not
    complete. We refer you to:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    the purchase contract agreement to be entered into among
    Hovnanian, K. Hovnanian and Wilmington Trust&#160;Company, as
    purchase contract agent (the &#147;purchase contract
    agreement&#148;), to be dated the date of first issuance of the
    Units, under which the purchase contracts and Units will be
    issued;&#160;and
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    the form of K. Hovnanian senior subordinated debt indenture, and
    a related supplemental indenture, each to be dated the date of
    first issuance of the Units, and each among K. Hovnanian, as
    issuer, Hovnanian and certain subsidiaries of Hovnanian, as
    Guarantors, and Wilmington Trust&#160;Company, as trustee, under
    which the amortizing notes will be issued.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    The form of K. Hovnanian senior subordinated debt indenture has
    been, and the related supplemental indenture for the amortizing
    notes and the purchase contract agreement will be, filed and
    incorporated by reference as exhibits to the registration
    statement of which this prospectus supplement forms a part.
    Whenever particular sections or defined terms are referred to,
    such sections or defined terms are incorporated herein by
    reference.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    As used in this section, the term &#147;Hovnanian&#148; means
    Hovnanian Enterprises, Inc. and does not include
    K.&#160;Hovnanian Enterprises, Inc. or any other subsidiary of
    Hovnanian Enterprises, Inc.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: transparent">

    <B><FONT style="font-family: 'Times New Roman', Times">Components
    of the Units</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    Each Unit offered is comprised of:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    a prepaid stock purchase contract issued by Hovnanian pursuant
    to which we will deliver to the holder, not later than
    February&#160;15, 2014 (subject to postponement in certain
    limited circumstances, the &#147;mandatory settlement
    date&#148;), a number of shares of our Class&#160;A common stock
    per purchase contract equal to the settlement rate described
    below under &#147;Description of the Purchase
    Contracts&#160;&#151; Delivery of Class&#160;A Common
    Stock;&#148; and
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    a senior subordinated amortizing note issued by K. Hovnanian
    with an initial principal amount of $4.526049 that pays equal
    quarterly installments of $0.453125 per amortizing note (except
    for the May&#160;15, 2011 installment payment, which will be
    $0.483334 per amortizing note), which cash payment in the
    aggregate will be equivalent to 7.25% per year with respect to
    the $25&#160;stated amount per Unit.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    Unless previously settled at your option as described in
    &#147;Description of the Purchase Contracts&#160;&#151; Early
    Settlement&#148; or &#147;Description of the Purchase
    Contracts&#160;&#151; Early Settlement Upon a Fundamental
    Change&#148; or unless previously settled at our option as
    described in &#147;Description of the Purchase
    Contracts&#160;&#151; Early Settlement at Our Election,&#148; we
    will deliver to you not more than 5.8140&#160;shares and not
    less than 4.7655&#160;shares of our Class&#160;A common stock,
    par value $0.01 per share (the &#147;Class&#160;A common
    stock&#148;) on the mandatory settlement date, based upon the
    &#147;applicable settlement rate&#148; (as defined below), which
    is subject to adjustment as described herein, and the
    &#147;applicable market value&#148; (as defined below) of our
    Class&#160;A common stock, as described below under
    &#147;Description of the Purchase Contracts&#160;&#151; Delivery
    of Class&#160;A Common Stock.&#148;
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    Each amortizing note will have an initial principal amount of
    $4.526049. On each February&#160;15, May&#160;15, August 15 and
    November&#160;15, commencing on May&#160;15, 2011, K. Hovnanian
    will pay equal cash installments of $0.453125 on each amortizing
    note (except for the May&#160;15, 2011 installment payment,
    which will be $0.483334 per amortizing note). Each installment
    will constitute a payment of interest (at a rate of 12.072%
</DIV>
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<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <BR>
    S-39
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<H5 align="left" style="page-break-before:always"><A HREF="#Y89359tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
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<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    per annum) and a partial repayment of principal on the
    amortizing note, allocated as set forth on the amortization
    schedule set forth under &#147;Description of the Amortizing
    Notes&#160;&#151; Amortization Schedule.&#148;
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    The stated amount of each Unit must be allocated between the
    amortizing note and the purchase contract based upon their
    relative fair market values. We have determined that the fair
    market value of each amortizing note is $4.526049 and the fair
    market value of each purchase contract is $20.473951. Each
    holder agrees to such allocation and this position will be
    binding upon each holder (but not on the Internal Revenue
    Service).
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: transparent">

    <B><FONT style="font-family: 'Times New Roman', Times">Limitation
    on Beneficial Ownership of Units, Separate Purchase Contracts
    and Class A Common Stock</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    In order to preserve the tax treatment of our net operating loss
    carryforwards under the Code, beneficial owners of Units and any
    separate purchase contracts will be subject to both a beneficial
    ownership limitation and a settlement limitation as described
    herein. In addition, as a Class&#160;A common stockholder upon
    settlement of your purchase contract, you will be subject to
    both our Rights Plan and the transfer restrictions of our
    amended Certificate of Incorporation. See &#147;Limitation on
    Beneficial Ownership of Class&#160;A Common Stock, Units and
    Separate Purchase Contracts.&#148;
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: transparent">

    <B><FONT style="font-family: 'Times New Roman', Times">Separating
    and Recreating Units</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    Upon the conditions and under the circumstances described below,
    a holder of a Unit will have the right to separate a Unit into
    its component parts, and a holder of a separate purchase
    contract and a separate amortizing note will have the right to
    combine the two components to recreate a Unit.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: transparent">

    <B><I><FONT style="font-family: 'Times New Roman', Times">Separating
    Units</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    At initial issuance, the purchase contracts and amortizing notes
    may be purchased and transferred only as Units and will trade
    under the CUSIP number for the Units.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    On any business day during the period beginning on, and
    including, the business day immediately following the date of
    initial issuance of the Units to, but excluding, the third
    scheduled trading day immediately preceding February&#160;15,
    2014 or any &#147;early mandatory settlement date&#148; (as
    defined below), you will have the right to separate your Unit
    into its constituent purchase contract and amortizing note
    (which we refer to as a &#147;separate purchase contract&#148;
    and a &#147;separate amortizing note,&#148; respectively, and
    which will thereafter trade under their respective CUSIP
    numbers), in which case that Unit will cease to exist.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <I>&#147;Business day&#148; </I>means any day other than a
    Saturday, Sunday or any day on which banking institutions in New
    York, New York are authorized or obligated by applicable law or
    executive order to close or be closed.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    Your Unit, purchase contract and amortizing note will be
    represented by global securities registered in the name of a
    nominee of The Depository Trust&#160;Company (&#147;DTC&#148;).
    You will not be entitled to receive a definitive physical
    certificate for your Units, purchase contracts or amortizing
    notes, except under the limited circumstances described under
    &#147;Book-Entry Procedures and Settlement.&#148; Beneficial
    interests in a Unit and, after separation, the separate purchase
    contract and separate amortizing note will be shown on and
    transfers will be effected through direct or indirect
    participants in DTC. In order to separate your Unit into its
    component parts, you must deliver written instructions to the
    broker or other direct or indirect participant through which you
    hold an interest in your Unit (your &#147;participant&#148;) to
    notify DTC through DTC&#146;s Deposit/Withdrawal at Custodian
    (&#147;DWAC&#148;) System of your election to separate the Unit.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    Separate purchase contracts and separate amortizing notes will
    be transferable independently from each other.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: transparent">

    <B><I><FONT style="font-family: 'Times New Roman', Times">Recreating
    Units</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    If you beneficially own a separate purchase contract and a
    separate amortizing note, you may combine the two components to
    recreate a Unit by delivering written instructions to your
    participant to notify DTC through its DWAC System of your desire
    to recreate the Unit on any business day during the period
    beginning on, and including, the business day immediately
    following the date of initial issuance of the Units to, but
    excluding, the third scheduled trading day immediately preceding
    February&#160;15, 2014 or any early mandatory settlement date.
</DIV>
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    <BR>
    S-40
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<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
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<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: transparent">

    <B><FONT style="font-family: 'Times New Roman', Times">Listing
    of Securities</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    We will apply to list the Units on the New York Stock Exchange,
    subject to satisfaction of its minimum listing standards with
    respect to the Units. However, we can give no assurance that the
    Units will be so listed. If the Units are approved for listing,
    we expect that the Units will begin trading on the New York
    Stock Exchange within 30 calendar days after the Units are first
    issued. In addition, the underwriters have advised us that they
    intend to make a market in the Units, but the underwriters are
    not obligated to do so. However, listing on the New York Stock
    Exchange does not guarantee that a trading market will develop,
    and the underwriters may discontinue market making at any time
    in their sole discretion without notice. Accordingly, we cannot
    assure you that a liquid trading market will develop for the
    Units (or, if developed, that a liquid trading market will be
    maintained), that you will be able to sell Units at a particular
    time or that the prices you receive when you sell will be
    favorable.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    We will not initially apply to list the separate purchase
    contracts or the separate amortizing notes on any securities
    exchange or automated inter-dealer quotation system. If
    (i)&#160;a sufficient number of Units are separated into
    separate purchase contracts and separate amortizing notes and
    traded separately such that applicable listing requirements are
    met and (ii)&#160;a sufficient number of holders of such
    separate purchase contracts and separate amortizing notes
    request that we list such separate purchase contracts and
    separate amortizing notes, we may endeavor to list such separate
    purchase contracts and separate amortizing notes on an exchange
    of our choosing (which may or may not be the New York Stock
    Exchange) subject to applicable listing requirements.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    Our Class&#160;A common stock is listed on the New York Stock
    Exchange under the symbol &#147;HOV.&#148; We have applied to
    have the shares of our Class&#160;A common stock deliverable
    upon settlement of all purchase contracts approved for listing
    on the New York Stock Exchange.
</DIV>

<DIV style="margin-top: 9pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: transparent">

    <B><FONT style="font-family: 'Times New Roman', Times">Title</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    Hovnanian and the purchase contract agent will treat the
    registered owner of any Unit or separate purchase contract or
    amortizing note as the absolute owner of the Unit or separate
    purchase contract or amortizing note for the purpose of settling
    the related purchase contracts or amortizing note and for all
    other purposes.
</DIV>

<DIV style="margin-top: 9pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: transparent">

    <B><FONT style="font-family: 'Times New Roman', Times">Replacement
    of Unit Certificates</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    In the event that physical certificates evidencing the Units
    have been issued, any mutilated Unit certificate will be
    replaced by us at the expense of the holder upon surrender of
    the certificate to the purchase contract agent. Unit
    certificates that become destroyed, lost or stolen will be
    replaced by us at the expense of the holder upon delivery to
    Hovnanian and the purchase contract agent of evidence of their
    destruction, loss or theft satisfactory to us and the purchase
    contract agent. In the case of a destroyed, lost or stolen Unit
    certificate, an indemnity satisfactory to us and the purchase
    contract agent may be required at the expense of the registered
    holder of the Units before a replacement will be issued.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    Notwithstanding the foregoing, we will not be obligated to
    replace any Unit certificates on or after the business day
    immediately preceding February&#160;15, 2014 or any early
    settlement date. In those circumstances, the purchase contract
    agreement will provide that, in lieu of the delivery of a
    replacement Unit certificate, the purchase contract agent, upon
    delivery of the evidence and indemnity described above, will
    deliver or arrange for delivery of the shares of Class&#160;A
    common stock issuable pursuant to the purchase contracts
    included in the Units evidenced by the certificate.
</DIV>

<DIV style="margin-top: 9pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: transparent">

    <B><FONT style="font-family: 'Times New Roman', Times">Miscellaneous</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    The purchase contract agreement will provide that we will pay
    all fees and expenses related to the offering of the Units and
    the enforcement by the purchase contract agent of the rights of
    the holders of the Units or the separate purchase contracts or
    amortizing notes, other than expenses (including legal fees) of
    the underwriters.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    Should you elect to separate or recreate Units, you will be
    responsible for any fees or expenses payable in connection with
    that separation or recreation, and we will have no liability
    therefor.
</DIV>
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    <BR>
    S-41
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<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
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<A name='Y89359110'>
<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: transparent">

    <B><FONT style="font-family: 'Times New Roman', Times">DESCRIPTION
    OF THE PURCHASE CONTRACTS</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    Each purchase contract, which initially forms a part of a Unit
    and which, at the holder&#146;s option after the date of initial
    issuance of the Units, can be separated and transferred
    separately from the amortizing note also forming a part of a
    Unit, will be issued pursuant to the terms and provisions of the
    purchase contract agreement.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    The following summary of the terms of the purchase contracts
    contains a description of all of the material terms of the
    purchase contracts but is not complete and is subject to, and is
    qualified in its entirety reference to, all of the provisions of
    the purchase contract agreement, including the definitions in
    the purchase contract agreement of certain terms. We refer you
    to the purchase contract agreement to be filed and incorporated
    by reference as an exhibit to the registration statement of
    which this prospectus supplement forms a part.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    As used in this section, the terms &#147;Hovnanian,&#148;
    &#147;we,&#148; &#147;us&#148; and &#147;our&#148; means
    Hovnanian Enterprises, Inc. and does not include K. Hovnanian
    Enterprises, Inc. or any other subsidiary of Hovnanian
    Enterprises, Inc.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: transparent">

    <B><FONT style="font-family: 'Times New Roman', Times">Delivery
    of Class&#160;A Common Stock</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    Unless previously settled early at your or our option, for each
    purchase contract we will deliver to you on February&#160;15,
    2014 (subject to postponement in certain limited circumstances
    described below, the &#147;mandatory settlement date&#148;) a
    number of shares of our Class&#160;A common stock. The number of
    shares of our Class&#160;A common stock issuable upon settlement
    of each purchase contract (the &#147;settlement rate&#148;) will
    be determined as follows:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    if the applicable market value of our Class&#160;A common stock
    is equal to or greater than the&#160;threshold appreciation
    price, then you will receive 4.7655&#160;shares of Class&#160;A
    common stock for each purchase contract (the &#147;minimum
    settlement rate&#148;);
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    if the applicable market value of our Class&#160;A common stock
    is greater than $4.30 (the &#147;reference price&#148;) but less
    than the threshold appreciation price, then you will receive a
    number of shares of Class&#160;A common stock for each purchase
    contract equal to the Unit stated amount of $25, <I>divided by
    </I>the applicable market value;&#160;and
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    if the applicable market value of our Class&#160;A common stock
    is less than or equal to the reference price of $4.30, then you
    will receive 5.8140&#160;shares of Class&#160;A common stock for
    each purchase contract (the &#147;maximum settlement rate&#148;).
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    The maximum settlement rate, minimum settlement rate and the
    applicable market value are each subject to adjustment as
    described under &#147;&#151;&#160;Adjustments to the Fixed
    Settlement Rates&#148; below. Each of the minimum settlement
    rate and the maximum settlement rate is referred to as a
    &#147;fixed settlement rate.&#148;
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    The reference price is the public offering price of our
    Class&#160;A common stock in the concurrent common stock
    offering.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    The threshold appreciation price shall be equal to $25
    <I>divided by </I>the minimum settlement rate (rounded to the
    nearest $0.0001). The threshold appreciation price, which is
    initially approximately $5.25, represents an appreciation of
    approximately 22% over the reference price.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    For illustrative purposes only, the following table shows the
    number of shares of Class&#160;A common stock issuable upon
    settlement of a purchase contract at the assumed applicable
    market values, based on a reference price of $4.30 and a
    threshold appreciation price of $5.25. The table assumes that
    there will be no adjustments to the fixed settlement rates
    described under &#147;&#151;&#160;Adjustments to the Fixed
    Settlement Rates&#148; below and that neither Hovnanian nor
    holders elect to settle early as described under
    &#147;&#151;&#160;Early Settlement,&#148;
</DIV>
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    <BR>
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<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
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<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    &#145;&#145;&#151;&#160;Early Settlement Upon a Fundamental
    Change&#148; or &#147;&#151;&#160;Early Settlement at Our
    Election&#148; below. We cannot assure you that the actual
    applicable market value will be within the assumed range set
    forth below.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    A holder of a Unit or a separate purchase contract, as
    applicable, will receive on the mandatory settlement date the
    following number of shares of Class&#160;A common stock at the
    following assumed applicable market values:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE border="0" width="100%" align="center" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
<!-- Table Width Row BEGIN -->
<TR style="font-size: 1pt" valign="bottom">
    <TD width="79%">&nbsp;</TD>	<!-- colindex=01 type=maindata -->
    <TD width="2%">&nbsp;</TD>	<!-- colindex=02 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=02 type=lead -->
    <TD width="17%" align="right">&nbsp;</TD>	<!-- colindex=02 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=02 type=hang1 -->
</TR>
<!-- Table Width Row END -->
<!-- TableOutputHead -->
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>Number of Shares of<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="left" valign="bottom">
<DIV style="border-bottom: 1px solid #000000; width: 1%; padding-bottom: 1px">
    <B>Assumed Applicable Market Value</B>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>Class A Common Stock</B>
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="line-height: 3pt; font-size: 1pt">
<TD>&nbsp;
</TD>
</TR>
<!-- TableOutputBody -->
<TR valign="bottom" style="background: #CCEEFF">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    $1.00
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    5.8140
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    $1.25
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    5.8140
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    $1.50
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    5.8140
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    $1.75
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    5.8140
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    $2.00
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    5.8140
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    $2.25
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    5.8140
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    $2.50
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    5.8140
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    $2.75
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    5.8140
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    $3.00
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    5.8140
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    $3.25
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    5.8140
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    $3.50
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    5.8140
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    $3.75
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    5.8140
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    $4.00
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    5.8140
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    $4.25
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    5.8140
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    $4.30
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    5.8140
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    $4.50
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    5.5556
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    $4.75
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    5.2632
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    $5.00
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    5.0000
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    $5.25
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    4.7655
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    $5.50
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    4.7655
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    $5.75
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    4.7655
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    $6.00
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    4.7655
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
</TABLE>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">

</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    As the above table illustrates, if, on the mandatory settlement
    date, the applicable market value is greater than or equal to
    the threshold appreciation price, we would be obligated to
    deliver 4.7655&#160;shares of Class&#160;A common stock for each
    purchase contract. As a result, you would receive only a portion
    of the appreciation in market value of the shares of our
    Class&#160;A common stock that you would have received had you
    purchased $25 worth of shares of our Class&#160;A common stock
    at the public offering price in the concurrent Common Stock
    Offering.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    If, on the mandatory settlement date, the applicable market
    value is less than the threshold appreciation price but greater
    than the reference price of $4.30, we would be obligated to
    deliver a number of shares of our Class&#160;A common stock on
    the mandatory settlement date equal to $25, <I>divided by
    </I>the applicable market value. As a result, we would retain
    all appreciation in the market value of our Class&#160;A common
    stock underlying each purchase contract between the reference
    price and the threshold appreciation price.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    If, on the mandatory settlement date, the applicable market
    value is less than or equal to the reference price of $4.30, we
    would be obligated to deliver upon settlement of the purchase
    contract 5.8140&#160;shares of Class&#160;A common stock for
    each purchase contract, regardless of the market price of our
    Class&#160;A common stock. As a result, the holder would realize
    the entire loss on the decline in market value of the
    Class&#160;A common stock underlying each purchase contract
    since the initial issuance date of the Units.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    Because the applicable market value of the Class&#160;A common
    stock is determined over the 20 &#147;trading days&#148; (as
    defined below) beginning on, and including, the
    23rd&#160;scheduled trading day immediately preceding
    February&#160;15, 2014, the number of shares of Class&#160;A
    common stock delivered for each purchase contract may be greater
    than or less than the number that would have been delivered
    based on the closing price of the
</DIV>
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    <BR>
    S-43
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<H5 align="left" style="page-break-before:always"><A HREF="#Y89359tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
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<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    Class&#160;A common stock on the last trading day in such 20
    trading day period. In addition, you will bear the risk of
    fluctuations in the market price of the shares of Class&#160;A
    common stock deliverable upon settlement of the purchase
    contracts between the end of such 20 trading day period and the
    date such shares are delivered.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    The term &#147;applicable market value&#148; means the average
    of the closing prices of our Class&#160;A common stock on each
    of the 20 consecutive trading days beginning on, and including,
    the 23rd&#160;scheduled trading day immediately preceding
    February&#160;15, 2014.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    The &#147;closing price&#148; of our Class&#160;A common stock
    on any given date means:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    the reported closing price on that date or, if no closing price
    is reported, the last reported sale price of shares of our
    Class&#160;A common stock on the New York Stock Exchange on that
    date;&#160;or
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    if our Class&#160;A common stock is not traded on the New York
    Stock Exchange, the closing price on that date as reported in
    composite transactions for the principal U.S.&#160;national or
    regional securities exchange on which our Class&#160;A common
    stock is so traded or, if no closing price is reported, the last
    reported sale price of shares of our Class&#160;A common stock
    on the principal U.S.&#160;national or regional securities
    exchange on which our Class&#160;A common stock is so
    traded;&#160;or
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    if our Class&#160;A common stock is not traded on a
    U.S.&#160;national or regional securities exchange, the last
    quoted bid price on that date for our Class&#160;A common stock
    in the
    <FONT style="white-space: nowrap">over-the-counter</FONT>
    market as reported by Pink OTC Markets Inc. or a similar
    organization;&#160;or
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    if our Class&#160;A common stock is not so quoted by Pink OTC
    Markets Inc. or a similar organization, the market value of our
    Class&#160;A common stock on that date as determined by our
    board of directors.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    A &#147;trading day&#148; is a day on which shares of our
    Class&#160;A common stock:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    are not suspended from trading on any U.S.&#160;national or
    regional securities exchange or association or
    <FONT style="white-space: nowrap">over-the-counter</FONT>
    market at 5:00&#160;p.m., New York City time;&#160;and
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    have traded at least once on the U.S.&#160;national or regional
    securities exchange or association or
    <FONT style="white-space: nowrap">over-the-counter</FONT>
    market that is the primary market for the trading of our
    Class&#160;A common stock.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    If our Class&#160;A common stock (or any other security for
    which the closing price must be determined) is not listed or
    admitted for trading on any U.S.&#160;national or regional
    securities exchange or association or
    <FONT style="white-space: nowrap">over-the-counter</FONT>
    market, &#147;trading day&#148; means a business day.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    A &#147;scheduled trading day&#148; is a day that is scheduled
    to be a trading day on the U.S.&#160;national or regional
    securities exchange or association or
    <FONT style="white-space: nowrap">over-the-counter</FONT>
    market on which our Class&#160;A common stock is listed or
    admitted for trading. If our Class&#160;A common stock is not so
    listed or admitted for trading, &#147;scheduled trading
    day&#148; means a business day.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    On the mandatory settlement date, our Class&#160;A common stock
    will be issued and delivered to you or your designee, upon
    (i)&#160;surrender of certificates representing the purchase
    contracts, if such purchase contracts are held in certificated
    form, and (ii)&#160;payment by you of any transfer or similar
    taxes payable in connection with the issuance of our
    Class&#160;A common stock to any person other than you. As long
    as the purchase contracts are evidenced by one or more global
    purchase contract certificates deposited with DTC, procedures
    for settlement will be governed by standing arrangements between
    DTC and the purchase contract agent.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    If one or more of the 20 scheduled trading days beginning on,
    and including, the 23rd&#160;scheduled trading day immediately
    preceding February&#160;15, 2014 is not a trading day, the
    mandatory settlement date will be postponed until the third
    scheduled trading day immediately following the last trading day
    of the 20 trading day period during which the applicable market
    value is determined.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    Prior to 5:00&#160;p.m., New York City time, on the last trading
    day of the 20 trading day period during which the applicable
    market value is determined, the shares of Class&#160;A common
    stock underlying each purchase contract will not be outstanding,
    and the holder of such purchase contract will not have any
    voting rights, rights to dividends or other distributions or
    other rights of a holder of our Class&#160;A common stock by
    virtue of holding such purchase contract. The person in whose
    name any shares of our Class&#160;A common stock shall be
</DIV>
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    <BR>
    S-44
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<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
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<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    issuable upon settlement of the purchase contract on the
    mandatory settlement date will become the holder of record of
    such shares as of 5:00&#160;p.m., New York City time, on the
    last trading day of 20 trading day period during which the
    applicable market value is determined.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    We will pay any documentary, stamp or similar issue or transfer
    tax due on the issue of any shares of our Class&#160;A common
    stock upon settlement of the purchase contracts, unless the tax
    is due because the holder requests any shares to be issued in a
    name other than the holder&#146;s name, in which case the holder
    will pay that tax.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: transparent">

    <B><FONT style="font-family: 'Times New Roman', Times">Early
    Settlement</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    On any trading day prior to 5:00&#160;p.m., New York City time,
    on the third scheduled trading day immediately preceding
    February&#160;15, 2014, you, as a holder of Units or a holder of
    a separate purchase contract, may elect to settle your purchase
    contracts early, in whole or in part, and receive shares of
    Class&#160;A common stock at the &#147;early settlement
    rate.&#148; The early settlement rate is equal to the minimum
    settlement rate, subject to adjustment as described below under
    &#147;&#151;&#160;Adjustments to the Fixed Settlement
    Rates,&#148; unless you elect to settle your purchase contracts
    early in connection with a fundamental change, in which case you
    will receive upon settlement of your purchase contracts a number
    of shares of our Class&#160;A common stock based on the
    &#147;fundamental change early settlement rate&#148; as
    described under &#147;&#151;&#160;Early Settlement Upon a
    Fundamental Change.&#148;
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    Your right to receive Class&#160;A common stock upon early
    settlement of your purchase contract is subject to
    (i)&#160;delivery of a written and signed notice of election (an
    &#147;early settlement notice&#148;) to the purchase contract
    agent electing early settlement of your purchase contract,
    (ii)&#160;if such purchase contract or the Unit that includes
    such purchase contract is held in certificated form,
    surrendering the certificates representing the purchase contract
    and (iii)&#160;payment by you of any transfer or similar taxes
    payable in connection with the issuance of our Class&#160;A
    common stock to any person other than you. As long as the
    purchase contracts or the Units are evidenced by one or more
    global certificates deposited with DTC, procedures for early
    settlement will be governed by standing arrangements between DTC
    and the purchase contract agent.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    Upon surrender of the purchase contract or the related Unit and
    payment of any applicable transfer or similar taxes due because
    of any issue of such shares in a name of a person other than the
    holder, you will receive the applicable number of shares of
    Class&#160;A common stock (and any cash payable for fractional
    shares) on the third business day following the &#147;early
    settlement date&#148; (as defined below).
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    If you comply with the requirements for effecting early
    settlement of your purchase contracts earlier than
    5:00&#160;p.m., New York City time, on any business day, then
    that day will be considered the &#147;early settlement
    date.&#148; If you comply with such requirements at or after
    5:00&#160;p.m., New York City time, on any business day or at
    any time on a day that is not a business day, then the next
    business day will be considered the &#147;early settlement
    date.&#148; The person in whose name any shares of our
    Class&#160;A common stock shall be issuable upon such early
    settlement of the purchase contract will become the holder of
    record of such shares as of 5:00&#160;p.m., New York City time,
    on the relevant early settlement date.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    Upon early settlement of the purchase contract component of a
    Unit, the corresponding amortizing note will remain outstanding
    and beneficially owned by or registered in the name of, as they
    case may be, the holder who elected to settle the related
    purchase contract early.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: transparent">

    <B><FONT style="font-family: 'Times New Roman', Times">Early
    Settlement Upon A Fundamental Change</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    If a &#147;fundamental change&#148; occurs and you elect to
    settle your purchase contracts early in connection with such
    fundamental change in accordance with the procedures described
    under &#147;&#151;&#160;Early Settlement&#148; above, you will
    receive a number of shares of our Class&#160;A common stock or
    cash, securities or other property, as applicable, based on the
    &#147;fundamental change early settlement rate,&#148; as
    described below. An early settlement will be deemed for these
    purposes to be &#147;in connection with&#148; such fundamental
    change if you deliver your early settlement notice to the
    purchase contract agent, and otherwise satisfy the requirements
    for effecting early settlement of your purchase contracts,
    during the period beginning on, and including, the effective
    date of the fundamental change and ending at 5:00&#160;p.m., New
    York City time, on the 30th&#160;business day thereafter
</DIV>
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    <BR>
    S-45
</DIV><!-- END PAGE WIDTH -->
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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#Y89359tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<!-- XBRL Pagebreak End -->

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    (or, if earlier, the third scheduled trading day immediately
    preceding February&#160;15, 2014) (the &#147;fundamental change
    early settlement period&#148;). We refer to this right as the
    &#147;fundamental change early settlement right.&#148;
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    If you comply with the requirements for effecting early
    settlement upon a fundamental change earlier than
    5:00&#160;p.m., New York City time, on any business day during
    the fundamental change early settlement period, then that day
    will be considered the &#147;fundamental change early settlement
    date.&#148; If you comply with such requirements at or after
    5:00&#160;p.m., New York City time, on any business day during
    the fundamental change early settlement period or at any time on
    a day during the fundamental change early settlement period that
    is not a business day, then the next business day will be
    considered the &#147;fundamental change early settlement
    date.&#148;
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    We will provide the purchase contract agent and the holders of
    Units and separate purchase contracts with a notice of a
    fundamental change within five business days after its
    occurrence, issue a press release announcing such effective date
    and post such press release on our website. The notice will also
    set forth, among other things, (i)&#160;the applicable
    fundamental change early settlement rate, (ii)&#160;if not
    Class&#160;A common stock, the kind and amount of cash,
    securities and other property receivable by the holder upon
    settlement and (iii)&#160;the deadline by which each
    holder&#146;s fundamental change early settlement right must be
    exercised.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    A &#147;fundamental change&#148; will be deemed to have occurred
    upon the occurrence of any of the following:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    our Class&#160;A common stock (or other common stock receivable
    upon settlement of your purchase contract, if applicable) is
    neither listed for trading on a United States national
    securities exchange nor approved for trading on an established
    automated
    <FONT style="white-space: nowrap">over-the-counter</FONT>
    trading market in the United States;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    the consummation of any acquisition (whether by means of a
    liquidation, share exchange, tender offer, consolidation,
    recapitalization, reclassification, merger of us or any sale,
    lease or other transfer of all or substantially all of the
    consolidated assets of ours and our subsidiaries) or a series of
    related transactions or events pursuant to which:
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="6%"></TD>
    <TD width="2%"></TD>
    <TD width="92%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    90% or more of our Class&#160;A common stock is exchanged for,
    converted into or constitutes solely the right to receive cash,
    securities or other property;&#160;and
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    more than 10% of such cash, securities or other property does
    not consist of shares of common stock that are, or that upon
    issuance will be, traded on a United States national securities
    exchange or approved for trading on an established automated
    <FONT style="white-space: nowrap">over-the-counter</FONT>
    trading market in the United&#160;States;&#160;or
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    any &#147;person&#148; or &#147;group&#148; within the meaning
    of Section&#160;13(d) of the Exchange Act of 1934, as amended
    (the &#147;Exchange Act&#148;), other than us, any of our
    subsidiaries and any of their employee benefit plans, has become
    the direct or indirect &#147;beneficial owner&#148; (as defined
    in
    <FONT style="white-space: nowrap">Rule&#160;13d-3</FONT>
    under the Exchange Act) of Class&#160;A common stock
    representing more than 50% of the voting power of our
    Class&#160;A common stock.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    The &#147;fundamental change early settlement rate&#148; will be
    determined by us by reference to the table below, based on the
    date on which the fundamental change occurs or becomes effective
    (the &#147;effective date&#148;) and the &#147;stock price&#148;
    in the fundamental change, which will be:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    in the case of a fundamental change described in the second
    bullet of the definition of &#147;fundamental change&#148;
    (i.e., constituting an &#147;acquisition&#148;) in which holders
    of shares of our Class&#160;A common stock receive only cash in
    the fundamental change, the stock price will be the cash amount
    paid per share of our Class&#160;A common stock;&#160;and
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    in all other cases, the stock price will be the average of the
    closing prices of our Class&#160;A common stock over the 10
    consecutive trading day period ending on the trading day
    immediately preceding the effective date.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    The stock prices set forth in the first column of the table
    below will be adjusted as of any date on which any fixed
    settlement rate is otherwise adjusted. The adjusted stock prices
    will equal the stock prices applicable immediately prior to such
    adjustment, <I>multiplied by </I>a fraction, the numerator of
    which is the maximum
</DIV>
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    <BR>
    S-46
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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#Y89359tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<!-- XBRL Pagebreak End -->

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    settlement rate immediately prior to the adjustment giving rise
    to the stock price adjustment and the denominator of which is
    the maximum settlement rate as so adjusted. The number of shares
    in the table below will be adjusted in the same manner as the
    fixed settlement rates as set forth under
    &#147;&#151;&#160;Adjustments to the Fixed Settlement
    Rates.&#148;
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    The following table sets forth the fundamental change early
    settlement rate per purchase contract for each stock price and
    effective date set forth below:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE border="0" width="100%" align="center" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
<!-- Table Width Row BEGIN -->
<TR style="font-size: 1pt" valign="bottom">
    <TD width="50%">&nbsp;</TD>	<!-- colindex=01 type=maindata -->
    <TD width="2%">&nbsp;</TD>	<!-- colindex=02 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=02 type=lead -->
    <TD width="7%" align="right">&nbsp;</TD>	<!-- colindex=02 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=02 type=hang1 -->
    <TD width="3%">&nbsp;</TD>	<!-- colindex=03 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=03 type=lead -->
    <TD width="8%" align="right">&nbsp;</TD>	<!-- colindex=03 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=03 type=hang1 -->
    <TD width="3%">&nbsp;</TD>	<!-- colindex=04 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=04 type=lead -->
    <TD width="8%" align="right">&nbsp;</TD>	<!-- colindex=04 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=04 type=hang1 -->
    <TD width="3%">&nbsp;</TD>	<!-- colindex=05 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=05 type=lead -->
    <TD width="8%" align="right">&nbsp;</TD>	<!-- colindex=05 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=05 type=hang1 -->
</TR>
<!-- Table Width Row END -->
<!-- TableOutputHead -->
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="14" align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>Effective Date</B>
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>February&#160;9,<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>February&#160;15,<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>February&#160;15,<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>February&#160;15,<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="left" valign="bottom">
<DIV style="border-bottom: 1px solid #000000; width: 1%; padding-bottom: 1px">
    <B>Stock Price</B>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>2011</B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>2012</B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>2013</B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>2014</B>
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="line-height: 3pt; font-size: 1pt">
<TD>&nbsp;
</TD>
</TR>
<!-- TableOutputBody -->
<TR valign="bottom" style="background: #CCEEFF">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    $1.00
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    5.4963
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    5.6701
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    5.7660
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    5.8140
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    $2.00
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    5.1312
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    5.3749
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    5.6578
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    5.8140
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    $3.00
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    4.9097
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    5.1021
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    5.3896
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    5.8140
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    $4.00
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    4.7882
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    4.9243
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    5.1226
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    5.8140
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    $4.30
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    4.7614
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    4.8866
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    5.0585
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    5.8140
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    $4.50
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    4.7499
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    4.8647
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    5.0204
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    5.5556
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    $4.75
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    4.7346
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    4.8405
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    4.9778
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    5.2632
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    $5.00
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    4.7214
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    4.8194
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    4.9405
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    5.0000
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    $5.25
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    4.7099
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    4.8011
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    4.9081
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    4.7655
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    $6.00
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    4.6838
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    4.7592
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    4.8353
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    4.7655
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    $7.00
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    4.6622
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    4.7245
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    4.7791
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    4.7655
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    $8.00
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    4.6495
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    4.7044
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    4.7500
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    4.7655
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    $9.00
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    4.6420
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    4.6925
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    4.7351
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    4.7655
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    $10.00
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    4.6375
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    4.6855
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    4.7275
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    4.7655
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    $12.50
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    4.6332
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    4.6779
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    4.7209
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    4.7655
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    $15.00
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    4.6330
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    4.6760
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    4.7195
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    4.7655
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    $17.50
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    4.6343
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    4.6759
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    4.7191
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    4.7655
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    $20.00
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    4.6363
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    4.6766
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    4.7190
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    4.7655
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    $22.50
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    4.6386
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    4.6776
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    4.7189
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    4.7655
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    $25.00
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    4.6412
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    4.6789
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    4.7188
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    4.7655
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
</TABLE>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">

</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    The exact stock prices and effective dates may not be set forth
    in the table above, in which case:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    if the applicable stock price is between two stock prices in the
    table or the effective date is between two effective dates in
    the table, the fundamental change early settlement rate will be
    determined by straight line interpolation between the
    fundamental change early settlement rates set forth for the
    higher and lower stock prices and the earlier and later
    effective dates, as applicable, based on a
    <FONT style="white-space: nowrap">365-day</FONT> year;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    if the applicable stock price is greater than $25.00 per share
    (subject to adjustment in the same manner as the stock prices
    set forth in the column headings of the table above), then the
    fundamental change early settlement rate will be the minimum
    settlement rate;&#160;or
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    if the applicable stock price is less than $1.00 per share
    (subject to adjustment in the same manner as the stock prices
    set forth in the column headings of the table above, the
    &#147;minimum stock price&#148;), the fundamental change early
    settlement rate will be determined as if the stock price equaled
    the minimum stock price, and using straight line interpolation,
    as described in the first bullet of this paragraph, if the
    effective date is between two effective dates in the table.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    The maximum number of shares of our Class&#160;A common stock
    deliverable under a purchase contract is 5.8140, subject to
    adjustment in the same manner as the fixed settlement rates as
    set forth under &#147;&#151;&#160;Adjustments to the Fixed
    Settlement Rates.&#148;
</DIV>
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    <BR>
    S-47
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<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
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<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    Our obligation to settle the purchase contracts at the
    fundamental change early settlement rate could be considered a
    penalty, in which case the enforceability thereof would be
    subject to general principles of reasonableness of economic
    remedies.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    If you exercise the fundamental change early settlement right
    following the effective date of a fundamental change described
    in the second bullet of the definition of &#147;fundamental
    change,&#148; we will deliver to you the kind and amount of
    securities, cash or other property that you would have been
    entitled to receive in such fundamental change transaction as a
    holder of a number of shares of our Class&#160;A common stock
    equal to the fundamental change settlement rate for each
    purchase contract being settled early. If such fundamental
    change causes our Class&#160;A common stock to be converted into
    the right to receive more than a single type of consideration
    (determined based in part upon any form of shareholder election)
    and you exercise the fundamental change early settlement right,
    we will deliver to you the types and amounts of consideration
    based on the weighted average of the types and amounts of
    consideration received by holders of our Class&#160;A common
    stock that affirmatively make such an election.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    We will deliver the shares of our Class&#160;A common stock,
    securities, cash or other property payable as a result of your
    exercise of the fundamental change early settlement right on the
    third business day following the fundamental change early
    settlement date. The person in whose name any shares of our
    Class&#160;A common stock or other securities, if applicable,
    shall be issuable following exercise of a holder&#146;s
    fundamental change early settlement right will become the holder
    of record of such shares or other securities, if applicable, as
    of 5:00&#160;p.m., New York City time, on the date such right is
    exercised.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    Upon early settlement of the purchase contract component of a
    Unit upon a fundamental change, the corresponding amortizing
    note will remain outstanding and, beneficially owned by or
    registered in the name of, as the case may be, the holder who
    elected to settle the related purchase contract early upon the
    fundamental change.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    If you do not elect to exercise your fundamental change early
    settlement right, your purchase contracts will remain
    outstanding and will be subject to normal settlement on any
    subsequent early settlement date or the mandatory settlement
    date, including, if applicable, the provisions set forth under
    &#147;&#151;&#160;Adjustments to the Fixed Settlement
    Rates&#148; regarding the occurrence of the relevant fundamental
    change.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: transparent">

    <B><FONT style="font-family: 'Times New Roman', Times">Early
    Mandatory Settlement at Our Election</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    We have the right to settle the purchase contracts early, in
    whole but not in part, on a date fixed by us as described below
    at the &#147;early mandatory settlement rate&#148; described
    below. We refer to this right as our &#147;early mandatory
    settlement right.&#148;
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    The &#147;early mandatory settlement rate&#148; will be the
    maximum settlement rate on the notice date (as defined below),
    unless the &#147;closing price&#148; (as defined above) of our
    Class&#160;A common stock for 20 or more trading days in a
    period of 30 consecutive trading days ending on the trading day
    immediately preceding the notice date exceeds 130% of the
    threshold appreciation price in effect on each such trading day,
    in which case the &#147;early mandatory settlement rate&#148;
    will be the minimum settlement rate on the notice date.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    In the event we elect to settle the purchase contracts early,
    you will have the right to require us to repurchase your
    amortizing notes, as described under &#147;Description of the
    Amortizing Notes&#160;&#151; Repurchase of Amortizing Notes at
    the Option of the Holder.&#148;
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    If we elect to exercise our early mandatory settlement right, we
    will provide the purchase contract agent and the holders of
    Units, separate purchase contracts and separate amortizing notes
    with a notice of our election (the &#147;early mandatory
    settlement notice&#148;), issue a press release announcing our
    election and post such press release on our website. The early
    mandatory settlement notice will specify, among other things:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    the early mandatory settlement rate;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    the date on which we will deliver shares of our Class&#160;A
    common stock following exercise of our early mandatory
    settlement right (the &#147;early mandatory settlement
    date&#148;), which will be at least 5 but not more than 30
    business days following the date of our notice (the &#147;notice
    date&#148;);
</TD>
</TR>

</TABLE>
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    <BR>
    S-48
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<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
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<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    that holders of Units and separate amortizing notes will have
    the right to require us to repurchase their amortizing notes
    that are a component of the Units or their separate amortizing
    notes, as the case may be (subject to certain exceptions
    described under &#147;Description of the Amortizing
    Notes&#160;&#151; Repurchase of Amortizing Notes at the Option
    of the Holder&#148;);
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    if applicable, the repurchase price and &#147;repurchase
    date&#148; (each as defined below under &#147;Description of the
    Amortizing Notes&#160;&#151; Repurchase of Amortizing Notes at
    the Option of the Holder&#148;);
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    if applicable, the last date on which holders may exercise their
    repurchase right;&#160;and
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    if applicable, the procedures that holders must follow to
    require us to repurchase their amortizing notes.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    We will deliver the shares of our Class&#160;A common stock and
    any cash payable for fractional shares to you on the early
    mandatory settlement date. The person in whose name any shares
    of our Class&#160;A common stock shall be issuable following
    exercise of our early mandatory settlement right will become the
    holder of record of such shares as of 5:00&#160;p.m., New York
    City time, on the notice date.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: transparent">

    <B><FONT style="font-family: 'Times New Roman', Times">Limitation
    on Beneficial Ownership of Units, Separate Purchase Contracts
    and Class A Common Stock</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    In order to preserve the tax treatment of our net operating loss
    carryforwards under the Code, beneficial owners of Units and any
    separate purchase contracts will be subject to both a beneficial
    ownership limitation and a settlement limitation as described
    herein. In addition, as a Class&#160;A common stockholder upon
    settlement of your purchase contract, you will be subject to
    both our Rights Plan and the transfer restrictions of our
    amended Certificate of Incorporation. See &#147;Limitation on
    Beneficial Ownership of Class&#160;A Common Stock, Units and
    Separate Purchase Contracts.&#148;
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: transparent">

    <B><FONT style="font-family: 'Times New Roman', Times">Adjustments
    to the Fixed Settlement Rates</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    Each fixed settlement rate will be adjusted, without
    duplication, if:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    (a)&#160;We issue Class&#160;A common stock to all or
    substantially all of the holders of our Class&#160;A common
    stock as a dividend or other distribution, in which event, each
    fixed settlement rate in effect immediately prior to
    5:00&#160;p.m., New York City time, on the &#147;record
    date&#148; (as defined below) for such dividend or distribution
    will be <I>divided by </I>a fraction:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="8%"></TD>
    <TD width="2%"></TD>
    <TD width="90%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    the numerator of which is the number of shares of our
    Class&#160;A common stock outstanding immediately prior to
    5:00&#160;p.m., New York City time, on such record date,&#160;and
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    the denominator of which is equal to (i)&#160;the number of
    shares of our Class&#160;A common stock outstanding immediately
    prior to 5:00&#160;p.m., New York City time, on such record
    date, <I>plus </I>(ii)&#160;the total number of shares of our
    Class&#160;A common stock constituting such dividend or other
    distribution.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    Any adjustment made pursuant to this clause&#160;(a) will become
    effective immediately after 5:00&#160;p.m., New&#160;York City
    time, on the record date for such dividend or distribution. If
    any dividend or distribution described in this clause&#160;(a)
    is declared but not so paid or made, each fixed settlement rate
    will be readjusted, effective as of the date our board of
    directors publicly announces its decision not to make such
    dividend or distribution, to such fixed settlement rate that
    would be in effect if such dividend or distribution had not been
    declared. For the purposes of this clause (a), the number of
    shares of Class&#160;A common stock outstanding immediately
    prior to 5:00&#160;p.m., New York City time, on the record date
    for such dividend or distribution will not include shares held
    in treasury but will include any shares issuable in respect of
    any scrip certificates issued in lieu of fractions of shares of
    Class&#160;A common stock. We will not pay any dividend or make
    any distribution on shares of Class&#160;A common stock held in
    treasury.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    (b)&#160;We issue to all or substantially all holders of our
    Class&#160;A common stock rights, options or warrants (other
    than rights, options or warrants issued pursuant to a dividend
    reinvestment plan, shareholder rights plan or share purchase
    plan or other similar plans) entitling them, for a period of up
    to 45 calendar days from the date of issuance of such rights,
    options or warrants, to subscribe for or
</DIV>
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    <BR>
    S-49
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<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    purchase our shares of Class&#160;A common stock at less than
    the &#147;current market price&#148; (as defined below) of our
    Class&#160;A common stock, in which case each fixed settlement
    rate in effect immediately prior to 5:00&#160;p.m., New York
    City time, on the record date for such issuance will be
    <I>multiplied by </I>a fraction:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="8%"></TD>
    <TD width="2%"></TD>
    <TD width="90%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    the numerator of which is equal to (i)&#160;the number of shares
    of Class&#160;A common stock outstanding immediately prior to
    5:00&#160;p.m., New York City time, on such record date, <I>plus
    </I>(ii)&#160;the total number of shares of our Class&#160;A
    common stock issuable pursuant to such rights, options or
    warrants,&#160;and
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    the denominator of which is equal to (i)&#160;the number of
    shares of Class&#160;A common stock outstanding immediately
    prior to 5:00&#160;p.m., New York City time, on such record
    date, <I>plus </I>(ii)&#160;the number of shares of Class&#160;A
    common stock equal to the quotient of the aggregate price
    payable to exercise such rights, options or warrants <I>divided
    by </I>the current market price per share of our Class&#160;A
    common stock.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    Any adjustment made pursuant to this clause&#160;(b) will be
    made successively whenever any such rights, options or warrants
    are issued and will become effective immediately after
    5:00&#160;p.m., New York City time, on the record date for such
    issuance. In the event that such rights, options or warrants
    described in this clause&#160;(b) are not so issued, each fixed
    settlement rate will be readjusted, effective as of the date our
    board of directors publicly announces its decision not to issue
    such rights, options or warrants, to such fixed settlement rate
    that would then be in effect if such issuance had not been
    declared. To the extent that such rights, options or warrants
    are not exercised prior to their expiration or shares of our
    Class&#160;A common stock are otherwise not delivered pursuant
    to such rights, options or warrants upon the exercise of such
    rights, options or warrants, each fixed settlement rate will be
    readjusted, effective as of the date of such expiration or the
    date of such exercise, as the case may be, to such fixed
    settlement rate that would then be in effect had the adjustment
    made upon the issuance of such rights, options or warrants been
    made on the basis of the delivery of only the number of shares
    of our Class&#160;A common stock actually delivered.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    In determining whether any rights, options or warrants entitle
    the holders thereof to subscribe for or purchase shares of our
    Class&#160;A common stock at less than the current market price
    per share of our Class&#160;A common stock, and in determining
    the aggregate price payable to exercise such rights, options or
    warrants, there will be taken into account any consideration
    received by us for such rights, options or warrants and any
    amount payable on exercise or conversion thereof (the value of
    such consideration, if other than cash, to be determined by our
    board of directors).
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    For the purposes of this clause (b), the number of shares of
    Class&#160;A common stock at the time outstanding will not
    include shares held in treasury but will include any shares
    issuable in respect of any scrip certificates issued in lieu of
    fractions of shares of Class&#160;A common stock. We will not
    issue any such rights or warrants, options in respect of shares
    of Class&#160;A common stock held in treasury.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    (c)&#160;We subdivide or combine our Class&#160;A common stock,
    in which event each fixed settlement rate in effect immediately
    prior to 9:00&#160;a.m., New York City time, on the effective
    date of such subdivision or combination will be <I>multiplied by
    </I>a fraction:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="8%"></TD>
    <TD width="2%"></TD>
    <TD width="90%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    the numerator of which is the number of shares of our
    Class&#160;A common stock that would be outstanding immediately
    after, and solely as a result of, such subdivision or
    combination,&#160;and
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    the denominator of which is the number of shares of our
    Class&#160;A common stock outstanding immediately prior to
    9:00&#160;a.m., New York City time, on such effective date.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    Any adjustment made pursuant to this clause&#160;(c) will become
    effective immediately after 9:00&#160;a.m., New&#160;York City
    time, on the effective date of such subdivision or combination.
</DIV>
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    <BR>
    S-50
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<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
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<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    (d)&#160;We distribute to all or substantially all holders of
    our Class&#160;A common stock evidences of our indebtedness,
    shares of our capital stock (other than our Class&#160;A common
    stock), securities, cash or other assets, excluding:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="8%"></TD>
    <TD width="2%"></TD>
    <TD width="90%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    any dividend or distribution covered by clause&#160;(a) above;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    any rights, options or warrants covered by clause&#160;(b) above;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    any dividend or distribution covered by clause&#160;(e)
    below;&#160;and
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    any spin-off to which the provisions set forth below in this
    clause&#160;(d) will apply,
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    in which event each fixed settlement rate in effect immediately
    prior to 5:00&#160;p.m., New York City time, on the record date
    for such distribution will be <I>multiplied by </I>a fraction:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="8%"></TD>
    <TD width="2%"></TD>
    <TD width="90%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    the numerator of which is the current market price per share of
    our Class&#160;A common stock,&#160;and
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    the denominator of which is equal to (i)&#160;current market
    price per share of our Class A common stock, <I>minus
    </I>(ii)&#160;the fair market value (as determined by our board
    of directors) on such record date of the portion of the
    evidences of indebtedness, shares of capital stock, securities,
    cash or other assets so distributed applicable to one share of
    our Class&#160;A common stock.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    Any adjustment made pursuant to the portion of this
    clause&#160;(d) above will become effective immediately after
    5:00&#160;p.m., New York City time, on the record date for such
    distribution. In the event that such distribution is not so
    made, each fixed settlement rate will be readjusted, effective
    as of the date our board of directors publicly announces its
    decision not to make such distribution, to such fixed settlement
    rate that would then be in effect if such distribution had not
    been declared.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    In the event that we make a distribution to all or substantially
    all holders of our Class&#160;A common stock consisting of
    capital stock of, or similar equity interests in, or relating
    to, a subsidiary or other business unit of ours that, upon
    issuance, will be traded on a U.S.&#160;national securities
    exchange (herein referred to as a &#147;spin-off&#148;), each
    fixed settlement rate in effect immediately prior to
    5:00&#160;p.m., New York City time, on the record date for such
    distribution will instead be <I>multiplied by </I>a fraction:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="8%"></TD>
    <TD width="2%"></TD>
    <TD width="90%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    the numerator of which is equal to (i)&#160;the current market
    price per share of our Class&#160;A common stock, <I>plus
    </I>(ii)&#160;the average of the closing prices of capital stock
    or similar equity interests so distributed applicable to one
    share of our Class&#160;A common stock (determined by reference
    to the definition of &#147;closing price&#148; set forth under
    &#147;&#151;&#160;Delivery of Class&#160;A Common Stock&#148;
    above as if references therein to our Class&#160;A common stock
    were to such capital stock or similar equity interest) over the
    10 consecutive trading day period commencing on, and including,
    the effective date of the spin-off (the &#147;valuation
    period&#148;),&#160;and
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    the denominator of which is the current market price per share
    of our Class&#160;A common stock.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    Any adjustment made pursuant to this portion of clause&#160;(d)
    will become effective immediately after 5:00&#160;p.m., New York
    City time, on the last trading day of the valuation period;
    <I>provided </I>that if any date for determining the number of
    shares of our Class&#160;A common stock issuable to a holder
    occurs during the valuation period, references in the preceding
    paragraph to 10 trading days will be deemed to be replaced with
    such lesser number of trading days as have elapsed between the
    effective date of such spin-off and such determination date for
    purposes of determining the fixed settlement rates. In the event
    that such distribution described in this clause&#160;(d) is not
    so made, each fixed settlement rate will be readjusted,
    effective as of the date our board of directors publicly
    announces its decision not to pay such distribution, to such
    fixed settlement rate that would then be in effect if such
    distribution had not been declared.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    (e)&#160;We make a distribution consisting exclusively of cash
    to all or substantially all holders of our Class&#160;A common
    stock, excluding:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="8%"></TD>
    <TD width="2%"></TD>
    <TD width="90%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    any cash that is distributed in a reorganization event (as
    described below);&#160;and
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    any dividend or distribution in connection with our liquidation,
    dissolution or winding up,
</TD>
</TR>

</TABLE>
<!-- XBRL Pagebreak Begin -->

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <BR>
    S-51
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#Y89359tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<!-- XBRL Pagebreak End -->

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    in which event, each fixed settlement rate in effect immediately
    prior to 5:00&#160;p.m., New York City time, on the record date
    fixed for such distribution will be <I>multiplied by </I>a
    fraction:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="8%"></TD>
    <TD width="2%"></TD>
    <TD width="90%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    the numerator of which is the current market price per share of
    our Class&#160;A common stock,&#160;and
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    the denominator of which is equal to (i)&#160;the current market
    price per share of our Class&#160;A common stock, <I>minus
    </I>(ii)&#160;the amount of such distribution per share of our
    Class A common stock.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    Any adjustment made pursuant to this clause&#160;(e) will become
    effective immediately after 5:00&#160;p.m., New&#160;York City
    time, on the record date for such distribution. In the event
    that any distribution described in this clause&#160;(e) is not
    so made, each fixed settlement rate will be readjusted,
    effective as of the date our board of directors publicly
    announces its decision not to pay such distribution, to such
    fixed settlement rate which would then be in effect if such
    distribution had not been declared.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    (f)&#160;We or any of our subsidiaries successfully complete a
    tender or exchange offer pursuant to a Schedule&#160;TO or
    registration statement on
    <FONT style="white-space: nowrap">Form&#160;S-4</FONT>
    for our Class&#160;A common stock (excluding any securities
    convertible or exchangeable for our Class&#160;A common stock),
    where the cash and the value of any other consideration included
    in the payment per share of our Class&#160;A common stock
    validly tendered or exchanged exceeds the current market price
    per share of our Class&#160;A common stock, in which event each
    fixed settlement rate in effect immediately prior to
    5:00&#160;p.m., New York City time, on the 10th trading day
    immediately following, and including, the trading day
    immediately following the last date on which tenders or
    exchanges may be made pursuant to such tender or exchange offer
    (the &#147;expiration date&#148;) will be <I>multiplied by </I>a
    fraction:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="8%"></TD>
    <TD width="2%"></TD>
    <TD width="90%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    the numerator of which will be equal to the sum of:
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="10%"></TD>
    <TD width="2%"></TD>
    <TD width="88%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    the aggregate value of all cash and the fair market value (as
    determined by our board of directors) on the expiration date of
    any other consideration paid or payable for shares validly
    tendered or exchanged and not withdrawn as of the expiration
    date;&#160;and
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    the product of:
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="13%"></TD>
    <TD width="2%"></TD>
    <TD width="85%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    the current market price of our Class&#160;A common
    stock;&#160;and
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    the number of shares of our Class&#160;A common stock
    outstanding immediately after the last time tenders or exchanges
    may be made pursuant to such tender or exchange offer (the
    &#147;expiration time&#148;), after giving effect to the
    purchase of all shares accepted for purchase or exchange in such
    tender or exchange offer,&#160;and
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="8%"></TD>
    <TD width="2%"></TD>
    <TD width="90%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    the denominator of which will be equal to the product of:
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="10%"></TD>
    <TD width="2%"></TD>
    <TD width="88%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    the current market price per share of our Class&#160;A common
    stock;&#160;and
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    the number of shares of our Class&#160;A common stock
    outstanding immediately prior to the expiration time on the
    expiration date, prior to giving effect to the purchase of any
    shares accepted for purchase or exchange in such tender or
    exchange offer.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    Any adjustment made pursuant to this clause&#160;(f) will become
    effective immediately after 5:00&#160;p.m., New&#160;York City
    time, on the 10th trading day immediately following the
    expiration date; <I>provided </I>that if any date for
    determining the number of shares of our Class&#160;A common
    stock issuable to a holder occurs during the 10 trading days
    immediately following, and including, the trading day next
    succeeding the expiration date, references in the preceding
    paragraph to 10 trading days will be deemed to be replaced with
    such lesser number of trading days as have elapsed between such
    expiration date and such determination date for purposes of
    determining the fixed settlement rates. In the event that we
    are, or one of our subsidiaries is, obligated to purchase shares
    of our Class&#160;A common stock pursuant to any such tender or
    exchange offer, but we are, or such subsidiary is, permanently
    prevented by applicable law from effecting any such purchases,
    or all such purchases are rescinded, then each fixed settlement
    rate will be readjusted to be such fixed settlement rate that
    would then be in effect if such tender or exchange offer had not
    been made.
</DIV>
<!-- XBRL Pagebreak Begin -->

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <BR>
    S-52
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#Y89359tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<!-- XBRL Pagebreak End -->

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    Except with respect to a spin-off, in cases where the fair
    market value of assets (including cash), debt securities or
    certain rights, warrants or options to purchase our securities
    as to which clauses&#160;(d) or (e)&#160;above apply, applicable
    to one share of Class&#160;A common stock, distributed to
    stockholders equals or exceeds the applicable current market
    price per share of our Class&#160;A common stock, rather than
    being entitled to an adjustment in each fixed settlement rate,
    holders of the purchase contracts will be entitled to receive
    (without settling such holders&#146; purchase contract) on the
    date on which such assets (including cash), debt securities or
    rights, options or warrants are distributed to holders of our
    Class&#160;A common stock, for each purchase contract, the
    amount of such assets or securities that such holder would have
    received had such holder owned a number of shares of our
    Class&#160;A common stock equal to the maximum settlement rate
    on the record date for such distribution.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    To the extent that we have a rights plan in effect with respect
    to our Class&#160;A common stock on any date for determining the
    number of shares of our Class&#160;A common stock issuable to a
    holder, you will receive, in addition to our Class&#160;A common
    stock, the rights under the rights plan, unless, prior to such
    determination date, the rights have separated from our
    Class&#160;A common stock, in which case each fixed settlement
    rate will be adjusted at the time of separation as if we made a
    distribution to all holders of our Class&#160;A common stock as
    described in clause&#160;(d) above, subject to readjustment in
    the event of the expiration, termination or redemption of such
    rights.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    The &#147;current market price&#148; per share of Class&#160;A
    common stock on any day means:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    with respect to clause&#160;(b) above, the average of the
    closing prices of our Class&#160;A common stock over the 10
    consecutive trading day period ending on, and including, the
    trading day immediately preceding the date of announcement of
    the issuance or distribution requiring such computation;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    with respect to clauses (d) (in the event of an adjustment not
    relating to a spin-off) and (e)&#160;above, the average of the
    closing prices of our Class&#160;A common stock over the 10
    consecutive trading day period ending on, and including, the
    trading day immediately preceding the earlier of the ex-date and
    the record date for such distribution;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    with respect to clause&#160;(d) above in the event of an
    adjustment relating to a spin-off only, the average of the
    closing prices of our Class&#160;A common stock over the 10
    consecutive trading day period commencing on, and including, the
    effective date of such spin-off;&#160;and
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    with respect to clause&#160;(f) above, the average of the
    closing prices of our Class&#160;A common stock over the 10
    consecutive trading day period commencing on, and including, the
    trading day immediately following the expiration date for the
    tender or exchange offer.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    The term &#147;ex-date,&#148; when used with respect to any
    issuance or distribution, means the first date on which shares
    of our Class&#160;A common stock trade on the applicable
    exchange or in the applicable market, regular way, without the
    right to receive such issuance or distribution in question from
    us or, if applicable, from the seller of our Class&#160;A common
    stock on such exchange or market (in the form of due bills or
    otherwise) as determined by such exchange or market.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    The term &#147;record date&#148; means, when used with respect
    to any dividend, distribution or other transaction or event in
    which the holders of our Class&#160;A common stock (or other
    applicable security) have the right to receive any cash,
    securities or other property or in which our Class&#160;A common
    stock (or other applicable security) is exchanged for or
    converted into any combination of cash, securities or other
    property, the date fixed for determination of holders of our
    Class&#160;A common stock (or other applicable security)
    entitled to receive such cash, securities or other property
    (whether such date is fixed by our board of directors or by
    statute, contract or otherwise).
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    In the event of:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    any consolidation or merger of us with or into another person
    (other than a merger or consolidation in which we are the
    continuing or surviving corporation and in which the shares of
    our Class&#160;A common stock outstanding immediately prior to
    the merger or consolidation are not exchanged for cash,
    securities or other property of us or another person);
</TD>
</TR>

</TABLE>
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    <BR>
    S-53
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<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
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<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    any sale, transfer, lease or conveyance to another person of all
    or substantially all of our property and assets;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    any reclassification of our Class&#160;A common stock into
    securities including securities other than our Class&#160;A
    common stock;&#160;or
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    any statutory exchange of our securities with another person
    (other than in connection with a merger or acquisition);
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    in each case, as a result of which our Class&#160;A common stock
    would be converted into, or exchanged for, securities, cash or
    property (each, a &#147;reorganization event&#148;), each
    purchase contract outstanding immediately prior to such
    reorganization event will, without the consent of the holders of
    the purchase contracts, become a contract to purchase the kind
    of securities, cash and other property that a holder of
    Class&#160;A common stock would have been entitled to receive
    immediately prior to such reorganization event (such securities,
    cash and other property, the &#147;exchange property&#148;). For
    purposes of the foregoing, the type and amount of exchange
    property in the case of any reorganization event that causes our
    Class&#160;A common stock to be converted into, or exchanged
    for, the right to receive more than a single type of
    consideration (determined based in part upon any form of
    shareholder election) will be deemed to be the weighted average
    of the types and amounts of consideration received by the
    holders of our Class&#160;A common stock that affirmatively make
    such an election. The number of units of exchange property for
    each purchase contract settled following the effective date of
    such reorganization event will be determined by the fixed
    settlement rates then in effect on the applicable settlement
    date (without interest thereon and without any right to
    dividends or distributions thereon which have a record date
    prior to the date such contracts are actually settled). Each
    fixed settlement rate will be determined using the applicable
    market value of a unit of exchange property that a holder of one
    share of our Class&#160;A common stock would have received in
    such reorganization event, and such value will be determined
    with respect to any publicly traded securities that compose all
    or part of the exchange property, based on the closing price of
    such securities; in the case of any cash that composes all or
    part of the exchange property, based on the amount of such cash;
    and in the case of any other property that composes all or part
    of the exchange property, based on the value of such property,
    as determined by a nationally recognized independent investment
    banking firm retained by us for this purpose.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    In addition, we may make such increases in each fixed settlement
    rate as we deem advisable in order to avoid or diminish any
    income tax to holders of our Class&#160;A common stock resulting
    from any dividend or distribution of shares of our Class&#160;A
    common stock (or issuance of rights, options or warrants to
    acquire shares of our Class&#160;A common stock) or from any
    event treated as such for income tax purposes or for any other
    reason. We may only make such a discretionary adjustment if we
    make the same proportionate adjustment to each fixed settlement
    rate.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    In the event of a taxable distribution to holders of our
    Class&#160;A common stock that results in an adjustment of each
    fixed settlement rate or an increase in each fixed settlement
    rate in our discretion, holders of the purchase contracts may,
    in certain circumstances, be deemed to have received a
    distribution subject to U.S.&#160;federal income tax as a
    dividend. See &#147;Certain United States Federal Income and
    Estate Consequences&#148; in this prospectus supplement. In
    addition,
    <FONT style="white-space: nowrap">non-U.S.&#160;holders</FONT>
    of the purchase contracts may, in certain circumstances, be
    deemed to have received a distribution subject to
    U.S.&#160;federal withholding tax requirements. See
    &#147;Certain United States Federal Income Tax and Estate
    Considerations&#160;&#151;
    <FONT style="white-space: nowrap">Non-U.S.&#160;Holders&#148;</FONT>
    in this prospectus supplement.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    Adjustments to each fixed settlement rate will be calculated to
    the nearest 1/10,000th&#160;of a share. No adjustment in the
    fixed settlement rates will be required unless the adjustment
    would require an increase or decrease of at least one percent.
    If any adjustment is not required to be made because it would
    not change the fixed settlement rates by at least one percent,
    then the adjustment will be carried forward and taken into
    account in any subsequent adjustment; <I>provided</I> that, on
    any date for determining the number of shares of our
    Class&#160;A common stock issuable to a holder, adjustments to
    the fixed settlement rates will be made with respect to any such
    adjustment carried forward and which has not been taken into
    account before such determination date.
</DIV>
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    <BR>
    S-54
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<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
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<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    No adjustment to the fixed settlement rates will be made if
    holders of Units or any separate purchase contracts may
    participate in the transaction (at a level based on the maximum
    settlement rate) that would otherwise give rise to such
    adjustment at the same time and on the same terms as holders of
    our Class&#160;A common stock without having to settle such
    holders&#146; purchase contracts.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    The fixed settlement rates will only be adjusted as set forth
    above and will not be adjusted:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    upon the issuance of any Class&#160;A common stock pursuant to
    any present or future plan providing for the reinvestment of
    dividends or interest payable on our securities and the
    investment of additional optional amounts in Class&#160;A common
    stock under any plan;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    upon the issuance of any Class&#160;A common stock or rights,
    options or warrants to purchase those shares pursuant to any
    present or future employee, director or consultant benefit plan
    or program of or assumed by us or any of our subsidiaries;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    upon the issuance of any Class&#160;A common stock pursuant to
    any option, warrant, right or exercisable, exchangeable or
    convertible security outstanding as of the date the Units were
    first issued;&#160;or
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    for a change in the par value or no par value of our
    Class&#160;A common stock.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    Whenever the fixed settlement rates are adjusted, we will
    deliver to the purchase contract agent a certificate setting
    forth in reasonable detail the method by which the adjustment to
    each fixed settlement rate was determined and setting forth each
    revised fixed settlement rate. In addition, we will, within five
    business days of any event requiring such adjustment, provide or
    cause to be provided written notice of the adjustment to the
    holders of the Units and separate purchase contracts and
    describe in reasonable detail the method by which each fixed
    settlement rate was adjusted.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    Each adjustment to each fixed settlement rate will result in a
    corresponding adjustment to the early settlement rate. If an
    adjustment is made to the fixed settlement rates, an inversely
    proportional adjustment will also be made to the reference price
    solely for the purposes of determining which clauses of the
    definition of the settlement rate will apply on the settlement
    date. For the avoidance of doubt, no separate inversely
    proportional adjustment will be made to the threshold
    appreciation price because it is equal to $25 <I>divided by</I>
    the minimum settlement rate (rounded to the nearest $0.0001) as
    adjusted in the manner described herein. Because (a)&#160;the
    applicable market value is an average of the closing prices of
    our Class&#160;A common stock over a 20 consecutive trading day
    period and (b)&#160;the fundamental change early settlement rate
    is generally calculated based on an average of the closing
    prices over a 10&#160;day trading day period, we will make
    appropriate adjustments to the closing prices prior to the
    relevant issuance date, record date, ex-date, effective date or
    expiration date, as the case may be, used to calculate the
    applicable market value to account for any adjustments to the
    fixed settlement rates that become effective during the period
    in which the applicable market value or the stock price, as the
    case may be, is being calculated.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: transparent">

    <B><FONT style="font-family: 'Times New Roman', Times">Fractional
    Shares</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    No fractional shares of our Class&#160;A common stock will be
    issued to holders upon settlement of the purchase contracts. In
    lieu of fractional shares otherwise issuable, holders will be
    entitled to receive an amount in cash equal to the fraction of a
    share of our Class&#160;A common stock, calculated on an
    aggregate basis in respect of the purchase contracts being
    settled, <I>multiplied by </I>the closing price of our
    Class&#160;A common stock on the trading day immediately
    preceding the mandatory settlement date, early settlement date,
    fundamental change early settlement date or early mandatory
    settlement date, as the case may be.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: transparent">

    <B><FONT style="font-family: 'Times New Roman', Times">Consequences
    of Bankruptcy</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    Pursuant to the terms of the purchase contract agreement, the
    mandatory settlement date for each purchase contract, whether
    held separately or as part of a Unit, will automatically
    accelerate upon the occurrence of specified events of
    bankruptcy, insolvency or reorganization with respect to
    Hovnanian. Pursuant to the terms of the purchase contract
    agreement, upon acceleration, holders will be entitled under the
    terms of the purchase contracts to receive a number of shares of
    our Class&#160;A common stock per purchase contract equal to the
</DIV>
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    <BR>
    S-55
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<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
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<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    maximum settlement rate in effect immediately prior to such
    acceleration (regardless of the market value of our Class&#160;A
    common stock at that time). However, a bankruptcy court may
    prevent us from delivering our Class&#160;A common stock in
    settlement of the accelerated purchase contracts. In such event,
    a holder would have a damage claim against us for the value of
    the Class&#160;A common stock that we would have otherwise been
    required to deliver upon settlement of the purchase contracts.
    We expect that this claim for damages will rank equally with the
    claims by holders of our Class&#160;A common stock in the
    bankruptcy proceeding, in which case you will only be able to
    recover damages to the extent holders of our Class&#160;A common
    stock receive any recovery.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: transparent">

    <B><FONT style="font-family: 'Times New Roman', Times">Modification</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    The purchase contract agreement will contain provisions
    permitting us and the purchase contract agent to modify the
    purchase contract agreement without the consent of the holders
    of purchase contracts (whether held separately or as a component
    of Units) for any of the following purposes:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    to evidence the succession of another person to Hovnanian or K.
    Hovnanian, and the assumption by any such successor of the
    covenants and obligations of Hovnanian or K. Hovnanian in the
    purchase contract agreement and the units and separate purchase
    contracts, if any;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    to add to the covenants for the benefit of holders of purchase
    contracts or to surrender any of our rights or powers under the
    agreement;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    to evidence and provide for the acceptance of appointment of a
    successor purchase contract agent;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    to make provision with respect to the rights of holders of
    purchase contracts pursuant to adjustments in the settlement
    rate due to consolidations, mergers or other reorganization
    events;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    to conform the provisions of the purchase contract agreement to
    the &#147;Description of the Purchase Contracts,&#148;
    &#147;Description of the Units&#148; and &#147;Limitation on
    Beneficial Ownership of Class&#160;A Common Stock, Units and
    Separate Purchase Contracts&#148; sections in the preliminary
    prospectus supplement, as supplemented by the related pricing
    term sheet;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    to cure any ambiguity or manifest error, to correct or
    supplement any provisions that may be inconsistent, so long as
    such action does not adversely affect the interest of the
    holders;&#160;and
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    to make any other provisions with respect to such matters or
    questions, so long as such action does not adversely affect the
    interest of the holders.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    The purchase contract agreement will contain provisions
    permitting us and the purchase contract agent, with the consent
    of the holders of not less than a majority of the purchase
    contracts at the time outstanding, to modify the terms of the
    purchase contracts or the purchase contract agreement. However,
    no such modification may, without the consent of the holder of
    each outstanding purchase contract affected by the modification,
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    reduce the number of shares of Class&#160;A common stock
    deliverable upon settlement of the purchase contract (except to
    the extent expressly provided in the anti-dilution adjustments);
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    change the mandatory settlement date, the right to settle
    purchase contracts early or the fundamental change early
    settlement right;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    reduce the above-stated percentage of outstanding purchase
    contracts the consent of the holders of which is required for
    the modification or amendment of the provisions of the purchase
    contracts or the purchase contract agreement;&#160;or
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    impair the right to institute suit for the enforcement of the
    purchase contracts.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    In executing any modification, the purchase contract agent shall
    be entitled to receive an opinion of counsel stating that such
    modification is authorized or permitted under the terms of the
    purchase contract agreement.
</DIV>
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    <BR>
    S-56
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    <B><FONT style="font-family: 'Times New Roman', Times">Consolidation,
    Merger, Sale or Conveyance</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    We will covenant in the purchase contract agreement that we will
    not merge with or into, consolidate with any other entity or
    sell, assign, transfer, lease or convey all or substantially all
    of our properties and assets to any person or entity, unless:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    the resulting, surviving or transferee entity (if not us) is a
    corporation or limited liability company that is treated as a
    corporation for U.S.&#160;federal income tax purposes, organized
    and existing under the laws of the United States of America, any
    State thereof or the District of Columbia, and such corporation
    or limited liability company (if not us) expressly assumes in
    writing all of our obligations under the purchase contracts and
    the purchase contract agreement;&#160;and
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    immediately after the merger, consolidation, sale, assignment,
    transfer, lease or conveyance, no default has occurred and is
    continuing under the purchase contracts or the purchase contract
    agreement.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: transparent">

    <B><FONT style="font-family: 'Times New Roman', Times">Reservation
    of Class&#160;A Common Stock</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    We will at all times reserve and keep available out of our
    authorized and unissued Class&#160;A common stock, solely for
    issuance upon settlement of the purchase contracts, that number
    of shares of Class&#160;A common stock as shall from time to
    time be issuable upon the settlement of all purchase contracts
    then outstanding, assuming settlement at the maximum settlement
    rate.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: transparent">

    <B><FONT style="font-family: 'Times New Roman', Times">Governing
    Law</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    The purchase contract agreement, the purchase contracts and any
    claim, controversy or dispute arising under or related to the
    purchase contract agreement or the purchase contracts will be
    governed by, and construed in accordance with, the laws of the
    State of New York.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: transparent">

    <B><FONT style="font-family: 'Times New Roman', Times">Information
    Concerning the Purchase Contract Agent</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    Wilmington Trust&#160;Company will be the purchase contract
    agent. The purchase contract agent will act as the agent for the
    holders of Units and separate purchase contracts from time to
    time. The purchase contract agreement will not obligate the
    purchase contract agent to exercise any discretionary actions in
    connection with a default under the terms of the purchase
    contracts or the purchase contract agreement.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    The purchase contract agreement will contain provisions limiting
    the liability of the purchase contract agent. The purchase
    contract agreement will contain provisions under which the
    purchase contract agent may resign or be replaced. This
    resignation or replacement would be effective upon the
    acceptance of appointment by a successor.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: transparent">

    <B><FONT style="font-family: 'Times New Roman', Times">Calculations
    in Respect of Purchase Contracts</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    We will be responsible for making all calculations called for
    under the Units and any separate purchase contracts. The
    purchase contract agent will have no obligation to make any such
    calculations. All such calculations made by us will be made in
    good faith and, absent manifest error, will be final and binding
    on the purchase contract agent and the holders of the Units and
    any separate purchase contracts. We will provide a schedule of
    such calculations to the purchase contract agent and the
    purchase contract agent will be entitled to conclusively rely
    upon the accuracy of such calculations without independent
    verification.
</DIV>
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    <BR>
    S-57
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<A name='Y89359111'>
<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: transparent">

    <B><FONT style="font-family: 'Times New Roman', Times">DESCRIPTION
    OF THE AMORTIZING NOTES</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    The amortizing notes will be issued by K. Hovnanian pursuant to
    its senior subordinated debt indenture, and a related
    supplemental indenture for such amortizing notes, each to be
    dated the date of first issuance of the amortizing notes, and
    each among K. Hovnanian, as issuer, Hovnanian and certain
    subsidiaries of Hovnanian, as Guarantors, and Wilmington
    Trust&#160;Company, as trustee (collectively referred to herein
    as the &#147;indenture&#148;).
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    The following summary of the terms of the amortizing notes
    contains a description of all of the material terms of the
    amortizing notes but is not complete and is subject to, and is
    qualified in its entirety reference to, all of the provisions of
    the indenture, including the definitions in the indenture of
    certain terms. We refer you to the form of base indenture, which
    has been filed, and the supplemental indenture, which will be
    filed, and in each case incorporated by reference as an exhibit
    to the registration statement of which this prospectus
    supplement forms a part. A copy of the base indenture is, and a
    copy of the supplemental indenture will be, available for
    inspection at the office of K. Hovnanian.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    As used in this section, the term &#147;Hovnanian&#148; means
    Hovnanian Enterprises, Inc. and does not include
    K.&#160;Hovnanian Enterprises, Inc. or any other subsidiary of
    Hovnanian Enterprises, Inc. and references to
    &#147;K.&#160;Hovnanian&#148; mean K. Hovnanian Enterprises,
    Inc. and do not include any of its subsidiaries.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: transparent">

    <B><FONT style="font-family: 'Times New Roman', Times">General</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    The amortizing notes will be issued as a separate series of
    senior subordinated debt securities under the indenture. The
    amortizing notes will be issued by K. Hovnanian in an initial
    aggregate principal amount of $13,578,147 (or $15,614,869
    initial aggregate principal amount if the underwriters exercise
    their over-allotment option in full). The final installment
    payment date will be February&#160;15, 2014. K. Hovnanian may
    not redeem the amortizing notes.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    Amortizing notes may only be issued in certificated form in
    exchange for a global security under the circumstances described
    below under &#147;Book-Entry Procedures and Settlement.&#148; In
    the event that amortizing notes are issued in certificated form,
    such amortizing notes may be transferred or exchanged at the
    offices described below. Payments on amortizing notes issued as
    a global security will be made to DTC, to a successor depositary
    or, in the event that no depositary is used, to a paying agent
    for the amortizing notes. In the event amortizing notes are
    issued in certificated form, installments will be payable, the
    transfer of the amortizing notes will be registrable and
    amortizing notes will be exchangeable for amortizing notes of
    other denominations of a like aggregate principal amount at the
    corporate trust office of the trustee in Wilmington, DE.
    Installment payments on certificated amortizing notes may be
    made at K. Hovnanian&#146;s option by check mailed to the
    address of the persons entitled thereto. See &#147;Book-Entry
    Procedures and Settlement.&#148;
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    There are no covenants or provisions in the indenture that would
    afford the holders of the amortizing notes protection in the
    event of a highly leveraged transaction, reorganization,
    restructuring, merger or similar transaction involving Hovnanian
    or K. Hovnanian that may adversely affect such holders.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: transparent">

    <B><FONT style="font-family: 'Times New Roman', Times">Ranking</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    The amortizing notes will be general unsecured senior
    subordinated obligations of K. Hovnanian. This means that the
    payment of principal of, and interest on (including, without
    limitation, installment payments), and all other amounts owing
    with respect to, the amortizing notes will be subordinated as
    set forth in the indenture to the prior payment in full in cash
    or cash equivalents of all existing and future &#147;Senior
    Indebtedness&#148; (as defined under
    &#147;&#151;&#160;Subordination&#148; below) of K. Hovnanian.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    The senior subordinated guarantees described under
    &#147;&#151;&#160;The Senior Subordinated Guarantees&#148; below
    will be general unsecured senior subordinated obligations of the
    &#147;Guarantors&#148; (as defined under &#147;&#151;&#160;The
    Senior Subordinated Guarantees&#148; below). This means that
    payments of any amounts pursuant to the senior subordinated
    guarantees will be subordinated on the same basis to Senior
    Indebtedness of the Guarantors as the amortizing notes will be
    subordinated to Senior Indebtedness of K. Hovnanian.
</DIV>
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    <BR>
    S-58
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<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    At October&#160;31, 2010, on an as further adjusted basis to
    give effect to this offering and the Concurrent Offerings and
    the application of the estimated net proceeds from this offering
    and the Concurrent Offerings, K.&#160;Hovnanian and the
    Guarantors would have had approximately $797.2&#160;million of
    secured indebtedness outstanding ($784.6&#160;million, net of
    discount) and approximately $832.7&#160;million of senior
    unsecured notes ($827.2&#160;million, net of discount), all of
    which would be Senior Indebtedness of K. Hovnanian and the
    Guarantors. After giving effect to the use of proceeds from this
    offering and the Concurrent Offerings, the amortizing notes will
    be K.&#160;Hovnanian and the Guarantors&#146; only senior
    subordinated indebtedness outstanding and K. Hovnanian and the
    Guarantors will not have any other senior subordinated notes or
    subordinated notes.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: transparent">

    <B><FONT style="font-family: 'Times New Roman', Times">Subordination</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    The indebtedness evidenced by the amortizing notes and the
    senior subordinated guarantees will be subordinate to the prior
    payment when due of the principal of and interest on all Senior
    Indebtedness of K.&#160;Hovnanian and the Guarantors,
    respectively.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    Upon maturity of the principal of any Senior Indebtedness of K.
    Hovnanian or any Guarantor, including by reason of acceleration,
    payment in full must be made on such Senior Indebtedness before
    any payment is made on or in respect of the amortizing notes by
    K. Hovnanian or the senior subordinated guarantee of such
    Guarantor, respectively.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    During the continuation of payment default with respect to any
    Senior Indebtedness of K. Hovnanian or a Guarantor and upon
    written notice thereof to K. Hovnanian or such Guarantor and the
    trustee or upon acceleration of such Senior Indebtedness, no
    direct or indirect payment may be made by K. Hovnanian or such
    Guarantor or the trustee with respect to the principal of, or
    interest on (including, without limitation, installment
    payments), the amortizing notes or such Guarantor&#146;s senior
    subordinated guarantee, respectively, or to repurchase any of
    the amortizing notes.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    During the continuation of any non-payment default with respect
    to any Senior Indebtedness of K.&#160;Hovnanian or a Guarantor
    pursuant to which the maturity thereof may be accelerated, no
    payment or distribution of any kind or character may be made by
    K. Hovnanian or such Guarantor on account of the principal of,
    or interest on (including, without limitation, installment
    payments), the amortizing notes or such Guarantor&#146;s senior
    subordinated guarantee, or the repurchase or other acquisition
    of, any amortizing notes for the period specified below (the
    &#147;payment blockage period&#148;). The payment blockage
    period will commence upon the receipt of notice of the default
    by the trustee from the holders of Senior Indebtedness of
    K.&#160;Hovnanian or a Guarantor or any representative of a
    holder of such Senior Indebtedness and will end on the earlier
    of:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    (i)&#160;120&#160;days thereafter;
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    (ii)&#160;the date on which such default is cured, waived or
    ceases to exist or on which such Senior Indebtedness is
    discharged;&#160;or
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    (iii)&#160;the date on which such payment blockage period shall
    have been terminated by written notice to K. Hovnanian or to the
    trustee from the holders of such Senior Indebtedness or any
    representative of the holders of such Senior Indebtedness that
    initiated such payment blockage period,
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    after which K. Hovnanian and the Guarantors will promptly resume
    making any and all required payments in respect of the
    amortizing notes or the applicable senior subordinated
    guarantees, including any missed payments.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    In no event will a payment blockage period extend beyond
    120&#160;days from the date of receipt by the trustee of the
    notice initiating such payment blockage period (the
    &#147;initial period&#148;). Any number of additional payment
    blockage periods may be commenced during the initial period;
    <I>provided</I> that no such additional period will extend
    beyond the initial period. After the expiration of the initial
    period, no payment blockage period with respect to the
    amortizing notes may be commenced on the basis of a non-payment
    default on the Senior Indebtedness which was the basis of a
    payment blockage period commenced during the initial period
</DIV>
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<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    until 270 consecutive days have elapsed after the end of the
    initial period. No non-payment event of default with respect to
    Senior Indebtedness of K. Hovnanian or a Guarantor that existed
    or was continuing on the date of the commencement of any payment
    blockage period with respect to the Senior Indebtedness of
    K.&#160;Hovnanian or a Guarantor initiating such payment
    blockage period and of which such Senior Indebtedness holder(s)
    are aware will be, or can be made, the basis for the
    commencement of a second payment blockage period whether or not
    within the specified period, unless such event of default has
    been cured or waived for a period of not less than 90
    consecutive days.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    If K. Hovnanian fails to make any payment on any amortizing
    notes when due or within any applicable grace period, whether or
    not on account of the payment blockage provisions referred to
    above, such failure would constitute an event of default under
    the indenture and would enable the holders of such amortizing
    notes to accelerate the maturity thereof. If any Guarantor fails
    to make any payment on any senior subordinated guarantee when
    due or within any applicable grace period, whether or not on
    account of the payment blockage provisions referred to above,
    such failure would constitute an event of default under the
    indenture and would enable the holders of the amortizing notes
    to accelerate the maturity thereof.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    Upon any distribution of assets of K. Hovnanian or any Guarantor
    in any dissolution, winding up, liquidation or reorganization of
    K. Hovnanian or such Guarantor, payment of the principal of, and
    interest on (including, without limitation, installment
    payments), amortizing notes or the applicable senior
    subordinated guarantee will be subordinated to the extent and in
    the manner set forth in the indenture to the prior payment in
    full of all Senior Indebtedness of K. Hovnanian or such
    Guarantor. Because of these subordination provisions, unless
    holders of Senior Indebtedness of K. Hovnanian or such Guarantor
    are paid in full, holders of Senior Indebtedness of K. Hovnanian
    or such Guarantor, including general creditors (other than
    certain trade creditors) of K. Hovnanian will recover more,
    ratably, than holders of the amortizing notes.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <I>&#147;Senior Indebtedness&#148; </I>of any person means:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    (i)&#160;all &#147;Indebtedness&#148; (as defined under
    &#147;&#151;&#160;The Senior Subordinated Guarantees&#148;
    below) of such person;
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    (ii)&#160;lease obligations of such person;
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    (iii)&#160;all Indebtedness, secured or unsecured, in connection
    with the acquisition or improvement of any property or asset or
    acquisition of any business by such person;
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    (iv)&#160;all Indebtedness secured by a mortgage, lien, pledge,
    charge or encumbrance upon property owned by such person and all
    Indebtedness secured in the manner specified in this
    clause&#160;(iv) even if such person has not assumed or become
    liable for the payment thereof;
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    (v)&#160;all customer deposits held in escrow accounts by such
    person pending closing of the related sales;
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    (vi)&#160;all Indebtedness of such person created or arising
    under any conditional sale or other title retention agreement
    with respect to property acquired by such person or otherwise
    representing the deferred and unpaid balance of the purchase
    price of any such property, including all Indebtedness created
    or arising in the manner specified in this clause&#160;(vi) even
    though the rights and remedies of the seller or lender under
    such agreement in the event of default are limited to
    repossession or sale of such property;
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    (vii)&#160;guarantees by such person, direct or indirect, of any
    indebtedness of another person of the types referred to in
    clauses&#160;(i) through (vi);&#160;and
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    (viii)&#160;contingent obligations of such person in respect of,
    or to purchase or otherwise acquire or be responsible or liable
    for through the purchase of products or services irrespective of
    whether such products are delivered or such services are
    rendered, any such Indebtedness referred to in clauses&#160;(i)
    through (vi);
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    which indebtedness, lease obligation, deposit, guarantee or
    contingent obligation such person has directly or indirectly
    created, incurred, assumed, guaranteed or otherwise become
    liable or responsible for, whether currently outstanding or
    hereafter created. All references to indebtedness include any
    indebtedness that renews,
</DIV>
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    <BR>
    S-60
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<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
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<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    extends, refunds, amends or modifies any such indebtedness;
    <I>provided, however, </I>that, with respect to K. Hovnanian and
    the Guarantors, &#147;Senior Indebtedness&#148; does not
    include, without limitation:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    (a)&#160;the amortizing notes and the senior subordinated
    guarantees;
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    (b)&#160;K. Hovnanian&#146;s
    8<FONT style="vertical-align: text-top; font-size: 70%;">7</FONT>/<FONT style="font-size: 70%;">8</FONT>%&#160;Senior
    Subordinated Notes due 2012 and related senior subordinated
    guarantees;
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    (c)&#160;K. Hovnanian&#146;s
    7<FONT style="vertical-align: text-top; font-size: 70%;">3</FONT>/<FONT style="font-size: 70%;">4</FONT>%&#160;Senior
    Subordinated Notes due 2013 and related senior subordinated
    guarantees;
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    (d)&#160;accounts payable or any other indebtedness to trade
    creditors created or assumed by K. Hovnanian or a Guarantor in
    the ordinary course of business in connection with the obtaining
    of materials or services;
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    (e)&#160;any liability for federal, state or local taxes owed or
    owing by K. Hovnanian or a Guarantor;
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    (f)&#160;all obligations of K. Hovnanian or a Guarantor (other
    than Hovnanian) owed to Hovnanian or any Subsidiary of
    Hovnanian;&#160;and
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    (g)&#160;any Indebtedness as to which, in the instrument
    creating or evidencing the same or pursuant to which the same is
    outstanding, it is provided that such indebtedness is on a
    parity with or otherwise not superior in right of payment to the
    amortizing notes or the senior subordinated guarantees, as
    applicable.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: transparent">

    <B><FONT style="font-family: 'Times New Roman', Times">Limitation
    on Senior Subordinated Indebtedness</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    Hovnanian and K. Hovnanian will not, and will not cause or
    permit any other Guarantor to, incur any Indebtedness that is
    subordinate in right of payment to any Senior Indebtedness of K.
    Hovnanian or a Guarantor, as the case may be, unless such
    Indebtedness is <I>pari passu </I>with, or subordinated in right
    of payment to, the amortizing notes or any senior subordinated
    guarantee; <I>provided </I>that the foregoing limitation will
    not apply to distinctions between categories of Senior
    Indebtedness of K. Hovnanian or a Guarantor, as the case may be,
    that exist by reasons of any &#147;Liens&#148; (as defined under
    &#147;&#151;&#160;The Senior Subordinated Guarantees&#148;
    below) or guarantees arising or created in respect of some but
    not all such Senior Indebtedness of K. Hovnanian or a Guarantor,
    as the case may be, or priorities of paydown, from proceeds of
    collateral or otherwise, among classes or tranches of any issue
    of Senior Indebtedness.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: transparent">

    <B><FONT style="font-family: 'Times New Roman', Times">The
    Senior Subordinated Guarantees</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    Hovnanian, the parent corporation of K. Hovnanian, and each of
    the parent&#146;s existing and future subsidiaries that from
    time to time guarantee K. Hovnanian&#146;s obligations under any
    &#147;Applicable Debt&#148; (as defined below) then outstanding
    (collectively, the &#147;Guarantors&#148;) will unconditionally
    guarantee, on a joint and several basis, all of K.
    Hovnanian&#146;s obligations under the amortizing notes,
    including K. Hovnanian&#146;s obligations to pay principal of,
    interest on (including, without limitation, installment
    payments) and all other amounts owing with respect to, the
    amortizing notes and under the indenture (each such guarantee, a
    &#147;senior subordinated guarantee&#148;). The obligations of
    each Guarantor are limited to the maximum amount which, after
    giving effect to all other contingent and fixed liabilities of
    such Guarantor and after giving effect to any collections from
    or payments made by or on behalf of any other Guarantor in
    respect of the obligations of such other Guarantor under its
    Guarantee or pursuant to its contribution obligations under the
    indenture, will result in the obligations of such Guarantor
    under its senior subordinated guarantee not constituting a
    fraudulent conveyance or fraudulent transfer under federal or
    state law. Each Guarantor other than Hovnanian that makes a
    payment or distribution under a senior subordinated guarantee
    will be entitled to a contribution from each other Guarantor in
    an amount <I>pro rata</I>, based on the net assets of each
    Guarantor, determined in accordance with GAAP.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    As of the date of this prospectus supplement, our home mortgage
    subsidiaries, our joint ventures and subsidiaries holding
    interests in our joint ventures and certain of our title
    insurance subsidiaries are not Guarantors.
</DIV>
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    <BR>
    S-61
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<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    Upon the release of a Guarantor from its guarantee of all then
    outstanding Applicable Debt, the senior subordinated guarantee
    of such Guarantor under the indenture will be deemed to be
    released and discharged at such time without any further action
    on the part of the trustee or any holder of the amortizing
    notes. If any such released Guarantor thereafter guarantees any
    Applicable Debt (or if any released guarantee under any
    Applicable Debt is reinstated or renewed), then such released
    Guarantor will guarantee the amortizing notes on the terms and
    conditions set forth in the indenture.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    For the purposes of this section, the following definitions will
    apply:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <I>&#147;Applicable Debt&#148; </I>means all Indebtedness of
    Hovnanian or K. Hovnanian under K. Hovnanian&#146;s or
    Hovnanian&#146;s senior notes and senior subordinated notes
    outstanding on the Issue Date.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <I>&#147;Attributable Debt&#148; </I>means, with respect to any
    Capitalized Lease Obligations, the capitalized amount thereof
    determined in accordance with GAAP.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <I>&#147;Capitalized Lease Obligations&#148; </I>of any person
    means the obligations of such person to pay rent or other
    amounts under a lease that is required to be capitalized for
    financial reporting purposes in accordance with GAAP, and the
    amount of such obligations will be the capitalized amount
    thereof determined in accordance with GAAP.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <I>&#147;Currency Agreement&#148; </I>of any person means any
    foreign exchange contract, currency swap agreement or other
    similar agreement or arrangement designed to protect such person
    or any of its Subsidiaries against fluctuations in currency
    values.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <I>&#147;GAAP&#148; </I>means generally accepted accounting
    principles set forth in the opinions and pronouncements of the
    Accounting Principles Board of the American Institute of
    Certified Public Accountants and statements and pronouncements
    of the Financial Accounting Standards Board or in such other
    statements by such other entity as may be approved by a
    significant segment of the accounting profession of the United
    States, as in effect on the Issue Date.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <I>&#147;Indebtedness&#148; </I>of any person means, without
    duplication:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    (i)&#160;any liability of such person (a)&#160;for borrowed
    money or under any reimbursement obligation relating to a letter
    of credit or other similar instruments (other than standby
    letters of credit or similar instruments issued for the benefit
    of, or surety, performance, completion or payment bonds, earnest
    money notes or similar purpose undertakings or indemnifications
    issued by, such person in the ordinary course of business),
    (b)&#160;evidenced by a bond, note, debenture or similar
    instrument (including a purchase money obligation) given in
    connection with the acquisition of any businesses, properties or
    assets of any kind or with services incurred in connection with
    capital expenditures (other than any obligation to pay a
    contingent purchase price which, as of the date of incurrence
    thereof, is not required to be recorded as a liability in
    accordance with GAAP), or (c)&#160;in respect of Capitalized
    Lease Obligations (to the extent of the Attributable Debt in
    respect thereof);
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    (ii)&#160;any Indebtedness of others that such person has
    guaranteed to the extent of the guarantee; <I>provided, however,
    </I>that Indebtedness of K. Hovnanian or any Guarantor will not
    include the obligations of K. Hovnanian or such Guarantor under
    warehouse lines of credit of Mortgage Subsidiaries to repurchase
    mortgages at prices no greater than 98% of the principal amount
    thereof;
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    (iii)&#160;to the extent not otherwise included, the obligations
    of such person under Currency Agreements or Interest Protection
    Agreements to the extent recorded as liabilities not
    constituting Interest Incurred, net of amounts recorded as
    assets in respect of such agreements, in accordance with
    GAAP;&#160;and
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    (iv)&#160;all Indebtedness of others secured by a Lien on any
    asset of such person, whether or not such Indebtedness is
    assumed by such person;
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <I>provided </I>that Indebtedness will not include accounts
    payable, liabilities to trade creditors of such person or other
    accrued expenses arising in the ordinary course of business. The
    amount of Indebtedness of any person at any date will be
    (a)&#160;the outstanding balance at such date of all
    unconditional obligations as described above, net of any
    unamortized discount to be accounted for as Interest Expense, in
    accordance with GAAP, (b)&#160;the
</DIV>
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    <BR>
    S-62
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<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    maximum liability of such person for any contingent obligations
    under clause&#160;(i) above at such date, net of an unamortized
    discount to be accounted for as Interest Expense in accordance
    with GAAP, and (c)&#160;in the case of clause&#160;(iv) above,
    the lesser of (x)&#160;the fair market value of any asset
    subject to a Lien securing the Indebtedness of others on the
    date that the Lien attaches and (y)&#160;the amount of the
    Indebtedness secured.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <I>&#147;Interest Expense&#148; </I>of any person for any period
    means, without duplication, the aggregate amount of
    (i)&#160;interest which, in conformity with GAAP, would be set
    opposite the caption &#147;interest expense&#148; or any like
    caption on an income statement for such person (including,
    without limitation, imputed interest included in Capitalized
    Lease Obligations, all commissions, discounts and other fees and
    charges owed with respect to letters of credit and bankers&#146;
    acceptance financing, the net costs (but reduced by net gains)
    associated with Currency Agreements and Interest Protection
    Agreements, amortization of other financing fees and expenses,
    the interest portion of any deferred payment obligation,
    amortization of discount or premium, if any, and all other
    noncash interest expense (other than interest and other charges
    amortized to cost of sales)), and (ii)&#160;all interest
    actually paid by K. Hovnanian or any Guarantor under any
    guarantee of Indebtedness (including, without limitation, a
    guarantee of principal, interest or any combination thereof) of
    any person other than K. Hovnanian or any Guarantor during such
    period; <I>provided</I>, that Interest Expense will exclude any
    expense associated with the complete write-off of financing fees
    and expenses in connection with the repayment of any
    Indebtedness.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <I>&#147;Interest Incurred&#148; </I>of any person for any
    period means, without duplication, the aggregate amount of
    (i)&#160;Interest Expense and (ii)&#160;all capitalized interest
    and amortized debt issuance costs.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <I>&#147;Interest Protection Agreement&#148; </I>of any person
    means any interest rate swap agreement, interest rate collar
    agreement, option or futures contract or other similar agreement
    or arrangement designed to protect such person or any of its
    Subsidiaries against fluctuations in interest rates with respect
    to Indebtedness permitted to be incurred under the indentures
    governing the Applicable Debt then outstanding.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    &#147;Issue Date&#148; means the date the amortizing notes are
    originally issued.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <I>&#147;Lien&#148; </I>means, with respect to any Property, any
    mortgage, lien, pledge, charge, security interest or encumbrance
    of any kind in respect of such Property. For purposes of this
    definition, a person will be deemed to own, subject to a Lien,
    any Property which it has acquired or holds subject to the
    interest of a vendor or lessor under any conditional sale
    agreement, capital lease or other title retention agreement
    relating to such Property.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <I>&#147;Mortgage Subsidiary&#148; </I>means any Subsidiary of
    Hovnanian substantially all of whose operations consist of the
    mortgage lending business.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <I>&#147;Property&#148; </I>of any person means all types of
    real, personal, tangible, intangible or mixed property owned by
    such person, whether or not included in the most recent
    consolidated balance sheet of such person and its Subsidiaries
    under GAAP.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <I>&#147;Significant Subsidiary&#148; </I>means any Subsidiary
    of Hovnanian which would constitute a &#147;significant
    subsidiary&#148; as defined in
    <FONT style="white-space: nowrap">Rule&#160;1-02(w)(1)</FONT>
    or (2)&#160;of
    <FONT style="white-space: nowrap">Regulation&#160;S-X</FONT>
    under the Securities Act and the Exchange Act as in effect on
    the Issue Date.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <I>&#147;Subsidiary&#148; </I>of any person means any
    corporation or other entity of which a majority of the capital
    stock having ordinary voting power to elect a majority of the
    board of directors or other persons performing similar functions
    of such corporation or other entity is at the time directly or
    indirectly owned or controlled by such person.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: transparent">

    <B><FONT style="font-family: 'Times New Roman', Times">Installment
    Payments</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    Each amortizing note will have an initial principal amount of
    $4.526049. On each February&#160;15, May&#160;15, August 15 and
    November&#160;15, commencing on May&#160;15, 2011 (each, an
    &#147;installment payment date&#148;), K.&#160;Hovnanian will
    pay, in cash, equal quarterly installments of $0.453125 on each
    amortizing note (except for the May&#160;15, 2011 installment
    payment, which will be $0.483334 per amortizing note). Each
    installment will constitute a payment of interest (at a rate of
    12.072% per annum) and a partial repayment of principal on the
</DIV>
<!-- XBRL Paragraph Pagebreak -->
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<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <BR>
    S-63
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#Y89359tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<!-- XBRL Pagebreak End -->

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    amortizing note, allocated as set forth on the amortization
    schedule set forth under &#147;&#151;&#160;Amortization
    Schedule.&#148; Installments will be paid to the person in whose
    name an amortizing note is registered as of 5:00&#160;p.m.,
    New&#160;York City time, on the business day immediately
    preceding the related installment payment date. In the event the
    amortizing notes do not continue to remain in book-entry only
    form, K. Hovnanian will have the right to select regular record
    dates, which will be more than 14&#160;days but less than
    60&#160;days prior to the relevant installment payment date.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    Each installment payment for any period will be computed on the
    basis of a
    <FONT style="white-space: nowrap">360-day</FONT> year
    of twelve
    <FONT style="white-space: nowrap">30-day</FONT>
    months. The installment payable for any period shorter than a
    full installment payment period will be computed on the basis of
    the actual number of days elapsed per
    <FONT style="white-space: nowrap">30-day</FONT>
    month. In the event that any date on which an installment is
    payable is not a business day, then payment of the installment
    on such date will be made on the next succeeding day that is a
    business day, and without any interest or other payment in
    respect of any such delay. However, if such business day is in
    the next succeeding calendar year, then such installment payment
    will be made on the immediately preceding business day, in each
    case with the same force and effect as if made on such date.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: transparent">

    <B><FONT style="font-family: 'Times New Roman', Times">Amortization
    Schedule</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    The total installments of principal on the amortizing notes for
    each installment payment date are set forth below:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE border="0" width="100%" align="center" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
<!-- Table Width Row BEGIN -->
<TR style="font-size: 1pt" valign="bottom">
    <TD width="75%">&nbsp;</TD>	<!-- colindex=01 type=maindata -->
    <TD width="2%">&nbsp;</TD>	<!-- colindex=02 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=02 type=lead -->
    <TD width="8%" align="right">&nbsp;</TD>	<!-- colindex=02 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=02 type=hang1 -->
    <TD width="3%">&nbsp;</TD>	<!-- colindex=03 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=03 type=lead -->
    <TD width="8%" align="right">&nbsp;</TD>	<!-- colindex=03 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=03 type=hang1 -->
</TR>
<!-- Table Width Row END -->
<!-- TableOutputHead -->
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>Amount of <BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>Amount of <BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="left" valign="bottom">
<DIV style="border-bottom: 1px solid #000000; width: 1%; padding-bottom: 1px">
    <B>Installment Payment Date</B>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>Principal</B>
</TD>
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>Interest</B>
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="line-height: 3pt; font-size: 1pt">
<TD>&nbsp;
</TD>
</TR>
<!-- TableOutputBody -->
<TR valign="bottom" style="background: #CCEEFF">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    May&#160;15, 2011
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    0.337631
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    0.145703
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    August&#160;15, 2011
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    0.326719
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    0.126406
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    November&#160;15, 2011
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    0.336579
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    0.116546
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    February&#160;15, 2012
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    0.346737
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    0.106388
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    May&#160;15, 2012
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    0.357201
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    0.095924
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    August&#160;15, 2012
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    0.367982
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    0.085143
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    November&#160;15, 2012
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    0.379087
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    0.074038
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    February&#160;15, 2013
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    0.390528
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    0.062597
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    May&#160;15, 2013
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    0.402314
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    0.050811
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    August&#160;15, 2013
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    0.414456
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    0.038669
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    November&#160;15, 2013
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    0.426965
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    0.026160
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    February&#160;15, 2014
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    0.439850
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    0.013275
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
</TABLE>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">

</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: transparent">

    <B><FONT style="font-family: 'Times New Roman', Times">Repurchase
    of Amortizing Notes at the Option of the Holder</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    If we elect to exercise our early mandatory settlement right
    with respect to the purchase contracts, then holders of the
    amortizing notes (whether as components of Units or separate
    amortizing notes) will have the right (the &#147;repurchase
    right&#148;) to require K. Hovnanian to repurchase some or all
    of their amortizing notes for cash at the repurchase price per
    amortizing note to be repurchased on the repurchase date, as
    described below. Holders may not require K. Hovnanian to
    repurchase a portion of an amortizing note. Holders will not
    have the right to require K. Hovnanian to repurchase any or all
    of such holder&#146;s amortizing notes in connection with any
    early settlement of such holder&#146;s purchase contracts at the
    holder&#146;s option, as described above under &#147;Description
    of the Purchase Contracts&#160;&#151; Early Settlement&#148; and
    &#147;Description of the Purchase Contracts&#160;&#151; Early
    Settlement Upon a Fundamental Change.&#148;
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    The &#147;repurchase date&#148; will be a date specified by us
    in the early mandatory settlement notice, which will be at least
    20 but not more than 45 business days following the date of our
    early mandatory settlement notice as described under
    &#147;Description of the Purchase Contracts&#160;&#151; Early
    Settlement at Our Option&#148; (and which may or may not fall on
    the early mandatory settlement date).
</DIV>
<!-- XBRL Pagebreak Begin -->

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <BR>
    S-64
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#Y89359tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<!-- XBRL Pagebreak End -->

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    The &#147;repurchase price&#148; per amortizing note to be
    repurchased will be equal to the principal amount of such
    amortizing note as of the repurchase date, <I>plus </I>accrued
    and unpaid interest on such principal amount from, and
    including, the immediately preceding installment payment date
    to, but not including, the repurchase date, calculated at a rate
    of 12.072% per annum. However, if the amortizing notes are in
    certificated form and the repurchase date falls after a regular
    record date and on or prior to the immediately succeeding
    installment payment date, the installment payment payable on
    such installment payment date will be paid on such installment
    payment date to the holder as of such regular record date and
    will not be included in the repurchase price per amortizing note.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    To exercise your repurchase right, you must deliver, on or
    before 5:00&#160;p.m., New York City time, on the business day
    immediately preceding the repurchase date, the amortizing notes
    to be repurchased (or the Units, if the early mandatory
    settlement date falls on or after the same day as the repurchase
    date and you have not separated your Units into their
    constituent components), together with a duly completed written
    repurchase notice in the form entitled &#147;Form of Repurchase
    Notice&#148; on the reverse side of the amortizing notes (a
    &#147;repurchase notice&#148;), in each case in accordance with
    appropriate DTC procedures, unless you hold certificated
    amortizing notes (or Units), in which case you must deliver the
    amortizing notes to be repurchased (or Units), duly endorsed for
    transfer, together with a repurchase notice, to the paying
    agent. Your repurchase notice must state:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    if certificated amortizing notes (or Units) have been issued,
    the certificate numbers of the amortizing notes (or Units), or
    if not certificated, your repurchase notice must comply with
    appropriate DTC procedures;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    the number of amortizing notes to be repurchased;&#160;and
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    that the amortizing notes are to be repurchased by K. Hovnanian
    pursuant to the applicable provisions of the amortizing notes
    and the indenture.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    You may withdraw any repurchase notice (in whole or in part) by
    a written, irrevocable notice of withdrawal delivered to the
    trustee, on or before 5:00&#160;p.m., New York City time, on the
    business day immediately preceding the repurchase date. The
    notice of withdrawal must state:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    the number of the withdrawn amortizing notes;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    if certificated amortizing notes (or Units) have been issued,
    the certificate numbers of the withdrawn amortizing notes (or
    Units), or if not certificated, your notice must comply with
    appropriate DTC procedures;&#160;and
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    the number of amortizing notes, if any, that remain subject to
    the repurchase notice.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    K.&#160;Hovnanian will be required to repurchase the amortizing
    notes to be purchased on the repurchase date. You will receive
    payment of the repurchase price on the later of (i)&#160;the
    repurchase date and (ii)&#160;the time of book-entry transfer or
    the delivery of the amortizing notes (or Units). If the trustee
    holds money sufficient to pay the repurchase price of the
    amortizing notes to be purchased on the repurchase date, then:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    such amortizing notes will cease to be outstanding and interest
    will cease to accrue (whether or not book-entry transfer of the
    amortizing notes (or Units) is made or whether or not the
    amortizing notes (or Units) are delivered to the
    trustee);&#160;and
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    all other rights of the holder will terminate (other than the
    right to receive the repurchase price).
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    In connection with any repurchase offer pursuant to an early
    mandatory settlement notice, we will, if required:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    comply with the provisions of the tender offer rules under the
    Securities Exchange Act of 1934, as amended (the &#147;Exchange
    Act&#148;) that may then be applicable;&#160;and
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    file a Schedule&#160;TO or any other required schedule under the
    Exchange Act.
</TD>
</TR>

</TABLE>
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    <BR>
    S-65
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<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
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<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    No amortizing notes may be repurchased at the option of holders
    if the principal amount thereof has been accelerated, and such
    acceleration has not been rescinded, on or prior to the
    repurchase date (except in the case of an acceleration resulting
    from a default by us of the payment of the repurchase price with
    respect to such amortizing notes).
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: transparent">

    <B><FONT style="font-family: 'Times New Roman', Times">Events of
    Default</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    The following are &#147;Events of Default&#148; under the
    indenture:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    (i)&#160;the failure by K. Hovnanian and the Guarantors to pay
    the repurchase price of any amortizing notes when the same shall
    become due and payable;
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    (ii)&#160;the failure by K. Hovnanian and the Guarantors to pay
    any installment payment on any amortizing notes as and when the
    same shall become due and payable and continuance of such
    failure for a period of 30&#160;days;
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    (iii)&#160;the failure by Hovnanian to give notice of a
    fundamental change as described under &#147;Description of the
    Purchase Contracts&#160;&#151; Early Settlement Upon a
    Fundamental Change&#148; when due;
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    (iv)&#160;the failure by K. Hovnanian or any Guarantor to comply
    with any of its other agreements or covenants in, or provisions
    of, the amortizing notes, the senior subordinated guarantees or
    the indenture and such failure continues for the period and
    after the notice specified below;
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    (v)&#160;the acceleration of any Indebtedness (other than
    non-recourse indebtedness) of K. Hovnanian or any Guarantor that
    has an outstanding principal amount of $10&#160;million or more,
    individually or in the aggregate, and such acceleration does not
    cease to exist, or such Indebtedness is not satisfied, in either
    case within 30&#160;days after such acceleration;
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    (vi)&#160;the failure by K. Hovnanian or any Guarantor to make
    any principal or interest payment in an amount of
    $10&#160;million or more, individually or in the aggregate, in
    respect of Indebtedness (other than non-recourse indebtedness)
    of K. Hovnanian or any Guarantor within 30&#160;days of such
    principal or interest becoming due and payable (after giving
    effect to any applicable grace period set forth in the documents
    governing such Indebtedness);
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    (vii)&#160;a final judgment or judgments that exceed
    $10&#160;million or more, individually or in the aggregate, for
    the payment of money having been entered by a court or courts of
    competent jurisdiction against K. Hovnanian or any Guarantor and
    such judgment or judgments is not satisfied, stayed, annulled or
    rescinded within 60&#160;days of being entered;
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    (viii)&#160;certain events of bankruptcy, insolvency or
    reorganization of K. Hovnanian or any Guarantor that is a
    Significant Subsidiary;&#160;or
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    (ix)&#160;any senior subordinated guarantee of a Guarantor that
    is a Significant Subsidiary ceases to be in full force and
    effect (other than in accordance with the terms of such senior
    subordinated guarantee and the indenture) or is declared null
    and void and unenforceable or found to be invalid, or any
    Guarantor denies its liability under its senior subordinated
    guarantee (other than by reason of release of a Guarantor from
    its senior subordinated guarantee in accordance with the terms
    of such senior subordinated guarantee and the indenture).
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    A default as described in clause&#160;(iv) above will not be
    deemed an Event of Default until the trustee notifies us, or the
    holders of at least 25&#160;percent in principal amount of the
    then outstanding amortizing notes notify us and the trustee, of
    the default and we do not cure the Default within 60&#160;days
    after receipt of the notice. The notice must specify the
    default, demand that it be remedied and state that the notice is
    a &#147;Notice of Default.&#148; If such a default is cured
    within such time period, it ceases.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    The trustee will not be charged with knowledge of any default or
    Event of Default or knowledge of any cure of any default or
    Event of Default unless an authorized officer of the trustee
    with direct responsibility for the administration of the
    indenture has actual knowledge of such default or event of
    default or written notice of such default or Event of Default
    has been given to the trustee by us or any holder.
</DIV>
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    <BR>
    S-66
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<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
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<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    If an Event of Default (other than an Event of Default with
    respect to Hovnanian or K. Hovnanian described in
    clause&#160;(viii) above), shall have occurred and be continuing
    under the indenture, the trustee by notice to us, or the holders
    of at least 25&#160;percent in principal amount of the
    amortizing notes then outstanding by notice to us and the
    trustee, may declare all amortizing notes to be due and payable
    immediately; <I>provided</I> that the subordination provisions
    of the indenture and the amortizing notes may bar
    K.&#160;Hovnanian and the Guarantors from making timely payment.
    Upon such declaration of acceleration, the amounts due and
    payable on the amortizing notes will be due and payable
    immediately. An Event of Default under the indenture may also be
    an event of default under our Senior Indebtedness activating the
    subordination provisions for the benefit of the holders of our
    Senior Indebtedness. If an Event of Default with respect to
    Hovnanian or K. Hovnanian specified in clause&#160;(viii) above
    occurs, such an amount will <I>ipso facto </I>become and be
    immediately due and payable without any declaration, notice or
    other act on the part of the trustee, K. Hovnanian, any
    Guarantor or any Holder.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    The holders of a majority in principal amount of the amortizing
    notes then outstanding by written notice to the trustee and K.
    Hovnanian may waive any continuing default or Event of Default
    (other than any default or Event of Default in payment of
    installment payments) on the amortizing notes under the
    indenture. Holders of a majority in principal amount of the then
    outstanding amortizing notes may rescind an acceleration and its
    consequence (except an acceleration due to nonpayment of
    installment payments on the amortizing notes) if the rescission
    would not conflict with any judgment or decree, if all existing
    Events of Default (other than the non-payment of accelerated
    installment payments) have been cured or waived and if there has
    been deposited with the trustee a sum sufficient to pay its fees
    and expenses in connection with such Event of Default.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    The holders may not enforce the provisions of the indenture, the
    amortizing notes or the subsidiary guarantees except as provided
    in the indenture, including the subordination provisions.
    Subject to certain limitations, holders of a majority in
    principal amount of the amortizing notes then outstanding may
    direct the trustee in its exercise of any trust or power;
    <I>provided </I>that such direction does not conflict with the
    terms of the indenture.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    The trustee, within 90&#160;days after the occurrence of a
    default with respect to the amortizing notes, will mail to all
    holders, at our expense, notice of all such defaults known to
    the trustee, unless such defaults shall have been cured or
    waived before the giving of such notice. However, the trustee
    may withhold from the holders notice of any continuing default
    or Event of Default (except a default or Event of Default in
    payment of installment payments or repurchase price (if
    applicable)) if the trustee determines that withholding such
    notice is in the holders&#146; interest.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    Hovnanian is required to deliver to the trustee an annual
    statement regarding compliance with the indenture, and include
    in such statement, if any officer is aware of any default or
    Event of Default, a statement specifying such default or Event
    of Default and what action Hovnanian is taking or proposes to
    take with respect thereto. In addition, Hovnanian is required to
    deliver to the trustee prompt written notice of the occurrence
    of any default or Event of Default.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: transparent">

    <B><FONT style="font-family: 'Times New Roman', Times">Discharge
    and Defeasance of Indenture</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    Hovnanian, K. Hovnanian and the Guarantors may discharge their
    obligations under the amortizing notes, the senior subordinated
    guarantees and the indenture (with the exception of any
    obligations which expressly survives the terminations of the
    indenture) by irrevocably depositing in trust with the trustee
    money or U.S.&#160;government obligations sufficient to pay
    principal of, and interest on, the amortizing notes to maturity
    and the amortizing notes mature within one year, subject to
    meeting certain other conditions.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    The indenture will permit Hovnanian, K. Hovnanian and the
    Guarantors to terminate all of their respective obligations
    under the indenture with respect to the amortizing notes and the
    senior subordinated
</DIV>
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    <BR>
    S-67
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<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
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<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    guarantees, other than the obligation to pay interest on and the
    principal of the amortizing notes and certain other obligations
    (&#147;legal defeasance&#148;), at any time by:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    (1)&#160;depositing in trust with the trustee, under an
    irrevocable trust agreement, money or U.S.&#160;government
    obligations in an amount sufficient to pay principal of, and
    interest on, the amortizing notes to their maturity;&#160;and
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    (2)&#160;complying with certain other conditions, including
    delivery to the trustee of an opinion of counsel or a ruling
    received from the Internal Revenue Service, to the effect that
    holders will not recognize income, gain or loss for federal
    income tax purposes as a result of Hovnanian&#146;s exercise of
    such right and will be subject to federal income tax on the same
    amount and in the same manner and at the same times as would
    have been the case otherwise, which opinion of counsel is based
    upon a change in the applicable federal tax law since the Issue
    Date.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    In addition, the indenture will permit Hovnanian, K. Hovnanian
    and the Guarantors to terminate all of their obligations under
    the indenture with respect to certain covenants and Events of
    Default specified in the indenture, and the Guarantors will be
    released (&#147;covenant defeasance&#148;), at any time by:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    (1)&#160;depositing in trust with the trustee, under an
    irrevocable trust agreement, money or U.S.&#160;government
    obligations in an amount sufficient to pay principal of, and
    interest on, the amortizing notes to their maturity;&#160;and
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    (2)&#160;complying with certain other conditions, including
    delivery to the trustee of an opinion of counsel or a ruling
    received from the Internal Revenue Service, to the effect that
    holders will not recognize income, gain or loss for federal
    income tax purposes as a result of the exercise of such right
    and will be subject to federal income tax on the same amount and
    in the same manner and at the same times as would have been the
    case otherwise.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    Notwithstanding the foregoing, no discharge, legal defeasance or
    covenant defeasance described above will affect the following
    obligations to, or rights of, the holders of the amortizing
    notes:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    rights of registration of transfer and exchange of amortizing
    notes;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    rights of substitution of mutilated, defaced, destroyed, lost or
    stolen amortizing notes;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    rights of holders of the amortizing notes to receive payments of
    principal thereof and interest thereon, upon the original due
    dates therefor, but not upon acceleration;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    rights, obligations, duties and immunities of the trustee;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    rights of holders of amortizing notes that are beneficiaries
    with respect to property so deposited with the trustee payable
    to all or any of them;&#160;and
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    obligations of Hovnanian, K. Hovnanian and the Guarantors to
    maintain an office or agency in respect of the amortizing notes.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    Hovnanian, K. Hovnanian and the Guarantors may exercise the
    legal defeasance option with respect to the amortizing notes
    notwithstanding the prior exercise of the covenant defeasance
    option with respect to the amortizing notes. If Hovnanian, K.
    Hovnanian and the Guarantors exercise the legal defeasance
    option with respect to the amortizing notes, payment of the
    amortizing notes may not be accelerated due to an Event of
    Default with respect to the amortizing notes. If Hovnanian, K.
    Hovnanian and the Guarantors exercise the covenant defeasance
    option with respect to the amortizing notes, payment of the
    amortizing notes may not be accelerated due to an Event of
    Default with respect to the covenants to which such covenant
    defeasance is applicable. However, if acceleration were to occur
    by reason of another Event of Default, the realizable value at
    the acceleration date of the cash and U.S.&#160;government
    obligations in the defeasance trust could be less than the
    principal of and interest then due on the amortizing notes, in
    that the required deposit in the defeasance trust is based upon
    scheduled cash flow rather than market value, which will vary
    depending upon interest rates and other factors.
</DIV>
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<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: transparent">

    <B><FONT style="font-family: 'Times New Roman', Times">Limitations
    on Mergers, Consolidations and Sales of Assets</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    The indenture will provide that neither K. Hovnanian nor any
    Guarantor will consolidate or merge with or into, or sell,
    lease, convey or otherwise dispose of all or substantially all
    of its assets (including, without limitation, by way of
    liquidation or dissolution), or assign any of its obligations
    under the amortizing notes, the senior subordinated guarantees
    or the indenture (as an entirety or substantially as an entirety
    in one transaction or in a series of related transactions), to
    any person (in each case other than in a transaction in which
    Hovnanian, K. Hovnanian or a Guarantor is the survivor of a
    consolidation or merger, or the transferee in a sale, lease,
    conveyance or other disposition) unless:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    (1)&#160;the person formed by or surviving such consolidation or
    merger (if other than Hovnanian, K. Hovnanian or the Guarantor,
    as the case may be), or to which such sale, lease, conveyance or
    other disposition or assignment will be made (collectively, the
    &#147;Successor&#148;), is a corporation or other legal entity
    organized and existing under the laws of the United States or
    any state thereof or the District of Columbia, and the Successor
    assumes by supplemental indenture in a form reasonably
    satisfactory to the trustee all of the obligations of Hovnanian,
    K. Hovnanian or the Guarantor, as the case may be, under the
    amortizing notes or a senior subordinated guarantee, as the case
    may be, and the indenture;&#160;and
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    (2)&#160;immediately after giving effect to such transaction, no
    default or Event of Default has occurred and is continuing.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    The foregoing provisions shall not apply to:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 8%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    (a)&#160;a transaction involving the sale or disposition of
    capital stock of a Guarantor, or the consolidation or merger of
    a Guarantor, or the sale, lease, conveyance or other disposition
    of all or substantially all of the assets of a Guarantor, that
    in any such case results in such Guarantor being released from
    its senior subordinated guarantee as provided under
    &#147;&#151;&#160;The Senior Subordinated Guarantees&#148;
    above,&#160;or
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 8%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    (b)&#160;a transaction the purpose of which is to change the
    state of incorporation of Hovnanian, K. Hovnanian or any
    Guarantor.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: transparent">

    <B><FONT style="font-family: 'Times New Roman', Times">Governing
    Law</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    The indenture, the amortizing notes and senior subordinated
    guarantees, and any claim, controversy or dispute arising under
    or related to the indenture or amortizing notes and senior
    subordinated guarantees, for all purposes shall be governed by,
    and construed in accordance with, the laws of the State of New
    York.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: transparent">

    <B><FONT style="font-family: 'Times New Roman', Times">Unclaimed
    Funds</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    Any monies deposited with the trustee or any paying agent or
    then held by K. Hovnanian in trust for the payment of
    installment payments on the amortizing notes that remains
    unclaimed for two years after the date the payments became due
    and payable, shall, at K. Hovnanian&#146;s request, be repaid to
    K. Hovnanian or released from trust, as applicable, and the
    holder of the amortizing note shall thereafter look, as a
    general unsecured creditor, only to K. Hovnanian for payment
    thereof.
</DIV>
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<A name='Y89359112'>
<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: transparent">

    <B><FONT style="font-family: 'Times New Roman', Times">LIMITATION
    ON BENEFICIAL OWNERSHIP OF CLASS&#160;A COMMON STOCK, UNITS AND
    SEPARATE PURCHASE CONTRACTS</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: transparent">

    <B><FONT style="font-family: 'Times New Roman', Times">Class&#160;A
    Common Stock</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <I>As a Class&#160;A common stockholder upon settlement of your
    purchase contract, you will be subject to both our Rights Plan
    and the transfer restrictions of our amended Certificate of
    Incorporation. The following is a summary of the Rights Plan and
    the transfer restrictions of our amended Certificate of
    Incorporation but is not complete. We refer you to both the
    Rights Agreement and our amended Certificate of Incorporation
    which are filed as exhibits to the registration statement of
    which this prospectus forms a part.</I>
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: transparent">

    <B><I><FONT style="font-family: 'Times New Roman', Times">Rights
    Plan</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    In August 2008, we announced that the board of directors of
    Hovnanian adopted a shareholder rights plan designed to preserve
    shareholder value and the value of certain tax assets primarily
    associated with net loss carryforwards and built-in losses under
    Section&#160;382 of the Internal Revenue Code
    (&#147;NOLs&#148;), and on December&#160;5, 2008, our
    stockholders approved the Board&#146;s decision to adopt the
    shareholder rights plan. The rights plan is intended to act as a
    deterrent to any person or group acquiring 4.9% or more of our
    outstanding Class&#160;A common stock (any such person an
    &#147;Acquiring Person&#148;), without the approval of the
    Company&#146;s board of directors. Subject to the terms,
    provisions and conditions of the rights plan, if and when they
    become exercisable, each right would entitle its holder to
    purchase from the Company one ten-thousandth of a share of the
    Company&#146;s Series&#160;B Junior Preferred Stock for a
    purchase price of $35.00. The rights will not be exercisable
    until the earlier of (i)&#160;10 business days after a public
    announcement by us that a person or group has become an
    Acquiring Person and (ii)&#160;10 business days after the
    commencement of a tender or exchange offer by a person or group
    for 4.9% of the Class&#160;A common stock. If issued, each
    fractional share of Series&#160;B Junior Preferred Stock would
    give the stockholder approximately the same dividend, voting and
    liquidation rights as does one share of the Company&#146;s
    Class&#160;A common stock. However, prior to exercise, a right
    does not give its holder any rights as a stockholder of the
    Company, including without limitation any dividend, voting or
    liquidation rights. See &#147;Description of Capital
    Stock&#160;&#151; Rights Plan&#148; in the accompanying
    prospectus for more information.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: transparent">

    <B><I><FONT style="font-family: 'Times New Roman', Times">Certificate
    of Incorporation</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    In addition, on December&#160;5, 2008, our stockholders approved
    an amendment to our Certificate of Incorporation to restrict
    certain transfers of our stock in order to preserve the tax
    treatment of our NOLs under the Code. Subject to certain
    exceptions pertaining to pre-existing 5% stockholders and
    Class&#160;B stockholders, the transfer restrictions in the
    amended Certificate of Incorporation generally restrict any
    direct or indirect transfer (such as transfers of the
    Company&#146;s stock that result from the transfer of interests
    in other entities that own the Company&#146;s stock) if the
    effect would be to: (i)&#160;increase the direct or indirect
    ownership of the Company&#146;s stock by any person (or public
    group) from less than 5% to 5% or more of the Company&#146;s
    stock; (ii)&#160;increase the percentage of the Company&#146;s
    stock owned directly or indirectly by a person (or public group)
    owning or deemed to own 5% or more of the Company&#146;s stock;
    or (iii)&#160;create a new &#147;public group&#148; (as defined
    in the applicable Treasury regulations).
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: transparent">

    <I><FONT style="font-family: 'Times New Roman', Times">Consequences
    of Prohibited Transfers</FONT></I>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    In accordance with our amended Certificate of Incorporation, any
    direct or indirect transfer attempted in violation of the
    restrictions would be void as of the date of the purported
    transfer as to the purported transferee (or, in the case of an
    indirect transfer, the ownership of the direct owner of
    Class&#160;A Common Stock would terminate simultaneously with
    the transfer), and the purported transferee (or in the case of
    any indirect transfer, the direct owner) would not be recognized
    as the owner of the shares owned in violation of the
    restrictions for any purpose, including for purposes of voting
    and receiving dividends or other distributions in respect of
    such Class&#160;A Common Stock, or in the case of options,
    receiving Class&#160;A Common Stock in respect of their
    exercise. In this prospectus supplement, Class&#160;A Common
    Stock purportedly acquired in violation of the transfer
    restrictions is referred to as &#147;excess stock.&#148;
</DIV>
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<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    In addition to the purported transfer being void as of the date
    of the purported transfer, upon demand, the purported transferee
    must transfer the excess stock to our agent along with any
    dividends or other distributions paid with respect to such
    excess stock. Our agent is required to sell such excess stock in
    an arms&#146; length transaction (or series of transactions)
    that would not constitute a violation under the transfer
    restrictions. The net proceeds of the sale, together with any
    other distributions with respect to such excess stock received
    by our agent, after deduction of all costs incurred by the
    agent, will be distributed first to the purported transferee in
    an amount, if any, up to the cost (or in the case of gift,
    inheritance or similar transfer, the fair market value of the
    excess stock on the date of the violative transfer) incurred by
    the purported transferee to acquire such excess stock, and the
    balance of the proceeds, if any, will be distributed to a
    charitable beneficiary. If the excess stock is sold by the
    purported transferee, such person will be treated as having sold
    the excess stock on behalf of the agent, and will be required to
    remit all proceeds to our agent (except to the extent we grant
    written permission to the purported transferee to retain an
    amount not to exceed the amount such person otherwise would have
    been entitled to retain had our agent sold such shares).
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    To the extent permitted by law, any stockholder who knowingly
    violates the transfer restrictions will be liable for any and
    all damages suffered by us as a result of such violation,
    including damages resulting from a reduction in or elimination
    of the ability to utilize the NOLs and any professional fees
    incurred in connection with addressing such violation.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    With respect to any transfer of Class&#160;A Common Stock which
    does not involve a transfer of &#147;securities&#148; of the
    Company within the meaning of the General Corporation Law of the
    State of Delaware but which would cause any 5-percent
    stockholder to violate the transfer restrictions, the following
    procedure will apply in lieu of those described above. In such
    case, no such 5-percent stockholder shall be required to dispose
    of any interest that is not a security of the Company, but such
    5-percent stockholder
    <FONT style="white-space: nowrap">and/or</FONT> any
    person whose ownership of securities of the Company is
    attributed to such 5-percent stockholder will be deemed to have
    disposed of (and will be required to dispose of) sufficient
    securities, simultaneously with the transfer, to cause such
    5-percent stockholder not to be in violation of the transfer
    restrictions, and such securities will be treated as excess
    stock to be disposed of through the agent under the provisions
    summarized above, with the maximum amount payable to such
    5-percent stockholder or such other person that was the direct
    holder of such excess stock from the proceeds of sale by the
    agent being the fair market value of such excess stock at the
    time of the prohibited transfer.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: transparent">

    <B><I><FONT style="font-family: 'Times New Roman', Times">Exceptions</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    The board of directors will have the discretion to approve
    transfers that would otherwise be restricted by the amended
    Certificate of Incorporation and may exempt any person or group
    from triggering the dilutive effect of the Rights Plan.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: transparent">

    <B><FONT style="font-family: 'Times New Roman', Times">Units and
    Separate Purchase Contracts</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    In order to preserve the tax treatment of our NOLs under the
    Code, holders of Units (or separate purchase contracts) will be
    subject to both a beneficial ownership limitation and a
    settlement limitation as described below.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: transparent">

    <B><I><FONT style="font-family: 'Times New Roman', Times">Section
    382 Ownership Blocker</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    The purchase contract agreement governing the Units and separate
    purchase contracts provides that no person may purchase a Unit
    or separate purchase contract, and no beneficial owner of Units
    or separate purchase contracts will be permitted to purchase any
    additional Units or separate purchase contracts, if as a result
    of such acquisition, such person would Beneficially Own (as
    defined below) 4.9% or more of our Class&#160;A common stock
    (the &#147;Section 382 Ownership Blocker&#148;). To determine
    whether 4.9% or more of our Class&#160;A common stock is
    Beneficially Owned, such person shall: (1)&#160;take into
    account all shares of Class&#160;A common stock Beneficially
    Owned by such person, (2) assume that such person Beneficially
    Owns the number of shares of our Class A common stock issuable
    upon settlement of the Units or separate purchase contracts
    based on the maximum settlement rate and (3)&#160;deem the
    number of shares of Class A common stock calculated pursuant to
    clause&#160;(2) to be outstanding for purposes of the
    calculation with respect to such person,
</DIV>
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<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    in the case of clauses (2) and (3), without taking into account
    the Section 382 settlement blocker described below. In addition,
    in the event that a beneficial owner of Units or separate
    purchase contracts acquires shares or additional shares of Class
    A common stock, as applicable, such beneficial owner may not
    beneficially own Units or separate purchase contracts to the
    extent such acquisition of our Class A common stock causes such
    beneficial owner to Beneficially Own 4.9% or more of the
    outstanding Class A common stock, calculated for this purpose in
    the same manner as described in the immediately preceding
    sentence. For purposes of the Section 382 Ownership Blocker, the
    terms &#147;Beneficially Own&#148; and &#147;Beneficial
    Owner&#148; shall be as defined in the Rights Plan (for the
    avoidance of doubt, regardless of whether such Rights Plan is
    then in effect).
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: transparent">

    <I><FONT style="font-family: 'Times New Roman', Times">Consequences
    of Prohibited Purchases</FONT></I>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    Any direct or indirect acquisition attempted in violation of the
    Section 382 Ownership Blocker would be void as of the date of
    the purported acquisition (or, in the case of an indirect
    acquisition, the ownership of the direct owner of the Units (or
    separate purchase contracts) would terminate simultaneously with
    the acquisition), and the purported acquiree (or in the case of
    any indirect acquisition, the direct owner) would not be
    recognized as the owner of the Units (or separate purchase
    contracts) owned in violation of the restrictions for any
    purpose, including for purposes of receiving installment
    payments or other distributions in respect of such Units. In
    this prospectus supplement, Units (or separate purchase
    contracts) purportedly acquired in violation of the Section 382
    Ownership Blocker are referred to as &#147;excess Units&#148;
    and would be subject to divestiture in the same manner as
    &#147;excess stock&#148; described above under
    &#147;&#151;&#160;Class&#160;A Common Stock&#160;&#151;
    Certificate of Incorporation&#160;&#151; Consequences of
    Prohibited Transfers&#148;, including with respect to any
    installment payments on the amortizing notes comprising a
    component of the excess Units.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: transparent">

    <B><I><FONT style="font-family: 'Times New Roman', Times">Section
    382 Settlement Blocker</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    No beneficial owner of Units or separate purchase contracts will
    be entitled to receive shares of our Class&#160;A common stock
    upon settlement of the purchase contracts, whether on the
    mandatory settlement date, an early settlement date, a
    fundamental change early settlement date, an early mandatory
    settlement date or otherwise, and any delivery of shares of our
    Class&#160;A common stock upon settlement of such purchase
    contracts will be void and of no effect, to the extent (but only
    to the extent) that such receipt or delivery would cause such
    beneficial owner to become an Acquiring Person as such term is
    defined in the Rights Plan (for the avoidance of doubt,
    regardless of whether such Rights Plan is then in effect),
    unless such beneficial owner has received prior approval of our
    board of directors (the &#147;Section&#160;382 settlement
    blocker&#148;). If any delivery of shares of our Class&#160;A
    common stock owed to a beneficial owner upon settlement of
    purchase contracts is not made, in whole or in part, as a result
    of the Section&#160;382 settlement blocker, our obligation to
    make such delivery shall not be extinguished and we shall
    deliver such shares as promptly as practicable after such
    delivery would not result in such beneficial owner being an
    Acquiring Person (as such term is defined in the Rights Plan
    (for the avoidance of doubt regardless of whether such Rights
    Plan is then in effect) and such beneficial owner gives notice
    thereof to us. See &#147;&#151;&#160;Class&#160;A Common
    Stock&#160;&#151; Rights Plan&#148; above and &#147;Description
    of Capital Stock&#160;&#151; Rights Plan&#148; and
    &#147;Description of Capital Stock&#160;&#151; Transfer
    Restrictions in the Certificate of Incorporation&#148; of the
    accompanying prospectus for further information.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: transparent">

    <B><I><FONT style="font-family: 'Times New Roman', Times">Exceptions</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    The board of directors will have the discretion to approve
    transfers that would otherwise be restricted by the Section 382
    Ownership Blocker or a settlement that would otherwise be
    restricted by the Section 382 settlement blocker.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: transparent">

    <B><FONT style="font-family: 'Times New Roman', Times">Representation</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    Each purchaser of Units and separate purchase contracts, by
    accepting such Units or separate purchase contracts, agrees to
    the Section&#160;382 Ownership Blocker and Section 382
    settlement blocker and represents and warrants to the Company
    that it is in compliance with the ownership limitation of the
    Section&#160;382 Ownership Blocker. This representation and
    warranty is part of the consideration for issuance of the Units
    and separate purchase contacts in this offering.
</DIV>
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    <BR>
    S-72
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<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
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<A name='Y89359113'>
<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: transparent">

    <B><FONT style="font-family: 'Times New Roman', Times">BOOK-ENTRY
    PROCEDURES AND SETTLEMENT</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    The Units, the separate purchase contracts and the separate
    amortizing notes will initially be issued under a book-entry
    system in the form of global securities. We will register the
    global securities in the name of The Depository
    Trust&#160;Company, New York, New York, or DTC, or its nominee
    and will deposit the global securities with that depositary.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    Following the issuance of a global security in registered form,
    the depositary will credit the accounts of its participants with
    the Units, the separate purchase contracts and the separate
    amortizing notes, as the case may be, upon our instructions.
    Only persons who hold directly or indirectly through financial
    institutions that are participants in the depositary can hold
    beneficial interests in the global securities. Because the laws
    of some jurisdictions require certain types of purchasers to
    take physical delivery of such securities in definitive form,
    you may encounter difficulties in your ability to own, transfer
    or pledge beneficial interests in a global security.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    So long as the depositary or its nominee is the registered owner
    of a global security, we and the trustee will treat the
    depositary as the sole owner or holder of the Units, the
    separate purchase contracts and the separate amortizing notes,
    as the case may be. Therefore, except as set forth below, you
    will not be entitled to have Units, separate purchase contracts
    or separate amortizing notes registered in your name or to
    receive physical delivery of certificates representing the
    Units, the separate purchase contracts or the separate
    amortizing notes. Accordingly, you will have to rely on the
    procedures of the depositary and the participant in the
    depositary through whom you hold your beneficial interest in
    order to exercise any rights of a holder under the indenture or
    the purchase contract agreement, as the case may be. We
    understand that under existing practices, the depositary would
    act upon the instructions of a participant or authorize that
    participant to take any action that a holder is entitled to take.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    You may elect to hold interests in the global securities either
    in the United States through DTC or outside the United States
    through Clearstream Banking, soci&#233;t&#233; anonyme
    (&#147;Clearstream&#148;) or Euroclear Bank, S.A./N.V., or its
    successor, as operator of the Euroclear System,
    (&#147;Euroclear&#148;) if you are a participant of such system,
    or indirectly through organizations that are participants in
    such systems. Interests held through Clearstream and Euroclear
    will be recorded on DTC&#146;s books as being held by the
    U.S.&#160;depositary for each of Clearstream and Euroclear,
    which U.S.&#160;depositaries will in turn hold interests on
    behalf of their participants&#146; customers&#146; securities
    accounts.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    As long as the separate amortizing notes are represented by the
    global securities, K. Hovnanian will pay installments on those
    separate amortizing notes to or as directed by DTC as the
    registered holder of the global securities. Payments to DTC will
    be in immediately available funds by wire transfer. DTC,
    Clearstream or Euroclear, as applicable, will credit the
    relevant accounts of their participants on the applicable date.
    Neither K. Hovnanian nor the trustee will be responsible for
    making any payments to participants or customers of participants
    or for maintaining any records relating to the holdings of
    participants and their customers, and you will have to rely on
    the procedures of the depositary and its participants.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: transparent">

    <B><FONT style="font-family: 'Times New Roman', Times">Settlement</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    Secondary market trading between DTC participants will occur in
    the ordinary way in accordance with DTC rules and will be
    settled in immediately available funds using DTC&#146;s
    <FONT style="white-space: nowrap">Same-Day</FONT>
    Funds Settlement System. Secondary market trading between
    Clearstream customers
    <FONT style="white-space: nowrap">and/or</FONT>
    Euroclear participants will occur in the ordinary way in
    accordance with the applicable rules and operating procedures of
    Clearstream and Euroclear and will be settled using the
    procedures applicable to conventional eurobonds in immediately
    available funds.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    Cross-market transfers between persons holding directly or
    indirectly through DTC, on the one hand, and directly or
    indirectly through Clearstream customers or Euroclear
    participants, on the other, will be effected in DTC in
    accordance with DTC rules on behalf of the relevant European
    international clearing system by its U.S.&#160;depositary;
    however, such cross-market transactions will require delivery of
    instructions to the relevant European international clearing
    system by the counterparty in such system in accordance with its
    rules and
</DIV>
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    <BR>
    S-73
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<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
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<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    procedures and within its established deadlines (based on
    European time). The relevant European international clearing
    system will, if the transaction meets its settlement
    requirements, deliver instructions to the U.S.&#160;depositary
    to take action to effect final settlement on its behalf by
    delivering or receiving securities in DTC, and making or
    receiving payment in accordance with normal procedures for
    <FONT style="white-space: nowrap">same-day</FONT>
    funds settlement applicable to DTC. Clearstream customers and
    Euroclear participants may not deliver instructions directly to
    their respective U.S.&#160;depositaries.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    Because of time-zone differences, credits of securities received
    in Clearstream or Euroclear as a result of a transaction with a
    DTC participant will be made during subsequent securities
    settlement processing and dated the business day following the
    DTC settlement date. Such credits or any transactions in Units,
    separate purchase contracts or separate amortizing notes, as the
    case may be, that are settled during such processing will be
    reported to the relevant Clearstream customers or Euroclear
    participants on such business day. Cash received in Clearstream
    or Euroclear as a result of sales of Units, separate purchase
    contracts or separate amortizing notes, as the case may be, by
    or through a Clearstream customer or a Euroclear participant to
    a DTC participant will be received with value on the DTC
    settlement date but will be available in the relevant
    Clearstream or Euroclear cash account only as of the business
    day following settlement in DTC.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    Although DTC, Clearstream and Euroclear have agreed to the
    foregoing procedures in order to facilitate transfers of Units,
    separate purchase contracts and separate amortizing notes, as
    the case may be, among participants of DTC, Clearstream and
    Euroclear, they are under no obligation to perform or continue
    to perform such procedures and such procedures may be
    discontinued at any time.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: transparent">

    <B><FONT style="font-family: 'Times New Roman', Times">Definitive
    Securities and Paying Agents</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    A beneficial owner of book-entry securities represented by a
    global security may exchange the securities for definitive
    (paper) securities only if:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    (a)&#160;the depositary is unwilling or unable to continue as
    depositary for such global security and we are unable to find a
    qualified replacement for the depositary within 90&#160;days;
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    (b)&#160;at any time the depositary ceases to be a clearing
    agency registered under the Securities Exchange Act of
    1934;&#160;or
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    (c)&#160;an Event of Default with respect to the amortizing
    notes, or any failure on the part of Hovnanian or K. Hovnanian
    to observe or perform any covenant or agreement in the purchase
    contracts, has occurred and is continuing and such beneficial
    owner requests that its amortizing notes
    <FONT style="white-space: nowrap">and/or</FONT>
    purchase contracts, as the case may be, be issued in physical,
    certificated form.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    The global security will be exchangeable in whole for definitive
    securities in registered form, with the same terms and of an
    equal aggregate principal amount. Definitive Units, separate
    purchase contracts or separate amortizing notes, as the case may
    be, will be registered in the name or names of the person or
    persons specified by the depositary in a written instruction to
    the registrar of the securities. The depositary may base its
    written instruction upon directions it receives from its
    participants.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    If any of the events described above occurs, then the beneficial
    owners will be notified through the chain of intermediaries that
    definitive securities are available and notice will be published
    as described below under &#147;&#151;&#160;Notices.&#148;
    Beneficial owners of book-entry Units, separate purchase
    contracts or separate amortizing notes, as the case may be, will
    then be entitled (1)&#160;to receive physical delivery in
    certificated form of definitive Units, separate purchase
    contracts or separate amortizing notes, as the case may be,
    equal in aggregate amount of Units, separate purchase contracts
    or separate amortizing notes, as the case may be, to their
    beneficial interest and (2)&#160;to have the definitive
    securities registered in their names. Thereafter, the holders of
    the definitive Units, separate purchase contracts and separate
    amortizing notes, as the case may be, will be recognized as the
    &#147;holders&#148; of the Units, separate amortizing notes and
    separate purchase contracts for purposes of the purchase
    contract agreement and indenture, respectively.
</DIV>
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    <BR>
    S-74
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<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
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<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    Each of the purchase contract agreement and indenture provides
    for the replacement of a mutilated, lost, stolen or destroyed
    definitive security, so long as the applicant furnishes to us
    and the trustee such security or indemnity and such evidence of
    ownership as they may require.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    In the event definitive separate amortizing notes are issued,
    the holders thereof will be able to receive installment payments
    at the office of K. Hovnanian&#146;s paying agent. The final
    installment payment of a definitive separate amortizing note may
    be made only against surrender of the separate amortizing note
    to one of K. Hovnanian&#146;s paying agents. K. Hovnanian also
    has the option of making installment payments by mailing checks
    to the registered holders of the separate certificated
    amortizing notes. K. Hovnanian&#146;s paying agent is the
    corporate trust office of Wilmington Trust&#160;Company, located
    at Rodney Square North, 1100 North Market Street, Wilmington, DE
    19890.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    In the event definitive Units, separate purchase contracts or
    separate amortizing notes are issued, the holders thereof will
    be able to transfer their securities, in whole or in part, by
    surrendering such securities for registration of transfer at the
    office of Wilmington Trust&#160;Company listed above. A form of
    such instrument of transfer will be obtainable at the relevant
    office of Wilmington Trust&#160;Company. Upon surrender, we will
    execute, and the purchase contract agent and the trustee will
    authenticate and deliver, new Units, separate purchase contracts
    or separate amortizing notes, as the case may be, to the
    designated transferee in the amount being transferred, and a new
    security for any amount not being transferred will be issued to
    the transferor. Such new securities will be delivered free of
    charge at the relevant office of Wilmington Trust&#160;Company,
    as requested by the owner of such new Units, separate purchase
    contacts or separate amortizing notes. We will not charge any
    fee for the registration of transfer or exchange, except that we
    may require the payment of a sum sufficient to cover any
    applicable tax or other governmental charge payable in
    connection with the transfer.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: transparent">

    <B><FONT style="font-family: 'Times New Roman', Times">Notices</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    So long as the global securities are held on behalf of DTC or
    any other clearing system, notices to holders of securities
    represented by a beneficial interest in the global securities
    may be given by delivery of the relevant notice to DTC or the
    alternative clearing system, as the case may be. Any notice will
    be deemed to have been given on the date of publication or, if
    published more than once, on the date of the first publication.
</DIV>
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    <BR>
    S-75
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<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<!-- XBRL Pagebreak End -->

<A name='Y89359114'>
<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: transparent">

    <B><FONT style="font-family: 'Times New Roman', Times">CERTAIN
    UNITED STATES FEDERAL INCOME AND ESTATE<BR>
    TAX CONSEQUENCES</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    The following summary describes certain U.S.&#160;federal income
    tax and estate consequences for holders as of the date of this
    prospectus supplement, of the purchase, ownership and
    disposition of Units, amortizing notes, and the purchase
    contracts that are or may be the components of a Unit and shares
    of our Class&#160;A common stock acquired under a purchase
    contract.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    This summary deals only with Units, amortizing notes, purchase
    contracts, and Class&#160;A common stock held as capital assets
    by a holder who purchases the Units upon original issuance at
    their initial offering price. This summary does not constitute a
    detailed description of the U.S.&#160;federal income tax
    considerations applicable to you if you are subject to special
    treatment under the U.S.&#160;federal income tax laws, including
    if you are:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    a dealer in securities or currencies;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    a trader in securities that has elected the
    <FONT style="white-space: nowrap">mark-to-market</FONT>
    method of tax accounting for your securities;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    a regulated investment company;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    a real estate investment trust;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    a tax-exempt organization;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    an insurance company;
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="6%"></TD>
    <TD width="2%"></TD>
    <TD width="92%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    a person holding the Units, amortizing notes, purchase
    contracts, or Class&#160;A common stock as part of a hedging,
    integrated, conversion or constructive sale transaction or a
    straddle;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    a financial institution;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    a person liable for alternative minimum tax;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    a person who is an investor in a pass-through entity;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    a &#147;U.S.&#160;holder&#148; (as defined below) whose
    &#147;functional currency&#148; is not the U.S.&#160;dollar;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    a &#147;controlled foreign corporation&#148;;
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    a &#147;passive foreign investment company&#148;;&#160;or
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="6%"></TD>
    <TD width="2%"></TD>
    <TD width="92%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    a U.S.&#160;expatriate.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    If a partnership holds the Units, amortizing notes, purchase
    contracts, or Class&#160;A common stock, the tax treatment of a
    partner will generally depend upon the status of the partner and
    the activities of the partnership. If you are a partner of a
    partnership holding the Units, amortizing notes, purchase
    contracts, or Class&#160;A common stock, you should consult your
    tax advisors.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    The discussion below is based upon the provisions of the
    Internal Revenue Code of 1986, as amended (the
    &#147;Code&#148;), and regulations, rulings and judicial
    decisions thereunder as of the date hereof. Those authorities
    may be changed, perhaps retroactively, so as to result in
    U.S.&#160;federal income and estate tax consequences different
    from those discussed below.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    This summary does not address all aspects of U.S.&#160;federal
    income and estate taxes and does not deal with foreign, state,
    local or other tax considerations that may be relevant to
    holders in light of their personal circumstances. <B>If you are
    considering the purchase, ownership or disposition of the Units,
    amortizing notes, purchase contracts or Class&#160;A common
    stock, you should consult your own tax advisors concerning the
    U.S.&#160;federal income and estate tax consequences to you in
    light of your particular situation as well as any consequences
    arising under the laws of any other taxing jurisdiction.</B>
</DIV>
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    <BR>
    S-76
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<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
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<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: transparent">

    <B><FONT style="font-family: 'Times New Roman', Times">Characterization
    of Units and Amortizing Notes</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    Although there is no authority directly on point and therefore
    the issue is not entirely free from doubt, each Unit will be
    treated as an investment unit composed of two separate
    instruments for U.S.&#160;federal income tax purposes:
    (i)&#160;a purchase contract and (ii)&#160;an amortizing note.
    Under this treatment, a holder of Units will be treated as if it
    held each component of the Units for U.S.&#160;federal income
    tax purposes. By acquiring a Unit, you will agree to treat
    (i)&#160;a Unit as an investment unit composed of two separate
    instruments in accordance with its form and (ii)&#160;the
    amortizing notes as indebtedness of K. Hovnanian for
    U.S.&#160;tax purposes. If, however, the components of a Unit
    were treated as a single instrument, the U.S.&#160;federal
    income tax consequences could differ from the consequences
    described below. Specifically, if you are a
    &#147;U.S.&#160;Holder&#148; (as defined below under
    &#147;U.S.&#160;Holders&#148;) you could be required to
    recognize the entire amount of each installment payment on the
    amortizing notes, rather than merely the portion of such payment
    denominated as interest, as income. In addition, if you are a
    <FONT style="white-space: nowrap">&#147;non-U.S.&#160;holder&#148;</FONT>
    (as defined below under &#147;Non-U.S. Holders&#148;), payments
    of principal and interest made to you on the amortizing notes
    could be subject to U.S.&#160;withholding tax. Even if the
    components of a Unit are respected as separate instruments for
    U.S.&#160;federal income tax purposes, (i)&#160;the amortizing
    notes could be recharacterized as equity for U.S.&#160;federal
    income tax purposes, in which case payments of interest to
    <FONT style="white-space: nowrap">non-U.S.&#160;holders</FONT>
    on the amortizing notes could potentially be subject to
    U.S.&#160;withholding tax and (ii)&#160;the purchase contracts
    could be treated as Hovnanian&#146;s stock on the date of
    issuance, in which case the tax consequences of the purchase,
    ownership and disposition thereof would be substantially the
    same as the tax consequences described herein.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    The Units are complex financial instruments and no statutory,
    judicial or administrative authority directly addresses all
    aspects of the treatment of the Units or instruments similar to
    the Units for U.S.&#160;federal income tax purposes, and no
    assurance can be given that the Internal Revenue Service
    (&#147;IRS&#148;) will agree with the tax consequences described
    herein. As a result, the U.S.&#160;federal income tax
    consequences of the purchase, ownership and disposition of the
    Units are unclear. We have not sought any rulings concerning the
    treatment of the Units, and the tax consequences described
    herein are not binding on the IRS or the courts, either of which
    could disagree with the explanations or conclusions contained in
    this summary. Accordingly, you should consult your tax advisor
    regarding the consequences to you of the possible
    recharacterization of the components of a Unit as a single
    instrument. Unless stated otherwise, the remainder of this
    discussion assumes the characterization of the Units as two
    separate instruments.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: transparent">

    <B><FONT style="font-family: 'Times New Roman', Times">U.S.
    Holders</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    The following is a summary of certain U.S.&#160;federal income
    tax consequences that will apply to you if you are a
    U.S.&#160;holder of Units, amortizing notes, purchase contracts
    or Class&#160;A common stock.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    As used herein, the term &#147;U.S.&#160;holder&#148; means a
    beneficial owner of Units, amortizing notes, purchase contracts
    or Class&#160;A common stock that, for U.S.&#160;federal income
    tax purposes, is:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    an individual citizen or resident of the United States;
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="6%"></TD>
    <TD width="2%"></TD>
    <TD width="92%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    a corporation (or other entity treated as a corporation for
    U.S.&#160;federal income tax purposes) created or organized in
    or under the laws of the United States, any state thereof or the
    District of Columbia;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    an estate the income of which is subject to U.S.&#160;federal
    income taxation regardless of its source;&#160;or
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    a trust if it (1)&#160;is subject to the primary supervision of
    a court within the United States and one or more United States
    persons have the authority to control all substantial decisions
    of the trust or (2)&#160;has a valid election in effect under
    applicable U.S.&#160;Treasury regulations to be treated as a
    United&#160;States person.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: transparent">

    <B><I><FONT style="font-family: 'Times New Roman', Times">Units</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: transparent">

    <I><FONT style="font-family: 'Times New Roman', Times">Allocation
    of Purchase Price</FONT></I>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    Your acquisition of a Unit will be treated as an acquisition of
    the amortizing note and the purchase contract constituting the
    Unit and, by purchasing the Unit, you will be deemed to have
    agreed to such
</DIV>
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    <BR>
    S-77
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<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
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<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    treatment. In addition, we and you, by your acceptance of a
    beneficial ownership interest in the amortizing notes, agree to
    treat the notes as indebtedness of K. Hovnanian for all
    U.S.&#160;tax purposes. The remainder of this discussion assumes
    that a holder of a Unit will be treated as owning the amortizing
    note and the purchase contract.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    The purchase price of each Unit will be allocated between the
    amortizing note and the purchase contract in proportion to their
    respective fair market values at the time of purchase. Such
    allocation will establish your initial tax basis in the
    amortizing note and the purchase contract. We will report the
    initial fair market value of each amortizing note as $4.526049
    and the initial fair market value of the purchase contract as
    $20.473951, and, by purchasing a Unit, you will be deemed to
    agree to such allocation. This allocation is not, however,
    binding on the IRS. The remainder of this discussion assumes
    that this allocation of the purchase price will be respected.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: transparent">

    <I><FONT style="font-family: 'Times New Roman', Times">Sale,
    Exchange, or Other Disposition of Units</FONT></I>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    Upon a disposition of Units, you will be treated as having sold,
    exchanged or disposed of both the purchase contracts and the
    amortizing notes that constitute such Units and you will
    calculate gain or loss on the purchase contracts separately from
    the gain or loss on the amortizing notes. It is thus possible
    that you could recognize a capital gain on one component of a
    Unit but a capital loss on the other component of the Unit. You
    generally will have gain or loss equal to the difference between
    (i)&#160;the portion of your proceeds allocable to the purchase
    contract and the amortizing notes and (ii)&#160;your respective
    adjusted tax bases in the purchase contract and the amortizing
    notes. For purposes of determining gain or loss, your proceeds
    will not include any amount attributable to accrued and unpaid
    interest, which amount will be treated as ordinary interest
    income to the extent not previously included in income. Such
    gain or loss generally will be capital gain or loss. Capital
    gains of individuals derived in respect of assets held for more
    than one year are subject to tax at preferential rates. The
    deductibility of capital losses is subject to limitations.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: transparent">

    <B><I><FONT style="font-family: 'Times New Roman', Times">Notes</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: transparent">

    <I><FONT style="font-family: 'Times New Roman', Times">Payments
    of Interest</FONT></I>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    Stated interest on an amortizing note will be includible in your
    gross income as ordinary interest income at the time it is paid
    or at the time it accrues in accordance with your method of tax
    accounting, and payments on the notes other than stated interest
    will reduce your basis with respect to such amortizing note.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: transparent">

    <B><I><FONT style="font-family: 'Times New Roman', Times">Purchase
    Contracts</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: transparent">

    <I><FONT style="font-family: 'Times New Roman', Times">Acquisition
    of Class&#160;A Common Stock under a Purchase Contract</FONT></I>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    You generally will not recognize gain or loss on the purchase of
    Class&#160;A common stock under a purchase contract, except with
    respect to any cash paid in lieu of a fractional share of
    Class&#160;A common stock. Your aggregate initial tax basis in
    the Class&#160;A common stock acquired under a purchase contract
    should equal your tax basis in the purchase contract less any
    such tax basis allocable to the fractional share. The holding
    period for Class&#160;A common stock received under a purchase
    contract will commence on the day after the Class&#160;A common
    stock is acquired.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: transparent">

    <I><FONT style="font-family: 'Times New Roman', Times">Constructive
    Distributions and Dividends</FONT></I>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    You might be treated as receiving a constructive distribution
    from us if (i)&#160;the fixed settlement rates are adjusted and
    as a result of such adjustment your proportionate interest in
    our assets or earnings and profits is increased and
    (ii)&#160;the adjustment is not made pursuant to a bona fide,
    reasonable anti-dilution formula. An adjustment in the fixed
    settlement rates would not be considered made pursuant to such a
    formula if the adjustment were made to compensate you for
    taxable distributions with respect to our Class&#160;A common
    stock (for example, if we increase the cash dividend on our
    Class&#160;A common stock). Certain of the possible settlement
    rate adjustments (including, without limitation, adjustments in
    respect of taxable dividends to holders of our Class&#160;A
    common stock and as discussed in &#147;Description of the
    Purchase Contracts&#160;&#151; Early Settlement Upon a
    Fundamental Change&#148;) may not qualify as being pursuant to a
    bona fide reasonable
</DIV>
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    <BR>
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<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
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<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    adjustment formula. Thus, under certain circumstances, an
    increase in the fixed settlement rates might give rise to a
    constructive distribution you even though you would not receive
    any cash related thereto. In addition, in certain situations,
    you might be treated as receiving a constructive distribution if
    we fail to adjust the fixed settlement rates. Any constructive
    distribution will be taxable as a dividend, return of capital,
    or capital gain in accordance with the earnings and profits
    rules described below.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: transparent">

    <B><I><FONT style="font-family: 'Times New Roman', Times">Class&#160;A
    Common Stock Acquired under a Purchase Contract</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: transparent">

    <I><FONT style="font-family: 'Times New Roman', Times">Distributions</FONT></I>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    Any distribution on our Class&#160;A common stock paid out of
    our current or accumulated earnings and profits (as determined
    for U.S.&#160;federal income tax purposes) will constitute a
    dividend and will be includible in income by you when received.
    Any such dividend will be eligible for the dividends-received
    deduction if you are an otherwise qualifying corporate holder
    that meets the holding period and other requirements for the
    dividends-received deduction. For tax years beginning before
    2013, non-corporate U.S.&#160;holders that receive dividends on
    our Class&#160;A common stock are eligible for a reduced rate of
    taxation if certain requirements are satisfied. Any
    distributions on our Class&#160;A common stock in excess of our
    current and accumulated earnings and profits will first be
    applied to reduce your tax basis in the Class&#160;A common
    stock, and any amount in excess of your tax basis will be
    treated as gain from the sale or exchange of your Class&#160;A
    common stock, as described immediately below.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: transparent">

    <I><FONT style="font-family: 'Times New Roman', Times">Sale,
    Exchange or Other Taxable Disposition</FONT></I>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    Upon a sale, exchange, or other taxable disposition of our
    Class&#160;A common stock, you will recognize capital gain or
    loss in an amount equal to the difference between the amount
    realized and your adjusted tax basis in the Class&#160;A common
    stock.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: transparent">

    <B><I><FONT style="font-family: 'Times New Roman', Times">Information
    Reporting and Backup Withholding</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    In general, information reporting requirements may apply to
    payments on the amortizing notes, the purchase contracts and
    Class&#160;A common stock made to you and to the proceeds of the
    sale or other disposition of such instruments, unless you are an
    exempt recipient. Backup withholding may apply to such payments
    if you fail to provide a taxpayer identification number, a
    certification of exempt status, or have been notified by the IRS
    that you are subject to backup withholding (and such
    notification has not been withdrawn).
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    Any amounts withheld under the backup withholding rules will be
    allowed as a refund or a credit against your U.S.&#160;federal
    income tax liability provided the required information is
    furnished to the IRS.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: transparent">

    <B><FONT style="font-family: 'Times New Roman', Times"><FONT style="white-space: nowrap">Non-U.S.</FONT>
    Holders</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    The following discussion applies only to
    <FONT style="white-space: nowrap">non-U.S.&#160;holders.</FONT>
    As used herein, a
    <FONT style="white-space: nowrap">&#147;non-U.S.&#160;holder&#148;</FONT>
    means a beneficial owner of Units, amortizing notes, purchase
    contracts or Class&#160;A common stock that is neither a
    U.S.&#160;holder nor a partnership. As discussed above under
    &#147;&#151;&#160;Characterization of Units and Amortizing
    Notes&#148;, this discussion assumes that a Unit is treated as
    two separate instruments and different tax consequences would
    apply if the Unit was treated as a single instrument.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: transparent">

    <B><I><FONT style="font-family: 'Times New Roman', Times">U.S.
    Federal Withholding Tax</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    A 30% U.S.&#160;federal withholding tax will not apply to any
    payment to you of principal or interest on the amortizing notes,
    provided that you meet the following requirements of the
    portfolio interest exemption:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    you do not actually (or constructively) own 10% or more of the
    total combined voting power of all of K. Hovnanian&#146;s voting
    stock within the meaning of the Code and the Treasury
    regulations;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    you are not a controlled foreign corporation that is related to
    K. Hovnanian through stock ownership;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    you are not a bank whose receipt of interest on the amortizing
    notes is described in section&#160;881(c)(3)(A) of the
    Code;&#160;and
</TD>
</TR>

</TABLE>
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    <BR>
    S-79
</DIV><!-- END PAGE WIDTH -->
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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#Y89359tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<!-- XBRL Pagebreak End -->

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    (a)&#160;you provide your name and address on an IRS
    <FONT style="white-space: nowrap">Form&#160;W-8BEN</FONT>
    (or other applicable form), and certify, under penalties of
    perjury, that you are not a United States person, or (b)&#160;if
    you hold your Units or amortizing notes through certain foreign
    intermediaries, you satisfy the certification requirements of
    applicable U.S.&#160;Treasury regulations. Special certification
    requirements apply to certain
    <FONT style="white-space: nowrap">non-U.S.&#160;holders</FONT>
    that are pass-through entities rather than individuals.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    If you cannot satisfy the requirements described above, payments
    of interest made to you will be subject to the 30%
    U.S.&#160;federal withholding tax, unless you provide us with a
    properly executed:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    IRS
    <FONT style="white-space: nowrap">Form&#160;W-8BEN</FONT>
    (or other applicable form) claiming an exemption from, or
    reduction in the rate of, withholding under the benefit of an
    applicable tax treaty;&#160;or
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    IRS
    <FONT style="white-space: nowrap">Form&#160;W-8ECI</FONT>
    (or other applicable form) stating that interest paid on the
    amortizing notes is not subject to withholding tax because it is
    effectively connected with your conduct of a trade or business
    in the United States.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    The 30% U.S.&#160;federal withholding tax will not apply to any
    gain that you realize on the sale, exchange, or other
    disposition of the Units, amortizing notes, purchase contracts
    or Class&#160;A common stock acquired under the purchase
    contract. In certain circumstances, however, withholding tax may
    apply to the proceeds you receive on the sale, exchange, or
    other disposition of the Units or purchase contracts (see
    &#147;&#151;&#160;Foreign Investment in Real Property Tax
    Act&#148; below).
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    We will generally withhold tax at a 30% rate on dividends paid
    on Class&#160;A common stock acquired under a purchase contract
    and any deemed dividends resulting from certain adjustments, or
    failure to make adjustments, to the settlement rate of the
    purchase contracts (see &#147;&#151;&#160;U.S.&#160;Holders
    &#151;&#160;Settlement of the Purchase Contracts&#160;&#151;
    Constructive Distributions and Dividends&#148;) or such lower
    rate as may be specified by an applicable income tax treaty.
    However, dividends that are effectively connected with the
    conduct of a trade or business by the
    <FONT style="white-space: nowrap">non-U.S.&#160;holder</FONT>
    within the United States and, where a tax treaty applies, are
    attributable to a U.S.&#160;permanent establishment of the
    <FONT style="white-space: nowrap">non-U.S.&#160;holder,</FONT>
    are not subject to the withholding tax, provided the relevant
    certification requirements are satisfied, but instead are
    subject to U.S.&#160;federal income tax, as described below.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    A
    <FONT style="white-space: nowrap">non-U.S.&#160;holder</FONT>
    of a Unit, Class&#160;A common stock or a purchase contract who
    wishes to claim the benefit of an applicable treaty rate for
    dividends or deemed dividends will be required to satisfy
    certain certification and disclosure requirements described in
    the portfolio interest discussion above. A
    <FONT style="white-space: nowrap">non-U.S.&#160;holder</FONT>
    eligible for a reduced rate of U.S.&#160;withholding tax on
    payments pursuant to an income tax treaty may obtain a refund of
    any excess amounts withheld by filing an appropriate claim for
    refund with the IRS.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: transparent">

    <B><I><FONT style="font-family: 'Times New Roman', Times">U.S.
    Federal Income Tax</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    If you are engaged in a trade or business in the United States
    and interest on the amortizing notes or dividends on our
    Class&#160;A common stock (or deemed dividends on the purchase
    contracts) are effectively connected with the conduct of that
    trade or business, you will be subject to U.S.&#160;federal
    income tax on the interest or dividends on a net income basis
    (although exempt from the 30% withholding tax), in the same
    manner as if you were a United States person as defined under
    the Code. Certain certification and disclosure requirements must
    be complied with in order for effectively connected income to be
    exempt from withholding. In addition, if you are a foreign
    corporation, you may be subject to a branch profits tax equal to
    30% (or lower applicable treaty rate) of your earnings and
    profits for the taxable year, subject to adjustments, that are
    effectively connected with the conduct by you of a trade or
    business in the United States. For this purpose, interest on the
    amortizing notes or dividends on our Class&#160;A common stock
    and deemed dividends on the purchase contracts will be included
    in earnings and profits.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    Upon a disposition of Units, you will be treated as having sold,
    exchanged or disposed of both the purchase contracts and the
    amortizing notes that constitute such Units. Any gain realized
    on the disposition of
</DIV>
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    <BR>
    S-80
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<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
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<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    an amortizing note, purchase contract or share of Class&#160;A
    common stock generally will not be subject to U.S.&#160;federal
    income tax unless:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    that gain or income is effectively connected with the conduct of
    a trade or business by you in the United States;&#160;or
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    you are an individual who is present in the United States for
    183&#160;days or more in the taxable year of that disposition,
    and certain other conditions are met;&#160;or
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    in the case of a purchase contract or our Class&#160;A common
    stock, we are or have been a &#147;United States real property
    holding corporation&#148; for U.S.&#160;federal income tax
    purposes (see the discussion below under
    &#147;&#151;&#160;Foreign Investment in Real Property Tax
    Act&#148;).
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    An individual
    <FONT style="white-space: nowrap">non-U.S.&#160;holder</FONT>
    described in the first bullet above will be subject to tax on
    the net gain derived from the sale under regular graduated
    U.S.&#160;federal income tax rates. An individual
    <FONT style="white-space: nowrap">non-U.S.&#160;holder</FONT>
    described in the second bullet point above will be subject to a
    flat 30% tax on the gain derived from the sale, which may be
    offset by U.S.&#160;source capital losses (even though the
    individual is not considered a resident of the United States).
    If a
    <FONT style="white-space: nowrap">non-U.S.&#160;holder</FONT>
    that is a foreign corporation falls under the first bullet
    above, it will be subject to tax on its gain under regular
    graduated U.S.&#160;federal income tax rates and, in addition,
    may be subject to the branch profits tax equal to 30% of its
    effectively connected earnings and profits or at such lower rate
    as may be specified by an applicable income tax treaty.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: transparent">

    <B><I><FONT style="font-family: 'Times New Roman', Times">Foreign
    Investment in Real Property Tax Act</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    We believe we are currently a &#147;United States real property
    holding corporation&#148; for U.S.&#160;federal income tax
    purposes. So long as our Class&#160;A common stock continues to
    be regularly traded on an established securities market in the
    United States, (i)&#160;you will not be subject to
    U.S.&#160;federal income tax on the disposition of our
    Class&#160;A common stock if you have not held (at any time
    during the shorter of the five year period preceding the date of
    disposition or your holding period) more than 5% (actually or
    constructively) of our total outstanding Class&#160;A common
    stock, and (ii)&#160;you will not be subject to
    U.S.&#160;federal income tax on the disposition of our purchase
    contracts (x)&#160;if, as a result of the Units being deemed
    regularly traded, the purchase contracts are considered to be
    regularly traded, and on the date acquired by you, the purchase
    contracts held by you had a fair market value less than or equal
    to 5% of the fair market value of all the purchase contracts, or
    (y)&#160;if the purchase contracts are not considered to be
    regularly traded, on the date such purchase contracts were
    acquired by you the purchase contracts had a fair market value
    less than or equal to 5% of the fair market value of our
    Class&#160;A common stock.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    If you exceed the limits described in the above paragraph, you
    could be subject to U.S.&#160;federal income tax at the regular
    graduated rates generally applicable to U.S.&#160;holders on
    gain, if any, recognized in connection with your disposition of
    our Class&#160;A common stock or Units (to the extent allocable
    to the purchase contracts), as applicable, or with respect to
    certain distributions on our Class&#160;A common stock or the
    Units (to the extent allocable to the purchase contracts) in
    excess of our current and accumulated earnings and profits. If
    you are subject to the tax described in the preceding sentence,
    you will be required to file a U.S.&#160;federal income tax
    return with the IRS.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    In addition, if the purchase contracts are not considered to be
    regularly traded, you will be subject to withholding upon a
    disposition of our purchase contracts if on the date acquired by
    you, the purchase contracts had a fair market value greater than
    5% of the fair market value of our Class&#160;A common stock.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: transparent">

    <B><I><FONT style="font-family: 'Times New Roman', Times">U.S.
    Federal Estate Tax</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    Your estate will not be subject to U.S.&#160;federal estate tax
    on the amortizing notes beneficially owned by you at the time of
    your death, provided that any payments made to you on the
    amortizing notes would be eligible for exemption from the 30%
    withholding tax under the rules described above under
    &#147;&#151;&#160;U.S.&#160;Federal Withholding Tax&#148;
    without regard to the certification requirement described in the
    fourth bullet point regarding portfolio interest.
</DIV>
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    <BR>
    S-81
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<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<!-- XBRL Pagebreak End -->

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    Class&#160;A common stock acquired under a purchase contract and
    owned by you at the time of your death will be subject to
    U.S.&#160;federal estate tax unless an applicable estate tax
    treaty provides otherwise. The purchase contract owned by you at
    the time of your death may be subject to U.S.&#160;federal
    estate tax unless an applicable estate tax treaty provides
    otherwise.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: transparent">

    <B><I><FONT style="font-family: 'Times New Roman', Times">Information
    Reporting and Backup Withholding</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    The amount of the interest and dividends (including constructive
    dividends) paid to you and the tax withheld with respect to such
    interest and dividends, regardless of whether withholding was
    required, must be reported annually to the IRS and to you.
    Copies of the information returns reporting the amount of such
    interest and dividends and the amount of withholding may also be
    made available to the tax authority in the country in which you
    reside under the provisions of an applicable income tax treaty.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    In general, no backup withholding will be required regarding
    payments on amortizing notes or Class&#160;A common stock that
    we make to you, provided that we do not have actual knowledge or
    reason to know that you are a United States person and you have
    delivered the statement described above under
    &#147;&#151;&#160;U.S.&#160;Federal Withholding Tax.&#148;
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    In addition, no information reporting or backup withholding will
    be required regarding the proceeds of the sale of Units,
    amortizing notes, purchase contracts, or Class&#160;A common
    stock made within the United States or conducted through certain
    U.S.&#160;financial intermediaries if:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    the payor (1)&#160;receives the statement described above and
    (2)&#160;does not have actual knowledge or reason to know that
    you are a United States person;&#160;or
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    you otherwise establish an exemption.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    Backup withholding may apply if you fail to comply with
    applicable U.S.&#160;information reporting or certification
    requirements.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    Any amounts withheld under the backup withholding rules will be
    allowed as a refund or a credit against your U.S.&#160;federal
    income tax liability provided the required information is
    furnished to the IRS.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: transparent">

    <B><I><FONT style="font-family: 'Times New Roman', Times">Additional
    Withholding Requirements</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    Under recently enacted legislation, the relevant withholding
    agent may be required to withhold 30% of any dividends and the
    proceeds of a sale of our Class&#160;A common stock paid after
    December&#160;31, 2012 to (i)&#160;a foreign financial
    institution unless such foreign financial institution agrees to
    verify, report and disclose its U.S.&#160;accountholders and
    meets certain other specified requirements or (ii)&#160;a
    non-financial foreign entity that is the beneficial owner of the
    payment unless such entity certifies that it does not have any
    substantial U.S.&#160;owners or provides the name, address and
    taxpayer identification number of each substantial
    U.S.&#160;owner and such entity meets certain other specified
    requirements.
</DIV>
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<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <BR>
    S-82
</DIV><!-- END PAGE WIDTH -->
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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#Y89359tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<!-- XBRL Pagebreak End -->

<A name='Y89359115'>
<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: transparent">

    <B><FONT style="font-family: 'Times New Roman', Times">CERTAIN
    ERISA CONSIDERATIONS</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    The following is a summary of certain considerations associated
    with the purchase of the Units by employee benefit plans that
    are subject to Title&#160;I of the U.S.&#160;Employee Retirement
    Income Security Act of 1974, as amended (&#147;ERISA&#148;),
    plans, individual retirement accounts and other arrangements
    that are subject to Section&#160;4975 of the Code or provisions
    under any federal, state, local,
    <FONT style="white-space: nowrap">non-U.S.&#160;or</FONT>
    other laws or regulations that are similar to such provisions of
    the Code or ERISA (collectively, &#147;Similar Laws&#148;), and
    entities whose underlying assets are considered to include
    &#147;plan assets&#148; of any such plan, account or arrangement
    (each, a &#147;Plan&#148;).
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: transparent">

    <B><FONT style="font-family: 'Times New Roman', Times">General
    Fiduciary Matters</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    ERISA and the Code impose certain duties on persons who are
    fiduciaries of a Plan subject to Title&#160;I of ERISA or
    Section&#160;4975 of the Code (an &#147;ERISA Plan&#148;) and
    prohibit certain transactions involving the assets of an ERISA
    Plan and its fiduciaries or other interested parties. Under
    ERISA and the Code, any person who exercises any discretionary
    authority or control over the administration of such an ERISA
    Plan or the management or disposition of the assets of such an
    ERISA Plan, or who renders investment advice for a fee or other
    compensation to such an ERISA Plan, is generally considered to
    be a fiduciary of the ERISA Plan.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    In considering an investment in the Units of a portion of the
    assets of any Plan, a fiduciary should determine whether the
    investment is in accordance with the documents and instruments
    governing the Plan and the applicable provisions of ERISA, the
    Code or any Similar Law relating to a fiduciary&#146;s duties to
    the Plan including, without limitation, the prudence,
    diversification, delegation of control and prohibited
    transaction provisions of ERISA, the Code and any other
    applicable Similar Laws.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: transparent">

    <B><FONT style="font-family: 'Times New Roman', Times">Prohibited
    Transaction Issues</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    Section&#160;406 of ERISA and Section&#160;4975 of the Code
    prohibit ERISA Plans from engaging in specified transactions
    involving plan assets with persons or entities who are
    &#147;parties in interest,&#148; within the meaning of ERISA, or
    &#147;disqualified persons,&#148; within the meaning of
    Section&#160;4975 of the Code, unless an exemption is available.
    A party in interest or disqualified person who engaged in a
    non-exempt prohibited transaction may be subject to excise taxes
    and other penalties and liabilities under ERISA and the Code. In
    addition, the fiduciary of the ERISA Plan that engaged in such a
    non-exempt prohibited transaction may be subject to penalties
    and liabilities under ERISA and the Code. The acquisition
    <FONT style="white-space: nowrap">and/or</FONT>
    holding of the Units by an ERISA&#160;Plan with respect to which
    the Company, an Underwriter, or a Guarantor is considered a
    party in interest or a disqualified person may constitute or
    result in a direct or indirect prohibited transaction under
    Section&#160;406 of ERISA
    <FONT style="white-space: nowrap">and/or</FONT>
    Section&#160;4975 of the Code, unless the investment is acquired
    and is held in accordance with an applicable statutory, class or
    individual prohibited transaction exemption. In this regard, the
    U.S.&#160;Department of Labor (the &#147;DOL&#148;) has issued
    prohibited transaction class exemptions, or &#147;PTCEs,&#148;
    that may apply to the acquisition and holding of the Units.
    These class exemptions include, without limitation,
    <FONT style="white-space: nowrap">PTCE&#160;84-14</FONT>
    respecting transactions determined by independent qualified
    professional asset managers,
    <FONT style="white-space: nowrap">PTCE&#160;90-1</FONT>
    respecting insurance company pooled separate accounts,
    <FONT style="white-space: nowrap">PTCE&#160;91-38</FONT>
    respecting bank collective investment funds,
    <FONT style="white-space: nowrap">PTCE&#160;95-60</FONT>
    respecting life insurance company general accounts and
    <FONT style="white-space: nowrap">PTCE&#160;96-23</FONT>
    respecting transactions determined by in-house asset managers.
    In addition, Section&#160;408(b)(17) of ERISA and
    Section&#160;4975(d)(20) of the Code provide relief from the
    prohibited transaction provisions of ERISA and Section&#160;4975
    of the Code for certain transactions, provided that neither the
    issuer of the securities nor any of its affiliates (directly or
    indirectly) have or exercise any discretionary authority or
    control or render any investment advice with respect to the
    assets of any ERISA Plan involved in the transaction and
    provided further that the ERISA Plan pays no more than adequate
    consideration in connection with the transaction. There can be
    no assurance that all of the conditions of any such exemptions
    will be satisfied.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    Because of the foregoing, the Units should not be purchased or
    held by any person investing &#147;plan assets&#148; of any
    Plan, unless such purchase and holding will not constitute a
    non-exempt prohibited transaction under ERISA and the Code or
    similar violation of any applicable Similar Laws.
</DIV>
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    <BR>
    S-83
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<H5 align="left" style="page-break-before:always"><A HREF="#Y89359tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<!-- XBRL Pagebreak End -->

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: transparent">

    <B><FONT style="font-family: 'Times New Roman', Times">Representation</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    Accordingly, by acceptance of a Unit, each purchaser and
    subsequent transferee of a Unit will be deemed to have
    represented and warranted that either (i)&#160;no portion of the
    assets used by such purchaser or transferee to acquire and hold
    the Units constitutes assets of any Plan or (ii)&#160;the
    purchase and holding of the Units by such purchaser or
    transferee will not constitute a non-exempt prohibited
    transaction under Section&#160;406 of ERISA or Section&#160;4975
    of the Code or similar violation under any applicable Similar
    Laws.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    The foregoing discussion is general in nature and is not
    intended to be all inclusive. Due to the complexity of these
    rules and the penalties that may be imposed upon persons
    involved in non-exempt prohibited transactions, it is
    particularly important that fiduciaries, or other persons
    considering purchasing the Units on behalf of, or with the
    assets of, any Plan, consult with their counsel regarding the
    potential applicability of ERISA, Section&#160;4975 of the Code
    and any Similar Laws to such investment and whether an exemption
    would be applicable to the purchase and holding of the Units.
</DIV>
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    <BR>
    S-84
</DIV><!-- END PAGE WIDTH -->
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<H5 align="left" style="page-break-before:always"><A HREF="#Y89359tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<!-- XBRL Pagebreak End -->

<A name='Y89359116'>
<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: transparent">

    <B><FONT style="font-family: 'Times New Roman', Times">UNDERWRITING</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    Credit Suisse Securities (USA) LLC, Citigroup Global Markets
    Inc. and J.P.&#160;Morgan Securities LLC are acting as the
    representatives of the underwriters below. Subject to the terms
    and conditions stated in the underwriting agreement dated the
    date of this prospectus supplement, each underwriter named below
    has severally agreed to purchase, and we have agreed to sell to
    that underwriter, the principal amount of Units set forth
    opposite the underwriter&#146;s name.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE border="0" width="100%" align="center" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
<!-- Table Width Row BEGIN -->
<TR style="font-size: 1pt" valign="bottom">
    <TD width="89%">&nbsp;</TD>	<!-- colindex=01 type=maindata -->
    <TD width="2%">&nbsp;</TD>	<!-- colindex=02 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=02 type=lead -->
    <TD width="7%" align="right">&nbsp;</TD>	<!-- colindex=02 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=02 type=hang1 -->
</TR>
<!-- Table Width Row END -->
<!-- TableOutputHead -->
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom">
    <B>Number<BR>
    </B>
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="left" valign="bottom">
<DIV style="border-bottom: 1px solid #000000; width: 1%; padding-bottom: 1px">
    <B>Underwriter</B>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="2" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>of Units</B>
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR style="line-height: 3pt; font-size: 1pt">
<TD>&nbsp;
</TD>
</TR>
<!-- TableOutputBody -->
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Credit Suisse Securities (USA) LLC
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    700,000
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Citigroup Global Markets Inc.
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    700,000
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    J.P. Morgan Securities LLC
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    700,000
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="top">
<DIV style="text-indent: -54pt; margin-left: 54pt">
    Merrill Lynch, Pierce, Fenner&#160;&#038; Smith<BR>
    Incorporated
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    300,000
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Deutsche Bank Securities Inc.
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    300,000
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Wells Fargo Securities, LLC
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    300,000
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="font-size: 1pt">
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD style="border-top: 1px solid #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="background: #CCEEFF">
<TD nowrap align="left" valign="top">
<DIV style="text-indent: -10pt; margin-left: 20pt">
    Total
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    3,000,000
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom" style="font-size: 1pt">
<TD>
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD style="border-top: 3px double #000000">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
</TR>
</TABLE>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">

</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    The underwriting agreement provides that the obligations of the
    underwriters to purchase the Units included in this offering are
    subject to approval of legal matters by counsel and to other
    conditions. The underwriters are obligated to purchase all of
    the Units (other than those covered by the over-allotment option
    described below) if they purchase any of the Units.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    The completion of the Notes Offering is contingent on the
    completion of each of the Common Stock Offering and this
    offering, but the completion of the Common Stock Offering and
    this offering are not contingent on the completion of the Notes
    Offering or each other.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    Units sold by the underwriters to the public will initially be
    offered at the initial public offering price set forth on the
    cover of this prospectus supplement. Any Units sold by the
    underwriters to securities dealers may be sold at a discount
    from the initial public offering price not to exceed $0.45 per
    Unit. If all the Units are not sold at the initial offering
    price, the underwriters may change the offering price and the
    other selling terms.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    If the underwriters sell more Units than the total number set
    forth in the table above, we have granted to the underwriters an
    option, exercisable for 30&#160;days from the date of this
    prospectus supplement, to purchase up to 450,000 additional
    Units at the public offering price less the underwriting
    discount. The underwriters may exercise the option solely for
    the purpose of covering over-allotments, if any, in connection
    with this offering. To the extent the option is exercised, each
    underwriter must purchase a number of Units approximately
    proportionate to that underwriter&#146;s initial purchase
    commitment. Any Units issued or sold under the option will be
    issued and sold on the same terms and conditions as the other
    Units that are the subject of this offering.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    We, our executive officers and directors have agreed that, for a
    period of 90&#160;days from the date of this prospectus
    supplement, we and they will not, without the prior written
    consent of Credit Suisse Securities (USA) LLC and
    J.P.&#160;Morgan Securities LLC, offer, sell, contract to sell,
    pledge or otherwise dispose of or hedge any shares or any
    securities convertible into or exchangeable for our Class&#160;A
    common stock, subject to certain specified exceptions. Credit
    Suisse Securities (USA) LLC and J.P.&#160;Morgan Securities LLC
    in their sole discretion may release any of the securities
    subject to these
    <FONT style="white-space: nowrap">lock-up</FONT>
    agreements at any time without notice.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    We will apply for listing of the Units on the New York Stock
    Exchange, subject to satisfaction of its minimum listing
    standard with respect to the Units; however, no assurance can be
    provided that the Units will be approved for listing. The Units
    are a new issue of securities and there is currently no trading
    market for the Units. Each underwriter has advised us that it
    intends to make a market in the Units, but no underwriter is
    obligated to do so. Any underwriter may discontinue any market
    making in the Units at any time in its sole discretion without
    notice. Accordingly, we cannot assure you that a liquid market
    will develop for the Units,
</DIV>
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    <BR>
    S-85
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<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<!-- XBRL Pagebreak End -->

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    that you will be able to sell your Units at a particular time or
    that the prices you receive when you sell will be favorable.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    The following table shows the underwriting discounts and
    commissions that we are to pay to the underwriters in connection
    with this offering. These amounts are shown assuming both no
    exercise and full exercise of the underwriters&#146;
    over-allotment option.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE border="0" width="100%" align="center" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent"><!-- TABLE 01 -->
<!-- Table Width Row BEGIN -->
<TR style="font-size: 1pt" valign="bottom">
    <TD width="77%">&nbsp;</TD>	<!-- colindex=01 type=maindata -->
    <TD width="2%">&nbsp;</TD>	<!-- colindex=02 type=gutter -->
    <TD width="4%" align="right">&nbsp;</TD>	<!-- colindex=02 type=lead -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=02 type=body -->
    <TD width="4%" align="left">&nbsp;</TD>	<!-- colindex=02 type=hang1 -->
    <TD width="3%">&nbsp;</TD>	<!-- colindex=03 type=gutter -->
    <TD width="4%" align="right">&nbsp;</TD>	<!-- colindex=03 type=lead -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=03 type=body -->
    <TD width="4%" align="left">&nbsp;</TD>	<!-- colindex=03 type=hang1 -->
</TR>
<!-- Table Width Row END -->
<!-- TableOutputHead -->
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="7" align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>Paid by us</B>
</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>No Exercise</B>
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>Full Exercise</B>
</TD>
</TR>
<TR style="line-height: 3pt; font-size: 1pt">
<TD>&nbsp;
</TD>
</TR>
<!-- TableOutputBody -->
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Per Unit
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    0.75
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    0.75
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Total
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    2,250,000
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    $
</TD>
<TD nowrap align="right" valign="bottom">
    2,587,500
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
</TABLE>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">

</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    We estimate that our total expenses for this offering (excluding
    underwriting discounts and commissions) will be approximately
    $300,000.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    In connection with the offering, the underwriters may purchase
    and sell Units in the open market. Purchases and sales in the
    open market may include short sales, purchases to cover short
    positions, which may include purchases pursuant to the
    over-allotment option, and stabilizing purchases. Short sales
    involve secondary market sales by the underwriters of a greater
    number of Units than they are required to purchase in the
    offering. &#147;Covered&#148; short sales are sales of Units in
    an amount up to the number of Units represented by the
    underwriters&#146; over-allotment option. &#147;Naked&#148;
    short sales are sales of Units in an amount in excess of the
    number of Units represented by the underwriters&#146;
    over-allotment option.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    Covering transactions involve purchases of Units either pursuant
    to the over-allotment option or in the open market after the
    distribution has been completed in order to cover short
    positions. To close a naked short position, the underwriters
    must purchase Units in the open market after the distribution
    has been completed. A naked short position is more likely to be
    created if the underwriters are concerned that there may be
    downward pressure on the price of the Units in the open market
    after pricing that could adversely affect investors who purchase
    in the offering. To close a covered short position, the
    underwriters must purchase Units in the open market after the
    distribution has been completed or must exercise the
    over-allotment option. In determining the source of Units to
    close the covered short position, the underwriters will
    consider, among other things, the price of Units available for
    purchase in the open market as compared to the price at which
    they may purchase Units through the over-allotment option.
    Stabilizing transactions involve bids to purchase Units so long
    as the stabilizing bids do not exceed a specified maximum.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    Purchases to cover short positions and stabilizing purchases, as
    well as other purchases by the underwriters for their own
    accounts, may have the effect of preventing or retarding a
    decline in the market price of the Units. They may also cause
    the price of the Units to be higher than the price that would
    otherwise exist in the open market in the absence of these
    transactions. The underwriters may conduct these transactions on
    the New York Stock Exchange, in the
    <FONT style="white-space: nowrap">over-the-counter</FONT>
    market or otherwise. If the underwriters commence any of these
    transactions, they may discontinue them at any time.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    The underwriters and their affiliates have performed investment
    banking, commercial banking and advisory services for us from
    time to time for which they have received customary fees and
    expenses. The underwriters may, from time to time, engage in
    transactions with and perform services for us in the ordinary
    course of their business. An affiliate of Deutsche Bank
    Securities Inc. is the trustee under our various existing
    indentures. An affiliate of Merrill Lynch, Pierce,
    Fenner&#160;&#038; Smith Incorporated has purchased, and may in
    the future purchase, mortgage loans from us or in the secondary
    mortgage market in the ordinary course of business. Disputes,
    which could include litigation, may arise in connection with
    requests for loan repurchases
    <FONT style="white-space: nowrap">and/or</FONT> make
    whole payments with respect to such mortgage loans. In addition,
    Credit Suisse Securities (USA) LLC is acting as the dealer
    manager in connection with the Tender Offers and certain of the
    underwriters or their affiliates may hold Tender Offer Notes and
    tender such notes in the Tender Offers or we may redeem them in
    the Redemptions. Certain of the underwriters in this offering
    are also underwriters in the Concurrent Offerings.
</DIV>
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    <BR>
    S-86
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<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
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<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    We have agreed to indemnify the underwriters against certain
    liabilities, including liabilities under the Securities Act, or
    to contribute to payments the underwriters may be required to
    make because of any of those liabilities.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    In relation to each Member State of the European Economic Area
    which has implemented the Prospectus Directive (each, a
    &#147;Relevant Member State&#148;) an offer to the public of any
    Units described by this prospectus supplement may not be made in
    that Relevant Member State, except that an offer to the public
    in that Relevant Member State of any Units offered by this
    prospectus supplement may be made at any time under the
    following exemptions under the Prospectus Directive, if they
    have been implemented in that Relevant Member State:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    (a)&#160;to any legal entity which is a qualified investor as
    defined in the Prospectus Directive;
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    (b)&#160;to fewer than 100 or, if the Relevant Member State has
    implemented the relevant provision of the 2010 PD Amending
    Directive, 150, natural or legal persons (other than qualified
    investors as defined in the Prospectus Directive), as permitted
    under the Prospectus Directive, subject to obtaining the prior
    consent of the representatives for any such offer;&#160;or
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    (c)&#160;in any other circumstances falling within
    Article&#160;3(2) of the Prospectus Directive, provided that no
    such offer of Units shall result in a requirement for the
    publication by us or any underwriter of a prospectus pursuant to
    Article&#160;3 of the Prospectus Directive.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    For the purposes of this provision, the expression an
    &#147;offer to the public&#148; in relation to any Units in any
    Relevant Member State means the communication in any form and by
    any means of sufficient information on the terms of the offer
    and any Units to be offered so as to enable an investor to
    decide to purchase any Units, as the same may be varied in that
    Member State by any measure implementing the Prospectus
    Directive in that Member State, the expression &#147;Prospectus
    Directive&#148; means Directive 2003/71/EC (and amendments
    thereto, including the 2010 PD Amending Directive, to the extent
    implemented in the Relevant Member State), and includes any
    relevant implementing measure in the Relevant Member State, and
    the expression &#147;2010 PD Amending Directive&#148; means
    Directive 2010/73/EU.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    Each underwriter has represented and agreed that:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    (a)&#160;it has only communicated or caused to be communicated
    and will only communicate or cause to be communicated an
    invitation or inducement to engage in investment activity
    (within the meaning of Section&#160;21 of the Financial Services
    and Markets Act 2000 (the &#147;FSMA&#148;)) received by it in
    connection with the issue or sale of the Units in circumstances
    in which Section&#160;21(1) of the FSMA does not apply to
    us;&#160;and
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 4%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    (b)&#160;it has complied and will comply with all applicable
    provisions of the FSMA with respect to anything done by it in
    relation to the Units in, from or otherwise involving the United
    Kingdom.
</DIV>
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    <BR>
    S-87
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<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
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<A name='Y89359117'>
<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: transparent">

    <B><FONT style="font-family: 'Times New Roman', Times">LEGAL
    MATTERS</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    The validity of the Units being offered hereby is being passed
    upon for us by Simpson Thacher&#160;&#038; Bartlett LLP, New
    York, New York. Certain legal matters relating to the offering
    of the Units will be passed upon and for the Underwriters by
    Davis Polk&#160;&#038; Wardwell LLP, New York, New York. Simpson
    Thacher&#160;&#038; Bartlett LLP will rely, as to matters of
    California law, on the opinion of Peter S. Reinhart,&#160;Esq.,
    Senior Vice President and General Counsel for the Company.
</DIV>

<A name='Y89359118'>
<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: transparent">

    <B><FONT style="font-family: 'Times New Roman', Times">EXPERTS</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    The consolidated financial statements as of October&#160;31,
    2010 and 2009, and for the years then ended incorporated by
    reference in this prospectus supplement from the Company&#146;s
    Amendment No.&#160;1 to the Annual Report on
    <FONT style="white-space: nowrap">Form&#160;10-K/A</FONT>
    for the year ended October&#160;31, 2010 and the effectiveness
    of Hovnanian&#146;s internal control over financial reporting as
    of October&#160;31, 2010, have been audited by
    Deloitte&#160;&#038; Touche LLP, an independent registered
    public accounting firm, as stated in their reports, which are
    incorporated herein by reference. Such consolidated financial
    statements are incorporated herein by reference in reliance upon
    the reports of such firm given on their authority as experts in
    accounting and auditing.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    The consolidated financial statements of Hovnanian for the year
    ended October&#160;31, 2008 appearing in Hovnanian&#146;s
    Amendment No.&#160;1 to the Annual Report
    <FONT style="white-space: nowrap">(Form&#160;10-K/A)&#160;for</FONT>
    the year ended October&#160;31, 2010 have been audited by
    Ernst&#160;&#038; Young LLP, independent registered public
    accounting firm, as set forth in their report thereon, included
    therein, and incorporated herein by reference. Such consolidated
    financial statements are incorporated herein by reference in
    reliance upon such report given on the authority of such firm as
    experts in accounting and auditing.
</DIV>

<A name='Y89359119'>
<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: transparent">

    <B><FONT style="font-family: 'Times New Roman', Times">AVAILABLE
    INFORMATION</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    We are subject to the informational requirements of the
    Securities Exchange Act of 1934, as amended, and file reports,
    proxy statements and other information with the SEC. You may
    read, free of charge, and copy, at the prescribed rates, any
    reports, proxy statements and other information at the
    SEC&#146;s public reference room at 100&#160;F&#160;Street,
    N.E., Washington,&#160;D.C. 20549. You may obtain information on
    the operation of the public reference room by calling the SEC at
    <FONT style="white-space: nowrap">1-800-SEC-0330.</FONT>
    Copies of such material also can be obtained by mail from the
    Public Reference Section of the SEC, at 100&#160;F&#160;Street,
    N.E., Washington,&#160;D.C. 20549, at the prescribed rates. The
    SEC also maintains a website that contains reports, proxy and
    information statements and other information. The website
    address is:
    <FONT style="white-space: nowrap">http://www.sec.gov.</FONT>
    Hovnanian&#146;s Class&#160;A common stock is listed on the New
    York Stock Exchange, and reports, proxy statements and other
    information also can be inspected at the offices of the New York
    Stock Exchange, 20&#160;Broad Street, New York, New York 10005.
</DIV>

<A name='Y89359120'>
<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: transparent">

    <B><FONT style="font-family: 'Times New Roman', Times">INCORPORATION
    OF CERTAIN DOCUMENTS BY REFERENCE</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    We incorporate by reference the documents listed below filed
    under Section&#160;13(a), 13(c), 14 or 15(d) of the Exchange
    Act. Information furnished under Item&#160;2.02 or
    Item&#160;7.01 of our Current Reports on
    <FONT style="white-space: nowrap">Form&#160;8-K</FONT>
    is not incorporated by reference in this prospectus.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    Hovnanian has filed the following document with the SEC and this
    document is incorporated herein by reference:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    Amendment No.&#160;1 to Annual Report on
    <FONT style="white-space: nowrap">Form&#160;10-K/A</FONT>
    for fiscal year ended October&#160;31, 2010, Registration File
    <FONT style="white-space: nowrap">No.&#160;1-8551;</FONT>
    and
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    The portions of Hovnanian&#146;s definitive proxy statement on
    Schedule 14A that were deemed &#147;filed&#148; with the SEC
    under the Exchange Act on January&#160;31, 2011.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    All documents filed by Hovnanian pursuant to Section&#160;13(a),
    13(c), 14 or 15(d) of the Exchange Act subsequent to the date of
    this prospectus supplement and prior to the termination of the
    offering made by this prospectus supplement are to be
    incorporated herein by reference. Any statement contained in a
    document
</DIV>
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    <BR>
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<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
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<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    incorporated or deemed to be incorporated by reference herein
    shall be deemed to be modified or superseded for purposes of
    this prospectus to the extent that a statement contained herein
    or in any other subsequently filed document which also is
    incorporated or deemed to be incorporated by reference herein
    modifies or supersedes such statement. Any such statement so
    modified or superseded shall not be deemed, except as so
    modified or superseded, to constitute a part of this prospectus.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    Hovnanian will provide without charge to each person, including
    any beneficial owner, to whom a copy of this prospectus
    supplement is delivered, upon the written or oral request of
    such person, a copy of any or all of the information
    incorporated by reference in this prospectus supplement, other
    than exhibits to such information (unless such exhibits are
    specifically incorporated by reference into the information that
    this prospectus incorporates). Requests for such copies should
    be directed to Brad O&#146;Connor, Vice President and Corporate
    Controller, Hovnanian Enterprises, Inc., 110&#160;West Front
    Street, P.O.&#160;Box&#160;500, Red Bank,
    New&#160;Jersey&#160;07701 (telephone:
    <FONT style="white-space: nowrap">(732)&#160;747-7800).</FONT>
</DIV>
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    <BR>
    S-89
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<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
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<DIV style="width: 94%; margin-left: 3%"><!-- BEGIN PAGE WIDTH -->

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <B>PROSPECTUS</B>
</DIV>

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <IMG src="y89359b5y8863900a.gif" alt="(HOVNANIAN ENTERPRISES, INC.)"><B>
    </B>
</DIV>

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <B><FONT style="font-size: 14pt">$500,000,000</FONT></B>
</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <B><FONT style="font-size: 24pt">Hovnanian Enterprises,
    Inc.</FONT></B>
</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <B><FONT style="font-size: 13pt">Preferred Stock<BR>
    Class&#160;A Common Stock<BR>
    Depositary Shares<BR>
    Warrants to Purchase Preferred Stock<BR>
    Warrants to Purchase Class&#160;A Common Stock<BR>
    Warrants to Purchase Depositary Shares<BR>
    Debt Securities<BR>
    Warrants to Purchase Debt Securities<BR>
    Stock Purchase Contracts<BR>
    Stock Purchase Units<BR>
    Units</FONT></B>
</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <B><FONT style="font-size: 24pt">K. Hovnanian Enterprises,
    Inc.</FONT></B>
</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <B><FONT style="font-size: 13pt">Debt Securities<BR>
    Warrants to Purchase Debt Securities<BR>
    Units</FONT></B>
</DIV>

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>

<DIV style="margin-top: 1pt; font-size: 1pt">&nbsp;</DIV>

<CENTER style="font-size: 1pt; width: 15%; border-bottom: 1pt solid #000000"></CENTER>

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>

<DIV style="margin-top: 1pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 3%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    We, Hovnanian Enterprises, Inc., may offer and sell from time to
    time, in one or more series:
</DIV>

<DIV style="margin-top: 1pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="2%"></TD>
    <TD width="95%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    Preferred Stock,
</TD>
</TR>


<TR style="line-height: 1pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    Class&#160;A Common Stock (along with Preferred Stock Purchase
    Rights),
</TD>
</TR>


<TR style="line-height: 1pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    Depositary Shares,
</TD>
</TR>


<TR style="line-height: 1pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    debt securities consisting of notes, debentures or other
    evidences of indebtedness, which may be senior debt securities,
    senior subordinated debt securities or subordinated debt
    securities, and which may be convertible into, or exchangeable
    or exercisable for, any of the securities referred to herein,
</TD>
</TR>


<TR style="line-height: 1pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    warrants to purchase our Preferred Stock, our Class&#160;A
    Common Stock, our Depositary Shares or our debt securities,
</TD>
</TR>


<TR style="line-height: 1pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    Stock Purchase Contracts,
</TD>
</TR>


<TR style="line-height: 1pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    Stock Purchase Units,&#160;and
</TD>
</TR>


<TR style="line-height: 1pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    Units, comprised of two or more of any of the securities
    referred to herein, in any combination;
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 2pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    together or separately, in amounts, at prices and on terms that
    will be determined at the time of the offering.
</DIV>

<DIV style="margin-top: 1pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 3%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    Our wholly-owned subsidiary, K. Hovnanian Enterprises, Inc., may
    offer and sell from time to time, in one or more series:
</DIV>

<DIV style="margin-top: 1pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="3%"></TD>
    <TD width="2%"></TD>
    <TD width="95%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    debt securities, consisting of notes, debentures or other
    evidences of indebtedness, which may be senior debt securities,
    senior subordinated debt securities or subordinated debt
    securities, which in each case will be fully and unconditionally
    guaranteed by Hovnanian Enterprises, Inc., and which may be
    convertible into, or exchangeable or exercisable for, any of the
    other securities referred to herein,
</TD>
</TR>


<TR style="line-height: 1pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    warrants to purchase K. Hovnanian Enterprises, Inc. debt
    securities, which will be fully and unconditionally guaranteed
    by Hovnanian Enterprises, Inc.,&#160;and
</TD>
</TR>


<TR style="line-height: 1pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    Units, comprised of two or more of any of the securities
    referred to herein, in any combination;
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 2pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    together or separately, in amounts, at prices and on terms that
    will be determined at the time of the offering.
</DIV>

<DIV style="margin-top: 1pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 3%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    Hovnanian Enterprises, Inc. debt securities or warrants or the
    debt securities or warrants issued by K. Hovnanian Enterprises,
    Inc. may be guaranteed by substantially all of our wholly-owned
    subsidiaries and may be issued either separately, or together
    with, upon conversion of, or in exchange for, other securities.
</DIV>

<DIV style="margin-top: 1pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 3%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    We may offer and sell the securities directly to you, through
    agents, underwriters or dealers. The prospectus supplement for
    each offering will describe in detail the plan of distribution
    for that offering and will set forth the names of any agents,
    dealers or underwriters involved in the offering and any
    applicable fees, commissions or discount arrangements. The net
    proceeds we expect to receive from sales will be set forth in
    the prospectus supplement.
</DIV>

<DIV style="margin-top: 1pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 3%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    This prospectus describes some of the general terms that may
    apply to these securities. The specific terms of the securities
    to be offered, and any other information relating to a specific
    offering, will be set forth in a post-effective amendment to the
    registration statement of which this prospectus is a part or in
    a supplement to this prospectus.
</DIV>

<DIV style="margin-top: 1pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 12pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <B>Investing in our securities involves risks. See &#147;Risk
    Factors&#148; beginning on page&#160;4 of this prospectus and in
    the documents that we incorporate by reference.</B>
</DIV>

<DIV style="margin-top: 1pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 3%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    Our common stock is traded on the New York Stock Exchange under
    the symbol &#147;HOV.&#148;
</DIV>

<DIV style="margin-top: 1pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 3%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    Neither the Securities and Exchange Commission nor any state
    securities commission has approved or disapproved of these
    securities or passed upon the accuracy or adequacy of this
    prospectus. Any representation to the contrary is a criminal
    offense.
</DIV>

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>

<DIV style="margin-top: 1pt; font-size: 1pt">&nbsp;</DIV>

<CENTER style="font-size: 1pt; width: 15%; border-bottom: 1pt solid #000000"></CENTER>

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>

<DIV style="margin-top: 1pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    The date of the prospectus is January&#160;28, 2011.
</DIV>
<!-- XBRL Pagebreak Begin -->

<P align="left" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">

</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="width: 94%; margin-left: 3%"><!-- BEGIN PAGE WIDTH -->
<!-- XBRL Pagebreak End -->
</DIV><!-- END PAGE WIDTH -->
<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->

<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: transparent">

    <B><FONT style="font-family: 'Times New Roman', Times">TABLE OF
    CONTENTS</FONT></B>
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>
<DIV align="left">
<!-- TOC -->
</DIV>

<DIV align="left">
<A name="Y88639tocpage"></A>
</DIV>

<TABLE border="0" width="100%" align="center" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
<!-- Table Width Row BEGIN -->
<TR style="font-size: 1pt" valign="bottom">
    <TD width="97%">&nbsp;</TD>	<!-- colindex=01 type=maindata -->
    <TD width="2%">&nbsp;</TD>	<!-- colindex=02 type=gutter -->
    <TD width="1%">&nbsp;</TD>	<!-- colindex=02 type=quadleft -->
    <TD width="1%">&nbsp;</TD>	<!-- colindex=02 type=maindata -->
    <TD width="1%">&nbsp;</TD>	<!-- colindex=02 type=quadright -->
</TR>
<!-- Table Width Row END -->
<!-- TableOutputHead -->
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>Page</B>
</TD>
</TR>
<TR style="line-height: 3pt; font-size: 1pt">
<TD>&nbsp;
</TD>
</TR>
<!-- TableOutputBody -->
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <A HREF='#Y88639101'>About This Prospectus</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    1
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <A HREF='#Y88639102'>Forward-Looking Statements</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    1
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <A HREF='#Y88639103'>Available Information</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    2
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <A HREF='#Y88639104'>Incorporation of Certain Documents By
    Reference</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    3
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <A HREF='#Y88639105'>The Company</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    3
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <A HREF='#Y88639106'>Risk Factors</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    4
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <A HREF='#Y88639107'>Ratios of Earnings to Fixed Charges and Earnings
    to Combined Fixed Charges and Preferred Stock Dividends</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    4
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <A HREF='#Y88639108'>Use of Proceeds</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    5
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <A HREF='#Y88639109'>Description of Debt Securities</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    5
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <A HREF='#Y88639110'>Description of Capital Stock</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    17
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <A HREF='#Y88639111'>Description of Depositary Shares</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    20
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <A HREF='#Y88639112'>Description of Stock Purchase Contracts and Stock
    Purchase Units</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    24
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <A HREF='#Y88639113'>Description of Units</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    24
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <A HREF='#Y88639114'>Description of Warrants</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    24
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <A HREF='#Y88639115'>Plan of Distribution</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    25
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <A HREF='#Y88639116'>Legal Matters</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    26
</TD>
<TD>&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD nowrap align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    <A HREF='#Y88639117'>Experts</A>
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD>&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    27
</TD>
<TD>&nbsp;
</TD>
</TR>
</TABLE>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">

</DIV>

<DIV align="left">
<!-- /TOC -->
</DIV>
<!-- XBRL Pagebreak Begin -->

<P align="left" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">

</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#Y88639tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<!-- XBRL Pagebreak End -->

<A name='Y88639101'>
<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: transparent">

    <B><FONT style="font-family: 'Times New Roman', Times">ABOUT
    THIS PROSPECTUS</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    This prospectus is part of a registration statement we filed
    with the Securities and Exchange Commission, or the
    &#147;Commission&#148;, using the &#147;shelf&#148; registration
    process. Under the shelf registration process, using this
    prospectus, together with a prospectus supplement, we may sell
    from time to time any combination of the securities described in
    this prospectus in one or more offerings. This prospectus
    provides you with a general description of the securities that
    may be offered. Each time we sell securities pursuant to this
    prospectus, we will provide a prospectus supplement that will
    contain specific information about the terms of the securities
    being offered. A prospectus supplement may include a discussion
    of any risk factors or other special considerations applicable
    to those securities or to us. The prospectus supplement may also
    add to, update or change information contained in this
    prospectus and, accordingly, to the extent inconsistent, the
    information in this prospectus is superseded by the information
    in the prospectus supplement. You should read this prospectus,
    any applicable prospectus supplement and the additional
    information incorporated by reference in this prospectus
    described below under &#147;Available Information&#148; and
    &#147;Incorporation of Certain Documents by Reference&#148;
    before making an investment in our securities.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    This prospectus contains summaries of certain provisions
    contained in some of the documents described herein, but
    reference is made to the actual documents for complete
    information. All of the summaries are qualified in their
    entirety by the actual documents. Copies of the documents
    referred to herein have been filed, or will be filed or
    incorporated by reference as exhibits to the registration
    statement of which this prospectus is a part, and you may obtain
    copies of those documents as described below under
    &#147;Available Information.&#148;
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <B>Neither the delivery of this prospectus nor any sale made
    under it implies that there has been no change in our affairs or
    that the information in this prospectus is correct as of any
    date after the date of this prospectus. You should not assume
    that the information in this prospectus, including any
    information incorporated in this prospectus by reference, the
    accompanying prospectus supplement or any free writing
    prospectus prepared by us, is accurate as of any date other than
    the date on the front of those documents. Our business,
    financial condition, results of operations and prospects may
    have changed since that date.</B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    We have not authorized anyone to provide any information other
    than that contained or incorporated by reference in this
    prospectus, a prospectus supplement or in any free writing
    prospectus prepared by or on behalf of us or to which we have
    referred you. We take no responsibility for, and can provide no
    assurance as to the reliability of, any other information that
    others may give you. We are not making an offer to sell
    securities in any jurisdiction where the offer or sale of such
    securities is not permitted.
</DIV>

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>

<CENTER style="font-size: 1pt; width: 18%; border-bottom: 1pt solid #000000"></CENTER>

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    Unless otherwise stated or context otherwise requires, all
    references in this prospectus to:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    &#147;K. Hovnanian&#148; are to K. Hovnanian Enterprises, Inc.,
    a California corporation;&#160;and
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    &#147;Hovnanian,&#148; &#147;us,&#148; &#147;we,&#148;
    &#147;our&#148; or &#147;Company&#148; are to Hovnanian
    Enterprises, Inc., a Delaware corporation, together with its
    consolidated subsidiaries, including K. Hovnanian.
</TD>
</TR>

</TABLE>

<A name='Y88639102'>
<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: transparent">

    <B><FONT style="font-family: 'Times New Roman', Times">FORWARD-LOOKING
    STATEMENTS</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    All statements in this prospectus that are not historical facts
    should be considered as &#147;Forward Looking Statements&#148;
    within the meaning of the &#147;Safe Harbor&#148; provisions of
    the Private Securities Litigation Reform Act of 1995. Such
    statements involve known and unknown risks, uncertainties and
    other factors that may cause actual results, performance or
    achievements of the Company to be materially different from any
    future results, performance or achievements expressed or implied
    by the forward-looking statements. Although we believe that our
    plans, intentions and expectations reflected in, or suggested
    by, such forward-looking statements are reasonable, we can give
    no assurance that such plans, intentions, or expectations will
    be achieved. Such risks, uncertainties and other factors
    include, but are not limited to:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    Changes in general and local economic and industry and business
    conditions and impacts of the sustained homebuilding downturn;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    Adverse weather and other environmental conditions and natural
    disasters;
</TD>
</TR>

</TABLE>
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<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <BR>
    1
</DIV><!-- END PAGE WIDTH -->
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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#Y88639tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<!-- XBRL Pagebreak End -->

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    Changes in market conditions and seasonality of the
    Company&#146;s business;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    Changes in home prices and sales activity in the markets where
    the Company builds homes;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    Government regulation, including regulations concerning
    development of land, the home building, sales and customer
    financing processes, and the environment;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    Fluctuations in interest rates and the availability of mortgage
    financing;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    Shortages in, and price fluctuations of, raw materials and labor;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    The availability and cost of suitable land and improved lots;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    Levels of competition;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    Availability of financing to the Company;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    Utility shortages and outages or rate fluctuations;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    Levels of indebtedness and restrictions on the Company&#146;s
    operations and activities imposed by the agreements governing
    the Company&#146;s outstanding indebtedness;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    The Company&#146;s sources of liquidity;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    Changes in credit ratings;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    Availability of net operating loss carryforwards;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    Operations through joint ventures with third parties;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    Product liability litigation and warranty claims;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    Successful identification and integration of acquisitions;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    Significant influence of the Company&#146;s controlling
    stockholders;&#160;and
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    Geopolitical risks, terrorist acts and other acts of war.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    Certain risks, uncertainties, and other factors are incorporated
    herein by reference to our most recent Annual Report on
    <FONT style="white-space: nowrap">Form&#160;10-K</FONT>
    and our subsequent Quarterly Reports on
    <FONT style="white-space: nowrap">Form&#160;10-Q,</FONT>
    along with the other information contained in this prospectus,
    as updated by our subsequent filings under the Securities
    Exchange Act of 1934, as amended (the &#147;Exchange Act&#148;).
    Except as otherwise required by applicable securities laws, we
    undertake no obligation to publicly update or revise any
    forward-looking statements, whether as a result of new
    information, future events, changed circumstances, or any other
    reason, after the date of this prospectus.
</DIV>

<A name='Y88639103'>
<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: transparent">

    <B><FONT style="font-family: 'Times New Roman', Times">AVAILABLE
    INFORMATION</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    We are subject to the informational requirements of the Exchange
    Act, and file reports, proxy statements and other information
    with the Commission. We have also filed a registration statement
    on
    <FONT style="white-space: nowrap">Form&#160;S-3</FONT>
    with the Commission. This prospectus, which forms part of the
    registration statement, does not have all of the information
    contained in the registration statement. You may read, free of
    charge, and copy, at the prescribed rates, any reports, proxy
    statements and other information, including the registration
    statement, at the Commission&#146;s Public Reference Room at
    100&#160;F&#160;Street, N.E., Washington,&#160;D.C. 20549. The
    public may obtain information concerning the operation of the
    Public Reference Room by calling the Commission at
    <FONT style="white-space: nowrap">1-800-SEC-0330.</FONT>
    The Commission also maintains a website that contains reports,
    proxy statements and other information, including the
    registration statement. The website address is:
    <FONT style="white-space: nowrap">http://www.sec.gov.</FONT>
    Hovnanian&#146;s Class&#160;A Common Stock is listed on the New
    York Stock Exchange, and reports, proxy statements and other
    information also can be inspected at the offices of the New York
    Stock Exchange, 20&#160;Broad Street, New York, New York 10005.
</DIV>
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<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <BR>
    2
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#Y88639tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<!-- XBRL Pagebreak End -->

<A name='Y88639104'>
<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: transparent">

    <B><FONT style="font-family: 'Times New Roman', Times">INCORPORATION
    OF CERTAIN DOCUMENTS BY REFERENCE</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    This prospectus is part of a registration statement filed with
    the Commission. The Commission allows us to &#147;incorporate by
    reference&#148; selected documents we file with it, which means
    that we can disclose important information to you by referring
    you to those documents. The information in the documents
    incorporated by reference is considered to be part of this
    prospectus, and information in documents that we file later with
    the Commission will automatically update and supersede this
    information.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    We incorporate by reference the documents listed below filed
    under Section&#160;13(a), 13(c), 14 or 15(d) of the Exchange
    Act. Information furnished under Item&#160;2.02 or
    Item&#160;7.01 of our Current Reports on
    <FONT style="white-space: nowrap">Form&#160;8-K</FONT>
    is not incorporated by reference in this prospectus.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    Hovnanian has filed the following documents with the Commission
    and these documents are incorporated herein by reference:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    Annual Report on
    <FONT style="white-space: nowrap">Form&#160;10-K</FONT>
    for the fiscal year ended October&#160;31, 2010, Registration
    File
    <FONT style="white-space: nowrap">No.&#160;1-8551</FONT>
    (including information specifically incorporated by reference
    into the Annual Report on
    <FONT style="white-space: nowrap">Form&#160;10-K</FONT>
    from Hovnanian&#146;s definitive proxy statement for the 2011
    Annual Meeting of shareholders);
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    The description of the Company&#146;s Class&#160;A Common Stock
    contained in the Registration Statement on
    <FONT style="white-space: nowrap">Form&#160;8-A</FONT>
    filed on March&#160;13, 2001, including any amendment or reports
    filed for the purpose of updating such description, Registration
    File
    <FONT style="white-space: nowrap">No.&#160;1-8551;</FONT>
    and
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    The description of the Company&#146;s Preferred Stock Purchase
    Rights contained in the Registration Statement on
    <FONT style="white-space: nowrap">Form&#160;8-A</FONT>
    filed on August&#160;14, 2008, Registration File
    <FONT style="white-space: nowrap">No.&#160;1-8551.</FONT>
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    All documents filed by Hovnanian pursuant to Section&#160;13(a),
    13(c), 14 or 15(d) of the Exchange Act subsequent to the date of
    the initial registration statement and prior to the
    effectiveness of the registration statement, and all such
    documents filed by Hovnanian subsequent to the date of this
    prospectus and prior to the termination of the offerings made by
    this prospectus are to be incorporated herein by reference. Any
    statement contained in a document incorporated or deemed to be
    incorporated by reference herein shall be deemed to be modified
    or superseded for purposes of this prospectus to the extent that
    a statement contained herein or in any other subsequently filed
    document which also is incorporated or deemed to be incorporated
    by reference herein modifies or supersedes such statement. Any
    such statement so modified or superseded shall not be deemed,
    except as so modified or superseded, to constitute a part of
    this prospectus.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    Hovnanian makes available through its website its annual report
    on
    <FONT style="white-space: nowrap">Form&#160;10-K,</FONT>
    quarterly reports on
    <FONT style="white-space: nowrap">Form&#160;10-Q,</FONT>
    current reports on
    <FONT style="white-space: nowrap">Form&#160;8-K,</FONT>
    and amendments to these reports filed or furnished pursuant to
    Section&#160;13(d) or 15(d) of the Exchange Act as soon as
    reasonably practicable after they are filed with, or furnished
    to, the Commission. In addition, Hovnanian will provide without
    charge to each person, including any beneficial owner, to whom a
    copy of this prospectus is delivered, upon the written or oral
    request of such person, a copy of any or all of the information
    incorporated by reference in this prospectus, other than
    exhibits to such information (unless such exhibits are
    specifically incorporated by reference into the information that
    this prospectus incorporates). Requests for such copies should
    be directed to Brad O&#146;Connor, Vice President and Corporate
    Controller, Hovnanian Enterprises, Inc., 110&#160;West Front
    Street, P.O.&#160;Box&#160;500, Red Bank, New Jersey 07701
    (telephone:
    <FONT style="white-space: nowrap">(732)&#160;747-7800).</FONT>
</DIV>

<A name='Y88639105'>
<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: transparent">

    <B><FONT style="font-family: 'Times New Roman', Times">THE
    COMPANY</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: transparent">

    <B><FONT style="font-family: 'Times New Roman', Times">Overview</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    We design, construct, market, and sell single-family detached
    homes, attached townhomes and condominiums, mid-rise
    condominiums, urban infill and active adult homes in planned
    residential developments and are one of the nation&#146;s
    largest builders of residential homes. Founded in 1959 by Kevork
    Hovnanian, the Company was incorporated in New Jersey in 1967
    and reincorporated in Delaware in 1983. Since the incorporation
    of our predecessor company and including unconsolidated joint
    ventures, we have delivered in excess of 291,000 homes,
    including 5,009 homes in fiscal 2010. The Company consists of
    two distinct operations: homebuilding and financial services.
    Our homebuilding operations consist of six segments: Northeast,
    Mid-Atlantic, Midwest, Southeast,
</DIV>
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    <BR>
    3
</DIV><!-- END PAGE WIDTH -->
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<H5 align="left" style="page-break-before:always"><A HREF="#Y88639tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<!-- XBRL Pagebreak End -->

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    Southwest and West. Our financial services operations provide
    mortgage loans and title services to the customers of our
    homebuilding operations.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    We are currently, excluding unconsolidated joint ventures,
    offering homes for sale in 192 communities in 40&#160;markets in
    18&#160;states throughout the United States. We market and build
    homes for first-time buyers, first-time and second-time
    <FONT style="white-space: nowrap">move-up</FONT>
    buyers, luxury buyers, active adult buyers, and empty nesters.
    We offer a variety of home styles at base prices ranging from
    $34,000 (low income housing) to $1,660,000 with an average sales
    price, including options, of $281,000 nationwide in fiscal 2010.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: transparent">

    <B><FONT style="font-family: 'Times New Roman', Times">Corporate
    Information</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    Our principal executive offices are located at 110&#160;West
    Front Street, P.O.&#160;Box&#160;500, Red Bank, New Jersey
    07701, our telephone number is (732)747-7800, and our Internet
    website address is www.khov.com. Information on or accessible
    through our website is not a part of this prospectus.
</DIV>

<A name='Y88639106'>
<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: transparent">

    <B><FONT style="font-family: 'Times New Roman', Times">RISK
    FACTORS</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    An investment in our securities involves a high degree of risk.
    Certain risks relating to us and our business are described
    under the headings &#147;Business&#148; and &#147;Risk
    Factors&#148; in our Annual Report on
    <FONT style="white-space: nowrap">Form&#160;10-K</FONT>
    for the year ended October&#160;31, 2010, filed with the
    Commission on December&#160;22, 2010, which is incorporated by
    reference into this prospectus and which you should carefully
    review and consider, along with the other information contained
    in this prospectus or incorporated by reference herein, as
    updated by our subsequent filings under the Exchange Act, before
    making an investment in any of our securities. Additional risks,
    as well as updates or changes to the risks described in the
    documents incorporated by reference herein, may be included in
    any applicable prospectus supplement. Our business, financial
    condition or results of operations could be materially adversely
    affected by any of these risks. The market or trading price of
    our securities could decline due to any of these risks, and you
    may lose all or part of your investment. In addition, please
    read the section of this prospectus captioned
    &#147;Forward-Looking Statements&#148;, in which we describe
    additional uncertainties associated with our business and the
    forward-looking statements included or incorporated by reference
    in this prospectus. Please note that additional risks not
    presently known to us or that we currently deem immaterial may
    also impair our business and operations.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    Investment in any securities offered pursuant to this prospectus
    involves risks and uncertainties. If one or more of the events
    discussed in the risk factors were to occur, our business,
    financial condition, results of operations or liquidity, as well
    as the value of an investment in our securities, could be
    materially adversely affected.
</DIV>

<A name='Y88639107'>
<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: transparent">

    <B><FONT style="font-family: 'Times New Roman', Times">RATIOS OF
    EARNINGS TO FIXED CHARGES AND<BR>
    EARNINGS TO COMBINED FIXED CHARGES AND PREFERRED STOCK
    DIVIDENDS</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    For purposes of computing the ratio of earnings to fixed charges
    and the ratio of earnings to combined fixed charges and
    preferred stock dividends, earnings consist of earnings from
    continuing operations before income taxes and income or loss
    from equity investees, plus fixed charges and distributed income
    of equity investees, less interest capitalized. Fixed charges
    consist of all interest incurred, plus that portion of operating
    lease rental expense (33%) deemed to be representative of
    interest, plus the amortization of debt issuance costs and bond
    discounts. Combined fixed charges and preferred stock dividends
    consist of fixed charges and preferred stock dividends declared.
    The fourth quarter of fiscal year 2005 was the first period we
    declared and paid preferred stock dividends, and due to covenant
    restrictions, we have been prohibited from paying dividends
    beginning with the first quarter of fiscal year 2008. The
    following table sets forth the ratios of earnings to fixed
    charges and the ratios of earnings to combined fixed charges and
    preferred stock dividends for each of the periods indicated:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE border="0" width="100%" align="center" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
<!-- Table Width Row BEGIN -->
<TR style="font-size: 1pt" valign="bottom">
    <TD width="71%">&nbsp;</TD>	<!-- colindex=01 type=maindata -->
    <TD width="2%">&nbsp;</TD>	<!-- colindex=02 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=02 type=lead -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=02 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=02 type=hang1 -->
    <TD width="3%">&nbsp;</TD>	<!-- colindex=03 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=03 type=lead -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=03 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=03 type=hang1 -->
    <TD width="3%">&nbsp;</TD>	<!-- colindex=04 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=04 type=lead -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=04 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=04 type=hang1 -->
    <TD width="3%">&nbsp;</TD>	<!-- colindex=05 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=05 type=lead -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=05 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=05 type=hang1 -->
    <TD width="3%">&nbsp;</TD>	<!-- colindex=06 type=gutter -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=06 type=lead -->
    <TD width="1%" align="right">&nbsp;</TD>	<!-- colindex=06 type=body -->
    <TD width="1%" align="left">&nbsp;</TD>	<!-- colindex=06 type=hang1 -->
</TR>
<!-- Table Width Row END -->
<!-- TableOutputHead -->
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="19" align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>Year Ended October&#160;31,</B>
</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom" align="center">
<TD nowrap align="center" valign="bottom">
&nbsp;
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>2010</B>
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>2009</B>
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>2008</B>
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>2007</B>
</TD>
<TD>
&nbsp;
</TD>
<TD colspan="3" nowrap align="center" valign="bottom" style="border-bottom: 1px solid #000000">
    <B>2006</B>
</TD>
</TR>
<TR style="line-height: 3pt; font-size: 1pt">
<TD>&nbsp;
</TD>
</TR>
<!-- TableOutputBody -->
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Ratio of earnings to fixed charges
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">

</TD>
<TD nowrap align="left" valign="bottom">
    (a)
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">

</TD>
<TD nowrap align="left" valign="bottom">
    (a)
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">

</TD>
<TD nowrap align="left" valign="bottom">
    (a)
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">

</TD>
<TD nowrap align="left" valign="bottom">
    (a)
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    1.8
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
<TR valign="bottom">
<TD align="left" valign="bottom">
<DIV style="text-indent: -10pt; margin-left: 10pt">
    Ratio of earnings to combined fixed charges and preferred stock
    dividends
</DIV>
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">

</TD>
<TD nowrap align="left" valign="bottom">
    (b)
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">

</TD>
<TD nowrap align="left" valign="bottom">
    (b)
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">

</TD>
<TD nowrap align="left" valign="bottom">
    (b)
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">

</TD>
<TD nowrap align="left" valign="bottom">
    (b)
</TD>
<TD>
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
&nbsp;
</TD>
<TD nowrap align="right" valign="bottom">
    1.7
</TD>
<TD nowrap align="left" valign="bottom">
&nbsp;
</TD>
</TR>
</TABLE>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">

</DIV>
<!-- XBRL Pagebreak Begin -->

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <BR>
    4
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#Y88639tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<!-- XBRL Pagebreak End -->

<DIV style="font-size: 1pt; margin-left: 0%; width: 13%;  align: left; border-bottom: 1pt solid #000000"></DIV>

<DIV style="margin-top: 3pt; font-size: 1pt">&nbsp;</DIV>



<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR>
    <TD valign="top">
    (a) </TD>
    <TD></TD>
    <TD valign="bottom">
    Earnings for the years ended October&#160;31, 2010, 2009, 2008
    and 2007 were insufficient to cover fixed charges for such
    period by $273.8&#160;million, $628.3&#160;million,
    $1,153.5&#160;million and $684.6&#160;million, respectively.</TD>
</TR>


<TR style="line-height: 3pt; font-size: 1pt"><TD>&nbsp;</TD></TR>

<TR>
    <TD valign="top">
    (b) </TD>
    <TD></TD>
    <TD valign="bottom">
    Earnings for the years ended October&#160;31, 2010, 2009, 2008
    and 2007 were insufficient to cover fixed charges and preferred
    stock dividends for such period by $273.8&#160;million,
    $628.3&#160;million, $1,153.5&#160;million and
    $695.6&#160;million, respectively. Due to restrictions in our
    indentures on our senior secured, senior, and senior
    subordinated notes, we are currently prohibited from paying
    dividends on our preferred stock and did not make any dividend
    payments in fiscal 2010, 2009 and 2008. In fiscal 2007 and 2006,
    we paid $10.7&#160;million of dividends on our preferred stock.</TD>
</TR>

</TABLE>

<A name='Y88639108'>
<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: transparent">

    <B><FONT style="font-family: 'Times New Roman', Times">USE OF
    PROCEEDS</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    Unless otherwise provided in the applicable prospectus
    supplement, the net proceeds from the sale of the securities
    offered by this prospectus and each prospectus supplement, the
    &#147;offered securities&#148;, will be used for general
    corporate purposes, which may include working capital needs, the
    refinancing or repayment of existing indebtedness, capital
    expenditures, expansion of the business and acquisitions. If any
    of the net proceeds from the offered securities will be used for
    acquisitions, we will identify the acquisition in the applicable
    prospectus supplement. The net proceeds may be invested
    temporarily in short-term securities or to repay short-term debt
    until they are used for their stated purpose.
</DIV>

<A name='Y88639109'>
<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: transparent">

    <B><FONT style="font-family: 'Times New Roman', Times">DESCRIPTION
    OF DEBT SECURITIES</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    The following description of the terms of the debt securities
    sets forth certain general terms that may apply to the debt
    securities that may be offered from time to time pursuant to
    this prospectus. The particular terms of any debt securities
    will be described in the prospectus supplement relating to those
    debt securities. Accordingly, for a description of the terms of
    a particular issue of debt securities, reference must be made to
    both the prospectus supplement relating thereto and the
    following description. The specific terms of debt securities as
    described in the applicable prospectus supplement will
    supplement and, if applicable, may modify or replace the general
    terms described in this prospectus.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    In this section, references to &#147;Hovnanian&#148; mean
    Hovnanian Enterprises, Inc. and do not include K. Hovnanian or
    any of its subsidiaries and references to &#147;K.
    Hovnanian&#148; mean K. Hovnanian Enterprises, Inc. and do not
    include any of its subsidiaries.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    The debt securities issued by K. Hovnanian, which we refer to as
    the &#147;K. Hovnanian Debt Securities&#148; may be issued
    either separately, or together with, upon conversion of or in
    exchange for, other securities. The K. Hovnanian Debt Securities
    will either be unsecured senior obligations, which we refer to
    as the &#147;K Hovnanian Senior Debt Securities&#148;, unsecured
    senior subordinated obligations, which we refer to as the
    &#147;K. Hovnanian Senior Subordinated Debt Securities&#148; or
    unsecured subordinated obligations, which we refer to as the
    &#147;K. Hovnanian Subordinated Debt Securities&#148;, of K.
    Hovnanian. The K. Hovnanian Debt Securities will be guaranteed
    by Hovnanian, may be guaranteed by other subsidiaries of
    Hovnanian and will be issued:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    in the case of K. Hovnanian Senior Debt Securities, under a
    Senior Indenture, the &#147;K. Hovnanian Senior Debt
    Indenture&#148;, among K. Hovnanian, Hovnanian and any
    subsidiaries of Hovnanian, as guarantors, and the trustee
    specified in the applicable prospectus supplement;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    in the case of K. Hovnanian Senior Subordinated Debt Securities,
    under a Senior Subordinated Indenture, the &#147;K. Hovnanian
    Senior Subordinated Debt Indenture&#148;, among K. Hovnanian,
    Hovnanian and any subsidiaries of Hovnanian, as guarantors, and
    the trustee specified in the applicable prospectus
    supplement;&#160;and
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    in the case of K. Hovnanian Subordinated Debt Securities, under
    a Subordinated Indenture, the &#147;K.&#160;Hovnanian
    Subordinated Debt Indenture&#148;, among K. Hovnanian, Hovnanian
    and any subsidiaries of Hovnanian, as guarantors, and the
    trustee specified in the applicable prospectus supplement.
</TD>
</TR>

</TABLE>
<!-- XBRL Pagebreak Begin -->

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <BR>
    5
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#Y88639tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<!-- XBRL Pagebreak End -->

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    The K. Hovnanian Senior Debt Indenture, the K. Hovnanian Senior
    Subordinated Debt Indenture and the K. Hovnanian Subordinated
    Debt Indenture are sometimes referred to in this description
    individually as a &#147;K. Hovnanian Indenture&#148; and
    collectively as the &#147;K. Hovnanian Indentures&#148;.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    The debt securities issued by Hovnanian, which we refer to as
    the &#147;Hovnanian Debt Securities&#148; may be issued either
    separately, or together with, upon conversion of or in exchange
    for, other securities. The Hovnanian Debt Securities will either
    be unsecured senior obligations, which we refer to as the
    &#147;Hovnanian Senior Debt Securities&#148; and together with
    the &#147;K. Hovnanian Senior Debt Securities, the &#147;Senior
    Debt Securities&#148;, unsecured senior subordinated
    obligations, which we refer to as the &#147;Hovnanian Senior
    Subordinated Debt Securities&#148; and together with the
    &#147;K. Hovnanian Senior Subordinated Debt Securities, the
    &#147;Senior Subordinated Debt Securities&#148;, or unsecured
    subordinated obligations, which we refer to as the
    &#147;Hovnanian Subordinated Debt Securities&#148; and together
    with the &#147;K. Hovnanian Subordinated Debt Securities, the
    &#147;Subordinated Debt Securities&#148;, of Hovnanian. The
    Hovnanian Debt Securities may be guaranteed by subsidiaries of
    Hovnanian and will be issued:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    in the case of Hovnanian Senior Debt Securities, under a Senior
    Indenture, the &#147;Hovnanian Senior Debt Indenture&#148;,
    among Hovnanian, any subsidiaries of Hovnanian, as guarantors,
    and the trustee specified in the applicable prospectus
    supplement;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    in the case of Hovnanian Senior Subordinated Debt Securities,
    under a Senior Subordinated Indenture, the &#147;Hovnanian
    Senior Subordinated Debt Indenture&#148;, among Hovnanian, any
    subsidiaries of Hovnanian, as guarantors, and the trustee
    specified in the applicable prospectus supplement;&#160;and
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    in the case of Hovnanian Subordinated Debt Securities, under a
    Subordinated Indenture, the &#147;Hovnanian Subordinated Debt
    Indenture&#148;, among Hovnanian, any subsidiaries of Hovnanian,
    as guarantors, and the trustee specified in the applicable
    prospectus supplement.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    The Hovnanian Senior Debt Indenture, The Hovnanian Senior
    Subordinated Debt Indenture and the Hovnanian Subordinated Debt
    Indenture are sometimes referred to in this description
    individually as a &#147;Hovnanian Indenture&#148; and
    collectively as the &#147;Hovnanian Indentures&#148;.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    The K. Hovnanian Senior Indenture and the Hovnanian Senior
    Indenture are sometimes referred to in this description
    individually as a &#147;Senior Debt Indenture&#148; and
    collectively as the &#147;Senior Debt Indentures&#148;. The
    K.&#160;Hovnanian Senior Subordinated Debt Indenture and the
    Hovnanian Senior Subordinated Debt Indenture are sometimes
    referred to in this description individually as a &#147;Senior
    Subordinated Debt Indenture&#148; and collectively as the
    &#147;Senior Subordinated Debt Indentures&#148;. The K.
    Hovnanian Subordinated Debt Indenture and the Hovnanian
    Subordinated Debt Indenture are sometimes referred to
    individually as a &#147;Subordinated Debt Indenture&#148; and
    collectively as the &#147;Subordinated Debt Indentures&#148;.
    The K. Hovnanian Indentures and the Hovnanian Indentures are
    sometimes referred to in this description individually as an
    &#147;Indenture&#148; and collectively as the
    &#147;Indentures&#148;.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    This summary of the terms and provisions of the debt securities
    and the Indentures is not complete, and we refer you to the
    copies of the Indentures, which will be filed as exhibits to the
    registration statement of which this prospectus forms a part.
    Whenever we refer to particular defined terms of the Indentures
    in this section or in a prospectus supplement, we are
    incorporating these definitions into this prospectus or the
    prospectus supplement.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    None of the Indentures limits the amount of debt securities that
    may be issued thereunder, and the Indentures provide that the
    debt securities may be issued from time to time in one or more
    series. The Indentures permit the appointment of a different
    trustee for each series of debt securities. Section references
    below are to sections in each Indenture unless otherwise
    indicated. Wherever particular sections or defined terms of the
    applicable Indenture are referred to, those sections or defined
    terms are incorporated herein by reference as part of the
    statement made, and the statement is qualified in its entirety
    by the reference. The Indentures are substantially identical,
    except for certain covenants, provisions relating to
    Hovnanian&#146;s guarantee and to subordination. For purposes of
    the summaries set forth below, &#147;issuer&#148; shall refer to
    K. Hovnanian in the case of the K. Hovnanian Debt Securities and
    the K. Hovnanian Indentures and to Hovnanian in the case of the
    Hovnanian Debt Securities and the Hovnanian Indentures.
    &#147;Obligors&#148; refers to Hovnanian and any subsidiaries of
    Hovnanian, as guarantors, the &#147;guarantors&#148;, in the
    case of the Hovnanian Debt Securities and the Hovnanian
    Indentures, and to K. Hovnanian and Hovnanian and any
    subsidiaries of Hovnanian, as guarantors, the
    &#147;guarantors&#148;, in the case of the K. Hovnanian Debt
    Securities and the K. Hovnanian Indentures.
</DIV>
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    <BR>
    6
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#Y88639tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<!-- XBRL Pagebreak End -->

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: transparent">

    <B><FONT style="font-family: 'Times New Roman', Times">Provisions
    Applicable to Senior, Senior Subordinated and Subordinated Debt
    Securities</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <I>General.</I>&#160;&#160;The Hovnanian Debt Securities will be
    unsecured senior, senior subordinated or subordinated
    obligations of Hovnanian and the K. Hovnanian Debt Securities
    will be unsecured senior, senior subordinated or subordinated
    obligations of K. Hovnanian, except that, under specified
    circumstances, K. Hovnanian may be released from these
    obligations. See &#147;Conditions for Release of K.
    Hovnanian&#148;. Unless otherwise specified in any prospectus
    supplement, the Senior Debt Securities will rank equally in
    right of payment with all of the other senior obligations of
    Hovnanian or K. Hovnanian, as applicable, and the Senior
    Subordinated Debt Securities and the Subordinated Debt
    Securities will have such terms with respect to rank and
    priority as described under &#147;Provisions Applicable Solely
    to Senior Subordinated Debt Securities and Subordinated Debt
    Securities&#160;&#151; Subordination&#148;. Except to the extent
    described in any prospectus supplement, the Indentures do not,
    and the debt securities will not, contain any covenants or other
    provisions that are intended to afford holders of the debt
    securities special protection in the event of either a change of
    control of Hovnanian or a highly leveraged transaction by
    Hovnanian.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    We refer you to the applicable prospectus supplement for the
    following terms of and information relating to the debt
    securities being offered, the &#147;Offered Debt
    Securities&#148;, to the extent these terms are applicable to
    Offered Debt Securities:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    the title of the Offered Debt Securities;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    classification as K. Hovnanian Senior Debt Securities, K.
    Hovnanian Senior Subordinated Debt Securities, K. Hovnanian
    Subordinated Debt Securities, Hovnanian Senior Debt Securities,
    Hovnanian Senior Subordinated Debt Securities or Hovnanian
    Subordinated Debt Securities, aggregate principal amount,
    purchase price and denomination, and whether the Offered Debt
    Securities will be guaranteed by Hovnanian
    <FONT style="white-space: nowrap">and/or</FONT> by
    the subsidiary guarantors of Hovnanian as described under
    &#147;&#151;&#160;Description of Guarantees&#148; below;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    the date or dates on which the principal of the Offered Debt
    Securities is payable;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    the method by which amounts payable in respect of principal,
    premium, if any, or interest, if any, on or upon the redemption
    of the Offered Debt Securities may be calculated;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    the interest rate or rates, or the method by which it will be
    determined, and the date or dates from which the interest, if
    any, will accrue;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    the date or dates on which the interest, if any, will be payable;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    the place or places where and the manner in which the principal
    of, premium, if any, and interest, if any, on the Offered Debt
    Securities will be payable and the place or places where the
    Offered Debt Securities may be presented for transfer;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    the right, if any, or obligation, if any, of Hovnanian or K.
    Hovnanian to redeem, repay or purchase the Offered Debt
    Securities pursuant to any sinking fund, amortization payments
    or analogous provisions, at the option of Hovnanian or K.
    Hovnanian or at the option of a holder thereof, and the period
    or periods within which, the price or prices or the method by
    which such price or prices will be determined, or both at which,
    the form or method of payment therefor if other than in cash and
    the terms and conditions upon which the Offered Debt Securities
    will be redeemed, repaid or purchased pursuant to the obligation;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    the terms for conversion or exchange, if any, of the Offered
    Debt Securities;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    any provision relating to the issuance of the Offered Debt
    Securities at an original issue discount;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    if the amounts of payments of principal of, premium, if any, and
    interest, if any, on the Offered Debt Securities are to be
    determined with reference to an index, the manner in which those
    amounts will be determined;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    any applicable United States federal income tax consequences;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    the currency or currencies for which the Offered Debt Securities
    may be purchased and the currency or currencies in which
    principal, premium, if any, and interest, if any, may be payable;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    the trustee with respect to the series of Offered Debt
    Securities;&#160;and
</TD>
</TR>

</TABLE>
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<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <BR>
    7
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#Y88639tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<!-- XBRL Pagebreak End -->

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    any other specific terms of the Offered Debt Securities,
    including any deleted, modified or additional Events of Default
    or remedies or additional covenants provided with respect to the
    Offered Debt Securities, and any terms that may be required by
    or advisable under applicable laws or regulations.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    Unless otherwise specified in any prospectus supplement, the
    debt securities will be issuable in registered form and in
    denominations of $2,000 and integral multiples of $1,000 in
    excess thereof, see Section&#160;2.7. No service charge will be
    made for any transfer or exchange of any debt securities but the
    issuer or trustee may require payment of a sum sufficient to
    cover any tax or other governmental charge, payable in
    connection therewith, see Section&#160;2.8.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    Debt securities may bear interest at a fixed rate or a floating
    rate. Debt securities bearing no interest or interest at a rate
    that at the time of issuance is below the prevailing market rate
    may be issued at an initial offering price below their stated
    principal amount. Special United States federal income tax
    considerations applicable to discounted debt securities or to
    some debt securities issued at par that are treated as having
    been issued at a discount for United States federal income tax
    purposes will be described in the applicable prospectus
    supplement.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    Unless otherwise specified in any prospectus supplement, in
    determining whether the holders of the requisite aggregate
    principal amount of outstanding debt securities of any series
    have given any request, demand, authorization, direction,
    notice, consent or waiver under the Indentures, the principal
    amount of any series of debt securities originally issued at a
    discount from their stated principal amount that will be deemed
    to be outstanding for such purposes will be the amount of the
    principal thereof that would be due and payable as of the date
    of the determination upon a declaration of acceleration of the
    maturity thereof.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <I>Description of Guarantees.</I>&#160;&#160;Hovnanian will
    fully and unconditionally guarantee, pursuant to the
    K.&#160;Hovnanian Indentures, the due and prompt payment of the
    principal of and premium, if any, and interest on the
    K.&#160;Hovnanian Debt Securities any and all other obligations
    of K. Hovnanian to the holders of the K. Hovnanian Debt
    Securities and the trustee under the K. Hovnanian Indentures
    when and as the same shall become due and payable, whether at
    the stated maturity, by declaration of acceleration, call for
    redemption or otherwise. Any series of debt securities of
    Hovnanian may be guaranteed by, and any series of debt
    securities of K. Hovnanian may be further guaranteed by, certain
    subsidiaries of Hovnanian, the &#147;subsidiary
    guarantees&#148;, as provided in the applicable prospectus
    supplement relating to such series. If debt securities are
    guaranteed by subsidiary guarantors, that subsidiary guarantee
    will be set forth in a supplemental indenture.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    Payments with respect to the guarantee by Hovnanian of the K.
    Hovnanian Senior Subordinated Debt Securities and K. Hovnanian
    Subordinated Debt Securities will be subordinated in right of
    payment to the prior payment in full of all Senior Indebtedness
    of Hovnanian to the same extent and manner that payments with
    respect to the K. Hovnanian Senior Subordinated Debt Securities
    and K. Hovnanian Subordinated Debt Securities are subordinated
    in right of payment to the prior payment in full of all Senior
    Indebtedness of K. Hovnanian as described under &#147;Provisions
    Applicable Solely to Senior Subordinated Debt Securities and
    Subordinated Debt Securities&#148; below. Likewise, payments
    with respect to subsidiary guarantees of Senior Subordinated
    Debt Securities and Subordinated Debt Securities will be
    subordinated in right of payment to the prior payment in full of
    all Senior Indebtedness of each such subsidiary guarantor to the
    same extent and manner that payments with respect to the Senior
    Subordinated Debt Securities and Subordinated Debt Securities
    are subordinated in right of payment to the prior payment in
    full of all Senior Indebtedness of the issuer of such debt
    securities as described under &#147;Provisions Applicable Solely
    to Senior Subordinated Debt Securities and Subordinated Debt
    Securities&#148; below.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <I>Global Securities.</I>&#160;&#160;The debt securities of a
    series may be issued in whole or in part in the form of one or
    more global securities, the &#147;global securities&#148;, that
    will be deposited with or on behalf of a depositary, &#147;the
    depositary&#148;, identified in the prospectus supplement
    relating to such series. Global securities may be issued only in
    fully registered form and in either temporary or permanent form.
    Unless and until it is exchanged in whole or in part for the
    individual debt securities represented thereby, a global
    security:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    may not be transferred except as a whole;&#160;and
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    may only be transferred
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="6%"></TD>
    <TD width="2%"></TD>
    <TD width="92%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    by the depositary for the global security to its nominee,
</TD>
</TR>

</TABLE>
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<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <BR>
    8
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#Y88639tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<!-- XBRL Pagebreak End -->

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="6%"></TD>
    <TD width="2%"></TD>
    <TD width="92%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    by a nominee of the depositary to the depositary or another
    nominee of the depositary,&#160;or
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    by the depositary or any nominee to a successor depositary or
    nominee of the successor depositary, see Section&#160;2.8.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    The specific terms of the depositary arrangement with respect to
    a series of debt securities will be described in the prospectus
    supplement relating to such series. Hovnanian and K. Hovnanian
    anticipate that the following provisions generally will apply to
    all depositary arrangements.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    Upon the issuance of a global security, the depositary for that
    global security or its nominee will credit, on its book-entry
    registration and transfer system, the respective principal
    amounts of the individual debt securities represented by that
    global security to the accounts of persons that have accounts
    with such depositary. Those accounts will be designated by the
    dealers, underwriters or agents with respect to those debt
    securities or by the issuer if the debt securities are offered
    and sold directly by the issuer. Ownership of beneficial
    interests in a global security will be limited to persons that
    have accounts with the applicable depositary, participants, or
    persons that may hold interests through participants. Ownership
    of beneficial interests in a global security will be shown on,
    and the transfer of that ownership will be effected only
    through, records maintained by the applicable depositary or its
    nominee, with respect to interests of participants, and the
    records of participants, with respect to interests of persons
    other than participants. The laws of some states require that
    certain purchasers of securities take physical delivery of these
    securities in definitive form. These limits and laws may impair
    the ability to transfer beneficial interests in a global
    security.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    As long as the depositary for a global security or its nominee
    is the registered owner of the global security, the depositary
    or its nominee, as the case may be, will be considered the sole
    owner or holder of the debt securities of the series represented
    by that global security for all purposes under the Indenture
    governing those debt securities. Except as provided below,
    owners of beneficial interests in a global security will not be
    entitled to have any of the individual debt securities of the
    series represented by the global security registered in their
    names, will not receive or be entitled to receive physical
    delivery of any of those debt securities in definitive form and
    will not be considered the owners or holders thereof under the
    Indenture governing those debt securities.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    Payment of principal of, premium, if any, and interest, if any,
    on individual debt securities represented by a global security
    registered in the name of a depositary or its nominee will be
    made to the depositary or its nominee, as the case may be, as
    the registered owner of the global security representing the
    debt securities. Hovnanian and K.&#160;Hovnanian expect that the
    depositary for a series of debt securities or its nominee, upon
    receipt of any payment of principal, premium, if any, and
    interest, if any, in respect of a global security representing
    any of those debt securities, will immediately credit
    participants&#146; accounts with payments in amounts
    proportionate to their respective beneficial interests in the
    principal amount of the global security for those securities as
    shown on the records of such depositary or its nominee.
    Hovnanian and K. Hovnanian also expect that payments by
    participants to owners of beneficial interests in the global
    security held through the participants will be governed by
    standing instructions and customary practices, as is now the
    case with securities held for the accounts of customers in
    bearer form or registered in &#147;street name.&#148; These
    payments will be the responsibility of the participants. Neither
    Hovnanian, K. Hovnanian, the trustee for such debt securities,
    any paying agent nor the registrar for the debt securities will
    have any responsibility or liability for any aspect of the
    records relating to or payments made on account of beneficial
    ownership interests of the global security for the debt
    securities or for maintaining, supervising or reviewing any
    records relating to beneficial ownership interests.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    If the depositary for a series of debt securities is at any time
    unwilling, unable or ineligible to continue as depositary and a
    successor depositary is not appointed by the issuer within
    90&#160;days, the issuer will issue individual debt securities
    of the applicable series in exchange for the global security
    representing the applicable series of debt securities. In
    addition, an issuer may at any time and in its sole discretion,
    subject to any limitations described in the prospectus
    supplement relating to such debt securities, determine not to
    have any debt securities of a series represented by a global
    security and, in such event, will issue individual debt
    securities of the applicable series in exchange for the global
    security representing the applicable series of debt securities.
    Further, if an issuer so specifies with respect to the debt
    securities of a series, an owner of a beneficial interest in a
    global security representing debt securities of that series may,
    on terms acceptable to the issuer, the trustee and the
    depositary for the global security, receive individual debt
    securities of the applicable series in exchange for beneficial
    interests, subject to any
</DIV>
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    <BR>
    9
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<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
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<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    limitations described in the prospectus supplement relating to
    the debt securities. In this instance, an owner of a beneficial
    interest in a global security will be entitled to physical
    delivery of individual debt securities of the series represented
    by the applicable global security equal in principal amount to
    the beneficial interest and to have the debt securities
    registered in its name. Individual debt securities of the series
    so issued will be issued in registered form and in
    denominations, unless otherwise specified in the applicable
    prospectus supplement relating to that series of debt
    securities, of $2,000 and integral multiples of $1,000 in excess
    thereof.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <I>Events of Default.</I>&#160;&#160;Unless otherwise specified
    in the applicable prospectus supplement, an Event of Default is
    defined under each Indenture with respect to the debt securities
    of any series issued under the applicable Indenture as being:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    default in the payment of principal of or premium, if any, with
    respect to debt securities of the applicable series when due;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    default in the payment of any installment of interest on any of
    the debt securities of that series when due, continued for
    30&#160;days;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    default in the payment or satisfaction of any sinking fund or
    other purchase obligation with respect to debt securities of
    that series when due;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    default in the performance of any other covenant of any of the
    obligors&#146; applicable to debt securities of that series,
    continued for 90&#160;days after written notice to the obligors
    by the trustee or to the obligors and the trustee, by the
    holders of at least 25% in aggregate principal amount of the
    debt securities of that series then outstanding requiring the
    same to be remedied;&#160;and
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    specified events of bankruptcy, insolvency or reorganization of
    the issuer, see Section&#160;5.1.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    If any Event of Default shall occur and be continuing, the
    trustee or the holders of not less than 25% in aggregate
    principal amount of the debt securities of that series then
    outstanding, by notice in writing to Hovnanian or K. Hovnanian,
    as applicable, and to the trustee, if given by the holders, may
    declare the principal, or, in the case of any series of debt
    securities originally issued at a discount from their stated
    principal amount, the portion of the principal amount as may be
    specified in the terms of that series, of all of the debt
    securities of that series and the interest, if any, accrued
    thereon to be due and payable immediately. Subject to the
    conditions set forth in each Indenture, the declaration
    described in the preceding sentence may be rescinded by notice
    in writing to Hovnanian or K. Hovnanian, as applicable, and the
    trustee by holders of a majority in aggregate principal amount
    of the debt securities of the series then outstanding. This
    rescission will rescind and annul any declaration made pursuant
    to the first sentence of this paragraph and its consequences if
    all defaults under such Indenture are cured or waived, see
    Section&#160;5.1.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    Each Indenture provides that no holder of any series of debt
    securities then outstanding may institute any suit, action or
    proceeding with respect to, or otherwise attempt to enforce,
    that Indenture, unless:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    the holder previously gave the trustee written notice of default
    and of the continuance thereof;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    the holders of not less than 25% in aggregate principal amount
    of the applicable series of debt securities then outstanding
    made written request to the trustee to institute the suit,
    action or proceeding and offered to the trustee reasonable
    indemnity as it may require with respect thereto;&#160;and
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    the trustee, for 60&#160;days after its receipt of the notice,
    request and offer of indemnity, neglected or refused to
    institute any action, suit or proceeding.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    Subject to the subordination provisions applicable to the Senior
    Subordinated Debt Securities and the Subordinated Debt
    Securities, the right, described in the above bullet points, of
    any holder of any debt security to receive payment of the
    principal of, premium, if any, or interest, if any, on that debt
    security, on or after the respective due dates, or to institute
    suit for the enforcement of any payment shall not be impaired or
    affected without the consent of the holder, see Section&#160;5.4.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    The holders of a majority in aggregate principal amount of the
    debt securities of the series then outstanding may direct the
    time, method and place of conducting any proceeding for any
    remedy available to the trustee or
</DIV>
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    <BR>
    10
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<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
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<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    exercising any trust or power conferred on the trustee with
    respect to the debt securities of that series, provided that the
    trustee may decline to follow that direction if the trustee
    determines that the action or proceeding is unlawful or would
    involve the trustee in personal liability, see Section&#160;5.7.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    Hovnanian
    <FONT style="white-space: nowrap">and/or</FONT> K.
    Hovnanian, as applicable, are required to furnish annually to
    the trustee a certificate as to compliance by Hovnanian
    <FONT style="white-space: nowrap">and/or</FONT> K.
    Hovnanian, as applicable, with all conditions and covenants
    under each Indenture, see Section&#160;4.3.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <I>Covenants.</I>&#160;&#160;The covenants, if any, that will
    apply to a particular series of debt securities will be as
    described in the applicable prospectus supplement relating to
    such series of debt securities. Except as described herein and
    as otherwise specified in the applicable prospectus supplement
    with respect to any series of debt securities, Hovnanian
    <FONT style="white-space: nowrap">and/or</FONT> K.
    Hovnanian as applicable may remove or add covenants without the
    consent of holders of the debt securities.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <I>Discharge and Defeasance.</I>&#160;&#160;Unless otherwise
    specified in the applicable prospectus supplement, Hovnanian
    <FONT style="white-space: nowrap">and/or</FONT> K.
    Hovnanian, as applicable, can discharge or defease their
    respective obligations with respect to any series of debt
    securities as described below, see Article&#160;Ten.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    Unless otherwise specified in any prospectus supplement,
    Hovnanian or K. Hovnanian, as applicable, may discharge all of
    its obligations, except those described below, to holders of any
    series of debt securities issued under any Indenture that have
    not already been delivered to the trustee for cancellation and
    that have either become due and payable, or are by their terms
    due and payable within one year or are to be called for
    redemption within one year, by irrevocably depositing with the
    trustee cash or U.S.&#160;Government Obligations, as defined in
    the Indenture, or a combination thereof, as trust funds in an
    amount to be sufficient to pay when due the principal of,
    premium, if any, and interest, if any, on all outstanding debt
    securities of that series and to make any mandatory sinking fund
    payments, if any, thereon when due.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    Unless otherwise provided in the applicable prospectus
    supplement, Hovnanian or K. Hovnanian, as applicable, may also
    elect at any time to defease and be discharged from all of its
    obligations, except those described below, to holders of any
    series of debt securities issued under each Indenture,
    &#147;defeasance&#148;, or be released from all of their
    obligations with respect to specified covenants and certain
    events of default applicable to any series of debt securities
    issued under each Indenture, &#147;covenant defeasance&#148;,
    if, among other things:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    Hovnanian or K. Hovnanian, as applicable, irrevocably deposit
    with the trustee cash or U.S.&#160;Government Obligations, or a
    combination thereof, as trust funds in an amount to be
    sufficient to pay when due the principal of, premium, if any,
    and interest, if any, on all outstanding debt securities of the
    applicable series and to make any mandatory sinking fund
    payments, if any, thereon when due;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    the deposit will not result in a breach or violation of, or
    cause a default under, any material agreement or instrument
    (other than the Indenture) to which either Hovnanian or K.
    Hovnanian, as applicable, is a party or by which it is
    bound;&#160;and
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    Hovnanian or K. Hovnanian, as applicable, deliver to the trustee
    an opinion of counsel to the effect that the holders of the
    applicable series of debt securities will not recognize income,
    gain or loss for United States federal income tax purposes as a
    result of the defeasance or covenant defeasance and that
    defeasance will not otherwise alter the United States federal
    income tax treatment of the holders&#146; principal of and
    interest payments, if any, on that series of debt securities.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    In the case of defeasance, the opinion must be based on a ruling
    of the Internal Revenue Service or a change in United States
    federal income tax law occurring after the date of the Indenture
    relating to the debt securities of such series, because this
    result would not occur under current tax law, see
    Section&#160;10.4.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    Notwithstanding the foregoing, no discharge, defeasance or
    covenant defeasance described above will affect the following
    obligations to, or rights of, the holders of any series of debt
    securities:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    rights of registration of transfer and exchange of debt
    securities of the applicable series;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    rights of substitution of mutilated, defaced, destroyed, lost or
    stolen debt securities of the applicable series;
</TD>
</TR>

</TABLE>
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    <BR>
    11
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<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<!-- XBRL Pagebreak End -->

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    rights of holders of debt securities of the applicable series to
    receive payments of principal thereof, premium, if any, and
    interest, if any, thereon, upon the original due dates
    therefore, but not upon acceleration, and to receive mandatory
    sinking fund payments thereon when due, if any;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    rights, obligations, duties and immunities of the trustee;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    rights of holders of debt securities of a series as
    beneficiaries with respect to property so deposited with the
    trustee payable to all or any of them;&#160;and
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    obligations of Hovnanian or K. Hovnanian, as applicable, to
    maintain an office or agency in respect of debt securities of
    the series, see Section&#160;10.2.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    Hovnanian or K. Hovnanian, as applicable, may exercise the
    defeasance option with respect to any series of debt securities
    notwithstanding the prior exercise of the covenant defeasance
    option with respect to any series of debt securities. If
    Hovnanian or K. Hovnanian, as applicable, exercises the
    defeasance option with respect to any series of debt securities,
    payment of that series of debt securities may not be accelerated
    because of an Event of Default with respect to that series of
    debt securities. If Hovnanian or K. Hovnanian, as applicable,
    exercises the covenant defeasance option with respect to any
    series of debt securities, payment of that series of debt
    securities may not be accelerated by reason of an Event of
    Default with respect to the covenants to which such covenant
    defeasance is applicable. However, if acceleration were to occur
    by reason of another Event of Default, the realizable value at
    the acceleration date of the cash and U.S.&#160;Government
    Obligations in the defeasance trust could be less than the
    principal of, premium, if any, and interest, if any, and any
    mandatory sinking fund payments, if any, then due on the series
    of debt securities, in that the required deposit in the
    defeasance trust is based upon scheduled cash flow rather than
    market value, which will vary depending upon interest rates and
    other factors.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <I>Modification of the Indenture.</I>&#160;&#160;Except as
    otherwise provided in the applicable prospectus supplement, each
    Indenture provides that the obligors and the trustee may enter
    into supplemental indentures without the consent of the holders
    of the debt securities to:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    evidence the assumption by a successor entity of the obligations
    of any of the obligors under that Indenture;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    add covenants or new events of default for the protection of the
    holders of the debt securities;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    cure any ambiguity or defect or correct any inconsistency in the
    Indenture;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    establish the form and terms of debt securities of any series;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    evidence the acceptance of appointment by a successor trustee;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    secure the debt securities of the applicable series or provide
    for guarantees of the debt securities of any series and evidence
    the termination or discharge of any guarantee of or lien
    securing the debt securities of such series when permitted under
    the applicable Indenture;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    designate a bank or trust company other than the trustee
    specified in the applicable prospectus supplement to act as
    trustee for a series of debt securities;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    subject to the following paragraph, modify the existing
    covenants and events of default solely in respect of, or add new
    covenants and events of default that apply solely to, debt
    securities not yet issued and outstanding on the date of the
    supplemental indenture;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    provide for the issuance of debt securities of any series in
    uncertificated form in addition to or in place of certificated
    debt securities of any series and exchangeability of those debt
    securities for fully registered debt securities;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    modify, eliminate or add to the provisions of the Indenture as
    necessary to effect the qualification of the Indenture under the
    Trust Indenture Act of 1939 and to add provisions expressly
    permitted by that Act;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    modify the provisions to provide for the denomination of debt
    securities in foreign currencies that will not adversely affect
    the interests of the holders of the debt securities in any
    material respect, see Section&#160;8.1;
</TD>
</TR>

</TABLE>
<!-- XBRL Pagebreak Begin -->

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <BR>
    12
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#Y88639tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<!-- XBRL Pagebreak End -->

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    to conform the text of the applicable Indenture, Offered Debt
    Securities or guarantees to this &#147;Description of Debt
    Securities&#148; or the comparable provisions in the applicable
    prospectus supplement to the extent this &#147;Description of
    Debt Securities&#148; or such comparable provision in a
    prospectus supplement was intended to be a verbatim recitation
    of a provision of such Indenture, Offered Debt Securities or
    guarantees;&#160;and
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    make any other change with respect to the debt securities of any
    series that does not adversely affect the legal rights of
    holders of the debt securities of such series.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    Each Indenture also contains provisions permitting the obligors
    and the trustee, with the consent of the holders of not less
    than a majority in aggregate principal amount of debt securities
    of each series then outstanding and affected, to add any
    provisions to, or change in any manner or eliminate any of the
    provisions of, the applicable Indenture or any supplemental
    indenture or modify in any manner the rights of the holders of
    the debt securities of that series; provided that the obligors
    and the trustee may not, without the consent of the holder of
    each outstanding debt security affected thereby:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    change the stated final maturity of any debt security, reduce
    the principal amount thereof, reduce the rate or extend the time
    of payment of interest (including default interest), if any,
    thereon, reduce or alter the method of computation of any amount
    payable on redemption, repayment or purchase by the issuer,
    change the coin or currency in which principal, premium, if any,
    and interest, if any, are payable, reduce the amount of the
    principal of any original issue discount security payable upon
    acceleration or provable in bankruptcy, impair or affect the
    right to institute suit for the enforcement of any payment or
    repayment thereof or, if applicable, adversely affect any right
    of prepayment at the option of the holder or make any change
    adverse to the interests of the holders in the terms and
    conditions of the guarantee by Hovnanian or by the subsidiary
    guarantors or modify the ranking or priority of the debt
    securities of any series or any guarantees of the debt
    securities of such series;&#160;or
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    reduce the stated percentage in aggregate principal amount of
    debt securities of any series issued under the Indenture, see
    Section&#160;8.2.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <I>Consolidation, Merger, Sale or
    Conveyance.</I>&#160;&#160;Except as otherwise provided in the
    applicable prospectus supplement, the K. Hovnanian Indentures
    provide that K. Hovnanian or Hovnanian may, and the Hovnanian
    Indentures provide that Hovnanian may, without the consent of
    the holders of debt securities, consolidate with, merge into or
    transfer, exchange or dispose of all of its properties to, any
    other corporation or partnership organized under the laws of the
    United States, any state thereof or the District of Columbia,
    provided that:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    the successor corporation or partnership assumes all obligations
    of K. Hovnanian or Hovnanian, as the case may be, by
    supplemental indenture satisfactory in form to the applicable
    trustee executed and delivered to that trustee, under the
    Indentures and the debt securities;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    immediately after giving effect to the consolidation, merger,
    exchange or other disposition, no Event of Default, and no event
    which, after notice or lapse of time or both, would become an
    Event of Default, will have occurred and be continuing;&#160;and
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    certain other conditions are met, see Section&#160;9.1.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <I>Conditions for Release of K. Hovnanian.</I>&#160;&#160;Except
    as otherwise provided in a prospectus supplement, each
    K.&#160;Hovnanian Indenture provides that K. Hovnanian may be
    released from its obligations under the K. Hovnanian Indenture
    and the K. Hovnanian Debt Securities, without the consent of the
    holders of the K. Hovnanian Debt Securities of any series,
    provided that:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    Hovnanian or any successor to Hovnanian has assumed the
    obligations of K. Hovnanian under the K.&#160;Hovnanian
    Indenture and the K. Hovnanian Debt Securities by supplemental
    indenture satisfactory in form to the applicable trustee
    executed and delivered to that trustee;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    Hovnanian delivers to the trustee an opinion of counsel to the
    effect that the holders of K. Hovnanian Debt Securities will not
    recognize income, gain or loss for United States federal income
    tax purposes as a result of the release of K. Hovnanian from its
    obligations under the K. Hovnanian Indenture and the K.
    Hovnanian
</TD>
</TR>
<!-- XBRL Paragraph Pagebreak -->

</TABLE>
<!-- XBRL Pagebreak Begin -->

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <BR>
    13
</DIV><!-- END PAGE WIDTH -->
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#Y88639tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<!-- XBRL Pagebreak End -->

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>
</TD>
    <TD align="left">
    Debt Securities and that such release will not otherwise alter
    the United States federal income tax treatment of the holders of
    the K. Hovnanian Debt Securities;&#160;and
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    certain other conditions are met, see Section&#160;14.1 of the
    K. Hovnanian Indentures.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: transparent">

    <B><FONT style="font-family: 'Times New Roman', Times">Provisions
    Applicable Solely to Senior Subordinated Debt Securities and
    Subordinated Debt Securities</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <I>Subordination.</I>&#160;&#160;The Subordinated Debt
    Securities will be subordinate and junior in right of payment,
    to the extent described in the Subordinated Debt Indentures, to
    all Senior Indebtedness of the obligors. The Senior Subordinated
    Debt Securities will be subordinate and junior in right of
    payment, to the extent described in the Senior Subordinated Debt
    Indentures, to all Senior Indebtedness of the obligors. The
    Senior Subordinated Debt Securities will rank senior to all
    existing and future Indebtedness of the obligors that is neither
    Senior Indebtedness of the obligors nor Senior Subordinated
    Indebtedness and only Indebtedness of the obligors that is
    Senior Indebtedness of the obligors will rank senior to the
    Senior Subordinated Debt Securities in accordance with the
    subordination provisions of the Senior Subordinated Debt
    Indentures.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    Except as otherwise provided in the applicable prospectus
    supplement:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <I>&#147;Senior Indebtedness&#148; </I>of the obligors is
    defined in the Subordinated Debt Indentures and the Senior
    Subordinated Debt Indentures as Indebtedness of the obligors
    outstanding at any time, other than the Indebtedness evidenced
    by such debt securities, except:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    any Indebtedness as to which, by the terms of the instrument
    creating or evidencing the same, it is provided that the
    Indebtedness is not senior or prior in right of payment to such
    debt securities or is <I>pari passu </I>or subordinate by its
    terms in right of payment to such debt securities;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    renewals, extensions and modifications of any such Indebtedness;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    any Indebtedness of the obligors to a wholly-owned Subsidiary of
    the obligors;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    any liability for federal, state or local taxes;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    interest accruing after the filing of a petition initiating
    certain events of bankruptcy or insolvency unless that interest
    is an allowed claim enforceable against the obligor in a
    proceeding under federal or state bankruptcy laws;&#160;and
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    trade payables.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <I>&#147;Senior Subordinated Indebtedness&#148; </I>of Hovnanian
    or K. Hovnanian, as applicable, is defined in the Senior
    Subordinated Debt Indentures as the applicable Senior
    Subordinated Debt Securities and any other Indebtedness of
    Hovnanian or K. Hovnanian, as applicable, that ranks <I>pari
    passu </I>with such Senior Subordinated Debt Securities. Any
    Indebtedness of Hovnanian or K. Hovnanian, as applicable, that
    is subordinate or junior by its terms in right of payment to any
    other Indebtedness of Hovnanian or K. Hovnanian, as applicable,
    will be subordinate to Senior Subordinated Indebtedness of
    Hovnanian or K. Hovnanian, as applicable, unless the instrument
    creating or evidencing the same or pursuant to which the same is
    outstanding specifically provides that this Indebtedness is to
    rank <I>pari passu </I>with other Senior Subordinated
    Indebtedness of Hovnanian or K. Hovnanian, as applicable, and is
    not subordinated by its terms to any Indebtedness of Hovnanian
    that is not Senior Indebtedness of Hovnanian or
    K.&#160;Hovnanian, as applicable.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    Senior Subordinated Indebtedness of Hovnanian as a guarantor of
    K. Hovnanian Senior Subordinated Debt Securities or of a
    subsidiary guarantor will have a similar meaning.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    Except as otherwise provided in the applicable prospectus
    supplement, the following subordination provisions will apply to
    the Senior Subordinated Debt Securities and the Subordinated
    Debt Securities:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    If:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    Hovnanian or K. Hovnanian, as applicable, should default in the
    payment of any principal of, premium, if any, or interest, if
    any, on any Senior Indebtedness of Hovnanian or K. Hovnanian, as
    applicable, when the
</TD>
</TR>

</TABLE>
<!-- XBRL Paragraph Pagebreak -->
<!-- XBRL Pagebreak Begin -->

<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <BR>
    14
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    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>
</TD>
    <TD align="left">
    same becomes due and payable, whether at maturity or at a date
    fixed for prepayment or by declaration of acceleration or
    otherwise,&#160;or
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    any other default with respect to Senior Indebtedness of
    Hovnanian or K. Hovnanian, as applicable, occurs and the
    maturity of the Senior Indebtedness has been accelerated in
    accordance with its terms, then, upon written notice of the
    default to Hovnanian or K. Hovnanian, as applicable, by the
    holders of the Senior Indebtedness or any trustee therefor,
    unless and until the default is cured or waived or has ceased to
    exist or the acceleration has been rescinded, no direct or
    indirect payment, in cash, property or securities, by set-off or
    otherwise, will be made or agreed to be made for principal of,
    premium, if any, or interest, if any, on any of the Senior
    Subordinated Debt Securities or the Subordinated Debt
    Securities, or in respect of any redemption, retirement,
    purchase or other acquisition of the Senior Subordinated Debt
    Securities or the Subordinated Debt Securities other than those
    made in capital stock of Hovnanian, or cash in lieu of
    fractional shares thereof, see Section 13.1 of the Senior
    Subordinated Debt Indentures and Section&#160;13.1 of the
    Subordinated Debt Indentures.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    If any default, other than a default described in the bullet
    points directly above, occurs under the Senior Indebtedness of
    Hovnanian or K. Hovnanian, as applicable, pursuant to which the
    maturity thereof may be accelerated immediately or the
    expiration of any applicable grace periods occurs, a
    &#147;Senior Nonmonetary Default&#148;, then, upon the receipt
    by Hovnanian or K. Hovnanian, as applicable, and the trustee of
    written notice thereof, a &#147;payment notice&#148;, from or on
    behalf of holders of 25% or more of the aggregate principal
    amount of Senior Indebtedness specifying an election to prohibit
    the payment and other action by Hovnanian or K. Hovnanian, as
    applicable, in accordance with the following provisions of this
    paragraph&#160;Hovnanian or K. Hovnanian, as applicable, may not
    make any payment or take any other action that would be
    prohibited by the bullet points directly above during the
    period, the &#147;payment blockage period&#148; commencing on
    the date of receipt of the payment notice and ending on the
    earlier of:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    the date, if any, on which the holders of such Senior
    Indebtedness or their representative notify the trustee that the
    Senior Nonmonetary Default is cured, waived or ceases to exist
    or the Senior Indebtedness to which the Senior Nonmonetary
    Default relates is discharged,&#160;or
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    the 120th&#160;day after the date of receipt of the payment
    notice.
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    Notwithstanding the provisions described in the immediately
    preceding bullet points, Hovnanian or K.&#160;Hovnanian, as
    applicable, may resume payments on the Senior Subordinated Debt
    Securities and the Subordinated Debt Securities after the
    payment blockage period. After the expiration of the initial
    payment blockage period, no subsequent payment blockage period
    may be commenced on the basis of a Senior Nonmonetary Default
    which existed or was continuing on the date of the commencement
    of the initial payment blockage period until at least 270
    consecutive days have elapsed from the last day of the initial
    payment blockage period.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    If:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    without the consent of Hovnanian or K. Hovnanian, as applicable,
    a receiver, conservator, liquidator or trustee of Hovnanian or
    K. Hovnanian, as applicable, or of any of its property is
    appointed by the order or decree of any court or agency or
    supervisory authority having jurisdiction, and the decree or
    order remains in effect for more than 60&#160;days, Hovnanian or
    K. Hovnanian, as applicable, is adjudicated bankrupt or
    insolvent, any of its property is sequestered by court order and
    that order remains in effect for more than 60&#160;days, or a
    petition is filed against Hovnanian or K. Hovnanian, as
    applicable, under any state or federal bankruptcy,
    reorganization, arrangement, insolvency, readjustment of debt,
    dissolution, liquidation or receivership law of any jurisdiction
    whether now or hereafter in effect, and is not dismissed within
    60&#160;days after such filing;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    Hovnanian or K. Hovnanian, as applicable:
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="6%"></TD>
    <TD width="2%"></TD>
    <TD width="92%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    commences a voluntary case or other proceeding seeking
    liquidation, reorganization, arrangement, insolvency,
    readjustment of debt, dissolution, liquidation or other relief
    with respect to itself or its debt or other liabilities under
    any bankruptcy, insolvency or other similar law now or hereafter
    in effect or seeking
</TD>
</TR>

</TABLE>
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    <BR>
    15
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    <TD width="92%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>
</TD>
    <TD align="left">
    the appointment of a trustee, receiver, liquidator, custodian or
    other similar official of it or any substantial part of its
    property;
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="6%"></TD>
    <TD width="2%"></TD>
    <TD width="92%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    consents to any such relief or to the appointment of or taking
    possession by any of the above officials in an involuntary case
    or other proceeding commenced against it;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    fails generally to, or cannot, pay its debts generally as they
    become due;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    takes any corporate action to authorize or effect any of the
    foregoing;&#160;or
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    any Subsidiary of the obligor takes, suffers or permits to exist
    any of the events or conditions referred to in any of the above
    bullet points,
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    then all Senior Indebtedness of Hovnanian or K. Hovnanian, as
    applicable, including any interest thereon accruing after the
    commencement of any proceedings, will first be paid in full
    before any payment or distribution, whether in cash, securities
    or other property, is made by the obligor to any holder of
    Senior Subordinated Debt Securities or Subordinated Debt
    Securities on account of the principal of, premium, if any, or
    interest, if any, on the Senior Subordinated Debt Securities or
    Subordinated Debt Securities, as the case may be.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    Any payment or distribution, whether in cash, securities or
    other property, other than securities of Hovnanian or K.
    Hovnanian, as applicable, or any other corporation provided for
    by a plan of reorganization or readjustment the payment of which
    is subordinate, at least to the extent provided in the
    subordination provisions with respect to the indebtedness
    evidenced by the Senior Subordinated Debt Securities or the
    Subordinated Debt Securities, to the payment of all Senior
    Indebtedness of the obligor then outstanding and to any
    securities issued in respect thereof under a plan of
    reorganization or readjustment, that would otherwise, but for
    the subordination provisions, be payable or deliverable in
    respect of the Senior Subordinated Debt Securities or the
    Subordinated Debt Securities of any series will be paid or
    delivered directly to the holders of Senior Indebtedness of the
    obligor in accordance with the priorities then existing among
    such holders until all Senior Indebtedness of Hovnanian or K.
    Hovnanian, as applicable, including any interest thereon
    accruing after the commencement of proceedings, has been paid in
    full. In the event of any proceeding, after payment in full of
    all sums owing with respect to Senior Indebtedness of the
    obligor, the holders of Senior Subordinated Debt Securities,
    together with the holders of any obligations of the obligor
    ranking on a parity with the Senior Subordinated Debt
    Securities, will be entitled to be repaid from the remaining
    assets of Hovnanian or K. Hovnanian, as applicable, the amounts
    at that time due and owing on account of unpaid principal of,
    premium, if any, or interest, if any, on the Senior Subordinated
    Debt Securities and such other obligations before any payment or
    other distribution, whether in cash, property or otherwise,
    shall be made on account of any capital stock or obligations of
    the obligor ranking junior to the Senior Subordinated Debt
    Securities, including the Subordinated Debt Securities, and such
    other obligations, see Section&#160;13.1 of the Senior
    Subordinated Debt Indentures and Section&#160;13.1 of the
    Subordinated Debt Indentures.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    If any payment or distribution of any character, whether in
    cash, securities or other property, other than securities of
    Hovnanian or K. Hovnanian, as applicable, or any other
    corporation provided for by a plan of reorganization or
    readjustment the payment of which is subordinate, at least to
    the extent provided in the subordination provisions with respect
    to the Senior Subordinated Debt Securities or the Subordinated
    Debt Securities, to the payment of all Senior Indebtedness of
    Hovnanian or K. Hovnanian, as applicable, then outstanding and
    to any securities issued in respect thereof under the plan of
    reorganization or readjustment, will be received by the trustee,
    or any holder of any Senior Subordinated Debt Securities or
    Subordinated Debt Securities in contravention of any of the
    terms of the Senior Subordinated Debt Indenture or the
    Subordinated Debt Indenture, as the case may be, such payment or
    distribution of securities will be received in trust for the
    benefit of, and will be paid over or delivered and transferred
    to, the holders of the Senior Indebtedness of Hovnanian or K.
    Hovnanian, as applicable, then outstanding in accordance with
    the priorities then existing among the holders for application
    to the payment of all Senior Indebtedness of Hovnanian or K.
    Hovnanian, as applicable, remaining unpaid to the extent
    necessary to pay all the Senior Indebtedness of Hovnanian or K.
    Hovnanian, as applicable, in full, see Section&#160;13.1 of the
    Senior Subordinated Debt Indentures and Section&#160;13.1 of the
    Subordinated Debt Indentures.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    By reason of the subordination, in the event of the insolvency
    of Hovnanian or K. Hovnanian, as applicable, holders of Senior
    Indebtedness of Hovnanian or K. Hovnanian, as applicable, may
    receive more, ratably, than holders of the Senior Subordinated
    Debt Securities or Subordinated Debt Securities of Hovnanian or
    K. Hovnanian,
</DIV>
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    <BR>
    16
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<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    as applicable. Subordination will not prevent the occurrence of
    any Event of Default, as defined in the Indentures, or limit the
    right of acceleration in respect of the Senior Subordinated Debt
    Securities or Subordinated Debt Securities.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: transparent">

    <B><FONT style="font-family: 'Times New Roman', Times">Concerning
    the Trustee</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    Information concerning the trustee for a series of debt
    securities will be set forth in the prospectus supplement
    relating to that series of debt securities. Hovnanian, K.
    Hovnanian and certain of Hovnanian&#146;s other subsidiaries may
    maintain bank accounts, borrow money and have other commercial
    banking, investment banking and other business relationships
    with the trustee under an Indenture and its affiliates in the
    ordinary course of business. The trustee under an Indenture or
    its affiliates may participate as underwriters, agents or
    dealers in any offering of K. Hovnanian debt securities
    <FONT style="white-space: nowrap">and/or</FONT>
    Hovnanian debt securities.
</DIV>

<A name='Y88639110'>
<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: transparent">

    <B><FONT style="font-family: 'Times New Roman', Times">DESCRIPTION
    OF CAPITAL STOCK</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    The following description of our common stock and preferred
    stock, together with the additional information we include in
    any applicable prospectus supplement, summarizes the material
    terms and provisions of the common stock and the preferred stock
    that may be offered from time to time pursuant to this
    prospectus. While the terms we have summarized below will apply
    generally to any future common stock or preferred stock that we
    may offer, we will describe the particular terms of any class or
    series of these securities in more detail in the applicable
    prospectus supplement. For the complete terms of our common
    stock and preferred stock, please refer to Hovnanian&#146;s
    amended certificate of incorporation, the &#147;Certificate of
    Incorporation&#148; and restated bylaws, the &#147;Restated
    By-Laws&#148; that are incorporated by reference as exhibits to
    the registration statement of which this prospectus is a part.
    The terms of these securities may also be affected by the
    General Corporation Law of the State of Delaware. The summary
    below and that contained in any prospectus supplement is
    qualified in its entirety by reference to the Certificate of
    Incorporation and Restated By-laws.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    The authorized capital stock of Hovnanian is
    230,100,000&#160;shares consisting of 200,000,000&#160;shares of
    Class&#160;A Common Stock, par value $.01 per share, the
    &#147;Class&#160;A Common Stock&#148;, 30,000,000&#160;shares of
    Class&#160;B Common Stock, par value $.01 per share, the
    &#147;Class&#160;B Common Stock&#148;, and 100,000&#160;shares
    of preferred stock, par value $.01 per share, in the series and
    with the voting powers, designations, preferences and relative,
    participating, optional or other special rights, and
    qualifications, limitations or restrictions thereof, as may be
    fixed from time to time by the Board of Directors of Hovnanian
    for each series.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: transparent">

    <B><FONT style="font-family: 'Times New Roman', Times">Common
    Stock</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    As of December&#160;17, 63,277,710&#160;shares of Class&#160;A
    Common Stock and 14,564,595&#160;shares of Class&#160;B Common
    Stock were issued and outstanding. The Class&#160;A Common Stock
    is traded on the New York Stock Exchange under the symbol
    &#147;HOV&#148;. There is no established public trading market
    for the Class&#160;B Common Stock. In order to trade
    Class&#160;B Common Stock, the shares must be converted into
    Class&#160;A Common Stock on a
    <FONT style="white-space: nowrap">one-for-one</FONT>
    basis. Any offering of common stock made hereby will consist
    only of Class&#160;A Common Stock. The outstanding Class&#160;A
    Common Stock is, and any Class&#160;A Common Stock offered
    pursuant to this prospectus and any prospectus supplement when
    issued and paid for will be, fully paid and non-assessable.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <I>Dividends.</I>&#160;&#160;Dividends on the Class&#160;A
    Common Stock will be paid if, when and as determined by the
    Board of Directors of Hovnanian out of funds legally available
    for this purpose. Certain debt instruments to which Hovnanian is
    a party contain restrictions on the payment of cash dividends.
    As a result of the most restrictive of these provisions,
    Hovnanian is not currently able to pay any cash dividends and
    anticipates that it will be prohibited from doing so for the
    foreseeable future. Hovnanian has never paid cash dividends on
    its Class&#160;A Common Stock nor does it currently intend to
    pay cash dividends on its Class&#160;A Common Stock. If and when
    declared, the amount of any regular cash dividend payable on a
    share of Class&#160;A Common Stock will be an amount equal to
    110% of the corresponding regular cash dividend payable on a
    share of Class&#160;B Common Stock.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <I>Voting Rights.</I>&#160;&#160;Holders of Class&#160;A Common
    Stock are entitled to one vote for each share held by them on
    all matters presented to shareholders. Holders of Class&#160;B
    Common Stock are generally entitled to ten votes per share.
</DIV>
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    <BR>
    17
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<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <I>Liquidation Rights.</I>&#160;&#160;After satisfaction of the
    preferential liquidation rights of any preferred stock, the
    holders of the Class&#160;A Common Stock and Class&#160;B Common
    Stock are entitled to share ratably as a single class in the
    distribution of all remaining net assets.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <I>Preemptive and Other Rights.</I>&#160;&#160;The holders of
    Class&#160;A Common Stock do not have preemptive rights as to
    additional issues of common stock or conversion rights. The
    shares of Class&#160;A Common Stock are not subject to
    redemption or to any further calls or assessments and are not
    entitled to the benefit of any sinking fund provisions. The
    rights, preferences and privileges of holders of Class&#160;A
    Common Stock are subject to, and may be adversely affected by,
    the rights of the holder of shares of any series of preferred
    stock that Hovnanian may designate and issue in the future.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: transparent">

    <B><FONT style="font-family: 'Times New Roman', Times">Preferred
    Stock</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    The Certificate of Incorporation authorizes the Board of
    Directors of Hovnanian to issue from time to time up to
    100,000&#160;shares of preferred stock, in one or more series,
    and with the voting powers, designations, preferences and
    relative, participating, optional or other special rights, and
    qualifications, limitations or restrictions thereof, as may be
    fixed from time to time by the Board of Directors of Hovnanian
    for each series. The preferred stock may be used by the Board of
    Directors of Hovnanian without further action by
    Hovnanian&#146;s stockholders as an anti-takeover device. As of
    December&#160;17, 2010, 5,600&#160;shares of Hovnanian&#146;s
    preferred stock were issued and outstanding, consisting of
    entirely of Hovnanian&#146;s 7.625% Series&#160;A Preferred
    Stock (liquidation preference $25,000.00 per share) par value
    $.01 per share, the &#147;Series&#160;A Preferred Stock&#148;.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    The applicable prospectus supplement will describe the terms of
    any preferred stock that may be offered, including the number of
    shares, dividend rate and dividend period, liquidation value,
    voting rights, conversion rights (if any), dividend and
    liquidation preferences, redemption terms, whether depositary
    shares representing fractional interests will be offered, and
    any other rights, privileges and limitations thereof.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 2%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: transparent">

    <B><I><FONT style="font-family: 'Times New Roman', Times">7.625%
    Series&#160;A Preferred Stock</FONT></I></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    Dividends on the Series&#160;A Preferred Stock are not
    cumulative. The Series&#160;A Preferred Stock ranks senior to
    Hovnanian&#146;s common stock with respect to the payment of
    dividends to the extent provided in the Certificate of
    Designations, Powers, Preferences and Rights of the 7.625%
    Series&#160;A Preferred Stock (the &#147;Certificate&#148;). The
    Certificate provides that unless dividends have been declared
    and paid or set apart for payment on the Series&#160;A Preferred
    Stock for the then-currently quarterly dividend period, no
    dividend may be declared or paid or set apart for payment on
    Hovnanian&#146;s common stock for that period, other than
    dividends or distributions paid in shares of, or options,
    warrants or rights to subscribe for or purchase shares of, the
    common stock of Hovnanian or any other stock of Hovnanian
    ranking, as to the payment of dividends and the distribution of
    assets upon dissolution, liquidation or winding up of Hovnanian,
    junior to the Series&#160;A Preferred Stock.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    The Series&#160;A Preferred Stock is traded as depositary
    shares, with each depositary share representing
    <FONT style="white-space: nowrap">1/1000th&#160;of</FONT>
    a share of Series&#160;A Preferred Stock, and is listed on the
    NASDAQ Global Market under the symbol &#147;HOVNP&#148;.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    The Series&#160;A Preferred Stock has no voting rights except as
    provided for in the Certificate or as otherwise required by law.
    However, so long as any shares of Series&#160;A Preferred Stock
    are outstanding, Hovnanian will not, without the vote of the
    holders of at least a majority of the shares of the
    Series&#160;A Preferred Stock, (1)&#160;authorize, create or
    issue any capital stock of Hovnanian ranking, as to dividends or
    upon liquidation, dissolution or winding up, senior to the
    Series&#160;A Preferred Stock, or reclassify any authorized
    capital stock of Hovnanian into any such shares of such capital
    stock, or issue any obligation or security convertible into or
    evidencing the right to purchase any such shares, or
    (2)&#160;amend, alter or repeal the Certificate, or the
    certificate of incorporation of Hovnanian, whether by merger,
    consolidation or otherwise, in a way that adversely affects the
    powers, preferences or special rights of the Series&#160;A
    Preferred Stock. Any increase in the amount of authorized common
    stock or preferred stock or any increase or decrease in the
    number of shares of any series of preferred stock or the
    authorization, creation and issuance of other classes or series
    of stock, in each case ranking equally with or junior to the
    Series&#160;A Preferred Stock will not be deemed to adversely
    affect such powers, preferences or special rights.
</DIV>
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    <BR>
    18
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<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    The Series&#160;A Preferred Stock has liquidation preferences
    over Hovnanian&#146;s common stock. Upon any liquidation,
    dissolution or winding up of Hovnanian, the holders of the
    Series&#160;A Preferred Stock will be entitled to receive out of
    the assets of Hovnanian available for distribution to its
    stockholders, an amount equal to the liquidation preference of
    $25,000.00 per share plus all accrued and unpaid dividends
    before any payment or distribution out of Hovnanian&#146;s
    assets may be made to or set apart for the holders of
    Hovnanian&#146;s common stock or other junior equity. If, upon
    any liquidation, dissolution or winding up of Hovnanian, the
    assets of Hovnanian, or proceeds thereof, distributable among
    the holders of shares Series&#160;A Preferred Stock and any
    stock ranking equally with the Series&#160;A Preferred Stock
    shall be insufficient to pay in full the preferential amounts to
    which such stock would be entitled, then such assets, or the
    proceeds thereof, shall be distributable among such holders
    ratably in accordance with the respective amounts which would be
    payable on such shares if all amounts payable thereon were paid
    in full. Neither a consolidation nor merger of Hovnanian, nor a
    sale, lease, exchange or transfer of all or substantially all of
    Hovnanian&#146;s assets will be deemed to be a liquidation,
    dissolution or winding up of Hovnanian.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: transparent">

    <B><FONT style="font-family: 'Times New Roman', Times">Rights
    Plan</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    On July&#160;29, 2008, the Board of Directors of Hovnanian
    adopted a rights plan, the &#147;Rights Plan,&#148; and declared
    a dividend of one preferred share purchase right for each
    outstanding share of Class&#160;A Common Stock and Class&#160;B
    Common Stock, which was subsequently paid to stockholders of
    record as of August&#160;15, 2008. Subject to the terms,
    provisions and conditions of the rights plan, if and when they
    become exercisable, each right would entitle its holder to
    purchase from Hovnanian one ten-thousandth of a share of
    Hovnanian&#146;s Series&#160;B Junior Preferred Stock for a
    purchase price of $35.00, the &#147;Purchase Price.&#148; If
    issued, each fractional share of Preferred Stock would give the
    stockholder approximately the same dividend, voting and
    liquidation rights as does one share of Hovnanian&#146;s
    Class&#160;A Common Stock. However, prior to exercise, a right
    does not give its holder any rights as a stockholder of
    Hovnanian, including without limitation any dividend, voting or
    liquidation rights.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    The Board of Directors of Hovnanian adopted the Rights Plan in
    an effort to protect stockholder value by attempting to protect
    against a possible limitation on Hovnanian&#146;s ability to use
    our net operating loss carryforwards, &#147;NOLs,&#148; to
    reduce potential future federal income tax obligations.
    Hovnanian has experienced and continues to experience
    substantial operating losses, and under the Internal Revenue
    Code and rules promulgated by the Internal Revenue Service,
    Hovnanian may &#147;carry forward&#148; these losses in certain
    circumstances to offset any current and future earnings and thus
    reduce its federal income tax liability, subject to certain
    requirements and restrictions. To the extent that the NOLs do
    not otherwise become limited, Hovnanian believes that it will be
    able to carry forward a significant amount of NOLs, and
    therefore these NOLs could be a substantial asset to Hovnanian.
    However, if Hovnanian experiences an &#147;Ownership
    Change,&#148; as defined in Section&#160;382 of the Internal
    Revenue Code, Hovnanian&#146;s ability to use the NOLs will be
    substantially limited, and the timing of the usage of the NOLs
    could be substantially delayed, which could therefore
    significantly impair the value of that asset. The Rights Plan is
    intended to act as a deterrent to any person or group acquiring
    4.9% or more of our outstanding Class&#160;A Common Stock, an
    &#147;Acquiring Person,&#148; without the approval of
    Hovnanian&#146;s Board.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <I>Exercisability.</I>&#160;&#160;The rights will not be
    exercisable until the earlier of (i)&#160;10 business days after
    a public announcement by us that a person or group has become an
    Acquiring Person and (ii)&#160;10 business days after the
    commencement of a tender or exchange offer by a person or group
    for 4.9% of the Class&#160;A Common Stock.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    Until the date that the rights become exercisable, the
    &#147;Distribution Date,&#148; the rights are evidenced by
    Hovnanian&#146;s Class&#160;A Common Stock and Class&#160;B
    Common Stock certificates which contain a notation to that
    effect. Any transfer of shares of Class&#160;A Common Stock
    <FONT style="white-space: nowrap">and/or</FONT>
    Class&#160;B Common Stock prior to the Distribution Date
    constitutes a transfer of the associated rights. After the
    Distribution Date, the rights may be transferred separately from
    the transfer of the underlying shares of Class&#160;A Common
    Stock or Class&#160;B Common Stock. After the Distribution Date,
    each holder of a right, other than rights beneficially owned by
    the Acquiring Person (which will thereupon become void), will
    thereafter have the right to receive upon exercise of a right
    and payment of the Purchase Price, that number of shares of
    Class&#160;A Common Stock or Class&#160;B Common Stock, as the
    case may be, having a market value of two times the Purchase
    Price.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <I>Exchange.</I>&#160;&#160;After the Distribution Date, the
    Board of Directors may exchange the rights (other than rights
    owned by an Acquiring Person which will have become void), in
    whole or in part, at an exchange ratio of one share
</DIV>
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    <BR>
    19
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<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
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<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    of Common Stock, or a fractional share of Series&#160;B
    Preferred Stock (or of a share of a similar class or series of
    Hovnanian&#146;s preferred stock having similar rights,
    preferences and privileges) of equivalent value, per right
    (subject to adjustment).
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <I>Expiration.</I>&#160;&#160;The rights and the Rights Plan
    will expire on the earliest of (i)&#160;August&#160;14, 2018,
    (ii)&#160;the time at which the rights are redeemed pursuant to
    the Rights Agreement, (iii)&#160;the time at which the rights
    are exchanged pursuant to the Rights Agreement, (iv)&#160;the
    repeal of Section&#160;382 of the Internal Revenue Code or any
    successor statute if the Board of Directors determines that the
    Rights Agreement is no longer necessary for the preservation of
    tax benefits, and (v)&#160;the beginning of a taxable year of
    Hovnanian to which the Board of Directors determines that no tax
    benefits may be carried forward.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <I>Redemption.</I>&#160;&#160;At any time prior to the time an
    Acquiring Person becomes such, the Board of Directors may redeem
    the rights in whole, but not in part, at a price of $0.01 per
    right, the &#147;Redemption&#160;Price.&#148; The redemption of
    the rights may be made effective at such time, on such basis and
    with such conditions as the Board of Directors in its sole
    discretion may establish. Immediately upon any redemption of the
    rights, the right to exercise the rights will terminate and the
    only right of the holders of rights will be to receive the
    Redemption&#160;Price.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <I>Anti-Dilution Provisions.</I>&#160;&#160;The Board of
    Directors may adjust the purchase price of the preferred shares,
    the number of preferred shares issuable and the number of
    outstanding rights to prevent dilution that may occur as a
    result of certain events, including among others, a stock
    dividend, a stock split or a reclassification of the preferred
    shares or Hovnanian&#146;s Class&#160;A Common Stock or
    Class&#160;B Common Stock. No adjustments to the purchase price
    of less than 1% will be made.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <I>Amendments.</I>&#160;&#160;Before the Distribution Date, the
    Board of Directors may amend or supplement the Rights Plan
    without the consent of the holders of the rights. After the
    Distribution Date, the Board of Directors may amend or
    supplement the rights Plan only to cure an ambiguity, to alter
    time period provisions, to correct inconsistent provisions, or
    to make any additional changes to the Rights Plan, but only to
    the extent that those changes do not impair or adversely affect
    any rights holder.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: transparent">

    <B><FONT style="font-family: 'Times New Roman', Times">Transfer
    Restrictions in the Certificate of Incorporation</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    At a special meeting of stockholders held on December&#160;5,
    2008, Hovnanian&#146;s stockholders approved an amendment to its
    Certificate of Incorporation to restrict certain transfers of
    Class&#160;A Common Stock in order to preserve the tax treatment
    of Hovnanian&#146;s NOLs under Section&#160;382 of the Internal
    Revenue Code. Subject to certain exceptions pertaining to
    pre-existing 5% stockholders and Class&#160;B stockholders, the
    transfer restrictions in the amended Certificate of
    Incorporation generally restrict any direct or indirect transfer
    (such as transfers of Hovnanian&#146;s stock that result from
    the transfer of interests in other entities that own
    Hovnanian&#146;s stock) if the effect would be to:
    (i)&#160;increase the direct or indirect ownership of
    Hovnanian&#146;s stock by any person (or public group) from less
    than 5% to 5% or more of Hovnanian&#146;s common stock;
    (ii)&#160;increase the percentage of Hovnanian&#146;s common
    stock owned directly or indirectly by a person (or public group)
    owning or deemed to own 5% or more of Hovnanian&#146;s common
    stock; or (iii)&#160;create a new public group. Transfers
    included under the transfer restrictions include sales to
    persons (or public groups) whose resulting percentage ownership
    (direct or indirect) of common stock would exceed the 5%
    thresholds discussed above, or to persons whose direct or
    indirect ownership of common stock would by attribution cause
    another person (or public group) to exceed such threshold.
</DIV>

<A name='Y88639111'>
<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: transparent">

    <B><FONT style="font-family: 'Times New Roman', Times">DESCRIPTION
    OF DEPOSITARY SHARES</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    The following description of depositary shares representing
    shares of our preferred stock sets forth certain general terms
    and provisions of depositary agreements, depositary shares and
    depositary receipts. The particular terms of the depositary
    shares and related agreements and receipts will be described in
    the prospectus supplement relating to those depositary shares.
    The description set forth below and in any prospectus supplement
    is not complete, and is subject to, and qualified in its
    entirety by reference to, the applicable depositary agreement, a
    form of which has been incorporated by reference as an exhibit
    to the Registration Statement of which this prospectus forms a
    part, and the depositary receipts, which will be filed as
    exhibits to the Registration Statement or filed as exhibits to
    one or more current reports on
    <FONT style="white-space: nowrap">Form&#160;8-K</FONT>
    and incorporated by reference herein. The specific terms of the
</DIV>
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    <BR>
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<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    depositary shares as described in the applicable prospectus
    supplement will supplement and, if applicable, may modify or
    replace the general terms described in this prospectus.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: transparent">

    <B><FONT style="font-family: 'Times New Roman', Times">General</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    Hovnanian may, at its option, elect to offer fractional shares
    of preferred stock, rather than full shares of preferred stock.
    In such event, Hovnanian will issue receipts for depositary
    shares, each of which will represent a fraction of a share of a
    particular series of preferred stock.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    The shares of any series of preferred stock represented by
    depositary shares will be deposited under a deposit agreement
    between Hovnanian and a bank or trust company selected by
    Hovnanian having its principal office in the United States and
    having a combined capital and surplus of at least $50,000,000,
    as preferred stock depositary. Each owner of a depositary share
    will be entitled to all the rights and preferences of the
    underlying preferred stock, including dividend, voting,
    redemption, conversion and liquidation rights, in proportion to
    the applicable fraction of a share of preferred stock
    represented by such depositary share.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    The depositary shares will be evidenced by depositary receipts
    issued pursuant to the deposit agreement. Depositary receipts
    will be distributed to the registered holder purchasing the
    fractional shares of preferred stock in accordance with the
    terms of the applicable prospectus supplement.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    Shares of preferred stock represented by depositary shares may
    be withdrawn from the depositary arrangement upon surrender of
    depositary receipts at the principal office of the preferred
    stock depositary and upon payment of the taxes, charges and fees
    provided for in the deposit agreement. Subject to the terms of
    the deposit agreement, the holder of depositary receipts will
    receive the appropriate number of shares of preferred stock and
    any money or property represented by such depositary shares.
    Only whole shares of preferred stock may be withdrawn; if a
    holder holds an amount of depositary shares in excess of whole
    shares of preferred stock, the preferred stock depositary will
    deliver along with the withdrawn shares of preferred stock a new
    depositary receipt evidencing the excess number of depositary
    shares. Except as described in the deposit agreement, holders of
    withdrawn shares of preferred stock will not be entitled to
    redeposit such shares or to receive depositary shares.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: transparent">

    <B><FONT style="font-family: 'Times New Roman', Times">Dividends
    and Other Distributions</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    The preferred stock depositary will distribute all cash
    dividends or other cash distributions received in respect of the
    deposited preferred stock to the record holders of depositary
    shares relating to such preferred stock in proportion to the
    number of such depositary shares owned by such holders.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    The preferred stock depositary will distribute any property
    received by it other than cash to the record holders of
    depositary shares entitled thereto. If the preferred stock
    depositary determines that it is not feasible to make such
    distribution, it may, with Hovnanian&#146;s approval, sell such
    property and distribute the net proceeds from such sale to such
    holders.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    If Hovnanian offers to the holders of a series of preferred
    stock represented by the depositary shares any rights,
    preferences or privileges to subscribe for or to purchase any
    securities or of any other nature, the preferred stock
    depositary will make such rights, preferences or privileges
    available to the record holders of depositary shares either by
    the issue of warrants representing such rights, preferences or
    privileges or by such other method as approved by the preferred
    stock depositary and Hovnanian. If the preferred stock
    depositary determines that this is not lawful or feasible or if
    it is instructed by a holder that such holder does not want to
    exercise such rights, preferences or privileges, it may, with
    Hovnanian&#146;s approval, sell such rights, preferences or
    privileges and distribute the net proceeds from such sale to the
    holders of depositary shares entitled thereto.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: transparent">

    <B><FONT style="font-family: 'Times New Roman', Times">Redemption
    of Preferred Stock</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    If a series of preferred stock represented by depositary shares
    is to be redeemed, the depositary shares will be redeemed from
    the proceeds received by the preferred stock depositary
    resulting from the redemption, in whole or in part, of such
    series of preferred stock. The depositary shares will be
    redeemed by the preferred stock depositary at a price per
    depositary share equal to the applicable fraction of the
    redemption price per share payable in respect of the shares of
    preferred stock so redeemed.
</DIV>
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    <BR>
    21
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<H5 align="left" style="page-break-before:always"><A HREF="#Y88639tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<!-- XBRL Pagebreak End -->

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    Whenever Hovnanian redeems shares of preferred stock held by the
    preferred stock depositary, the preferred stock depositary will
    redeem as of the same date the number of depositary shares
    representing shares of preferred stock so redeemed. If fewer
    than all the depositary shares are to be redeemed, the
    depositary shares to be redeemed will be selected by the
    preferred stock depositary by lot or ratably or by such other
    equitable method as the preferred stock depositary may decide.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: transparent">

    <B><FONT style="font-family: 'Times New Roman', Times">Voting
    Deposited Preferred Stock</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    Upon receipt of notice of any meeting at which the holders of
    any series of deposited preferred stock are entitled to vote,
    the preferred stock depositary will mail the information
    contained in such notice of meeting to the record holders of the
    depositary shares relating to such series of preferred stock.
    Each record holder of such depositary shares on the record date
    will be entitled to instruct the preferred stock depositary to
    vote the amount of the preferred stock represented by such
    holder&#146;s depositary shares. The preferred stock depositary
    will endeavor, as practicable, to vote the amount of such series
    of preferred stock represented by such depositary shares in
    accordance with such instructions.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    Hovnanian will agree to take all actions that the preferred
    stock depositary may deem necessary to enable the preferred
    stock depositary to vote as instructed. The preferred stock
    depositary will abstain from voting shares of any series of
    preferred stock held by it for which it does not receive
    specific instructions from the holders of depositary shares
    representing such shares.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: transparent">

    <B><FONT style="font-family: 'Times New Roman', Times">Changes
    Affecting Preferred Stock</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    Upon any change in par or stated value,
    <FONT style="white-space: nowrap">split-up,</FONT>
    combination or any other reclassification of the series of
    preferred stock represented by the depositary shares, or upon
    any recapitalization, reorganization, merger, amalgamation or
    consolidation affecting Hovnanian or to which it is a party, the
    preferred stock depositary may in its discretion, with the
    approval and instructions of Hovnanian, and in such manner as
    the preferred stock depositary may deem equitable, treat any
    securities which shall be received by the preferred stock
    depositary in exchange for or upon conversion of or in respect
    of such preferred stock as new deposited securities received in
    exchange for or upon conversion or in respect of such preferred
    stock and make such adjustments in:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    the fraction of an interest represented by one depositary share
    in one share of such preferred stock;&#160;and
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    the ratio of the redemption price per depositary share to the
    redemption price of a share of such preferred stock,
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    in each case as may be necessary to fully reflect the effects of
    such change.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    With the approval of Hovnanian, the preferred stock depositary
    may execute and deliver additional depositary receipts, or may
    call for the surrender of all outstanding depositary receipts to
    be exchanged for new depositary receipts specifically describing
    such new deposited securities.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: transparent">

    <B><FONT style="font-family: 'Times New Roman', Times">Amendment
    and Termination of the Deposit Agreement</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    The form of depositary receipt evidencing the depositary shares
    and any provision of the deposit agreement may at any time be
    amended by agreement between Hovnanian and the preferred stock
    depositary. However, any amendment that materially and adversely
    alters any existing right of the holders of depositary shares
    will not be effective unless such amendment has been approved by
    the holders of at least a majority of the depositary shares then
    outstanding. Every holder of an outstanding depositary receipt
    at the time any such amendment becomes effective shall be
    deemed, by continuing to hold such depositary receipt, to
    consent and agree to such amendment and to be bound by the
    deposit agreement, which has been amended thereby. The deposit
    agreement may be terminated only if
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    all outstanding depositary shares have been redeemed;&#160;or
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    a final distribution in respect of the preferred stock has been
    made to the holders of depositary shares in connection with any
    liquidation, dissolution or winding up of Hovnanian.
</TD>
</TR>

</TABLE>
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<P align="center" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <BR>
    22
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<H5 align="left" style="page-break-before:always"><A HREF="#Y88639tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<!-- XBRL Pagebreak End -->

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: transparent">

    <B><FONT style="font-family: 'Times New Roman', Times">Charges
    of Preferred Stock Depositary; Taxes and Other Governmental
    Charges</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    Hovnanian will pay all transfer and other taxes and governmental
    charges arising solely from the existence of the depositary
    arrangements. Hovnanian also will pay charges of the depositary
    in connection with the deposit of preferred stock and any
    redemption of preferred stock. The amount paid as dividends or
    otherwise distributable by the preferred stock depositary with
    respect to the depositary shares or the underlying preferred
    stock will be reduced by any amounts required to be withheld by
    Hovnanian or the preferred stock depositary on account of taxes
    or other governmental charges. Holders of depositary receipts
    will pay other transfer and other taxes and governmental charges
    and such other charges, including a fee for the withdrawal of
    shares of preferred stock upon surrender of depositary receipts,
    as are expressly provided in the deposit agreement to be for
    their accounts. The preferred stock depositary may refuse to
    make any payment or distribution, or any transfer, exchange or
    withdrawal of any depositary shares or shares of preferred
    stock, until such taxes or other governmental charges are paid.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: transparent">

    <B><FONT style="font-family: 'Times New Roman', Times">Transfer,
    Surrender and Exchange</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    Depositary receipts may be transferred, surrendered or exchanged
    in accordance with the deposit agreement. The preferred stock
    depositary, its agents or Hovnanian may require a holder, among
    other things, to furnish appropriate endorsements and transfer
    documents. The preferred stock depositary is not required to
    accept deposits of preferred stock or to register transfers,
    surrenders or exchanges of depositary shares during any period
    when the register of stockholders of Hovnanian is closed or in
    order to comply with any requirement of law, government or
    governmental body, commission or the deposit agreement.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: transparent">

    <B><FONT style="font-family: 'Times New Roman', Times">Resignation
    and Removal of Depositary</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    The preferred stock depositary may resign at any time by
    delivering to Hovnanian notice of its intent to do so, and
    Hovnanian may at any time remove the preferred stock depositary,
    any such resignation or removal to take effect upon the
    appointment of a successor preferred stock depositary and its
    acceptance of such appointment. Such successor preferred stock
    depositary must be appointed within 60&#160;days after delivery
    of the notice of resignation or removal and must be a bank or
    trust company having its principal office in the United States
    and having a combined capital and surplus of at least
    $50,000,000.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: transparent">

    <B><FONT style="font-family: 'Times New Roman', Times">Miscellaneous</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    The preferred stock depositary will forward all reports and
    communications from Hovnanian which are delivered to the
    preferred stock depositary and which Hovnanian is required to
    furnish to the holders of the deposited preferred stock.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    Neither the preferred stock depositary nor Hovnanian will be
    liable if it or Hovnanian are prevented or delayed by law or any
    circumstances beyond its or Hovnanian&#146;s control in
    performing its or Hovnanian&#146;s obligations under the deposit
    agreement. Hovnanian&#146;s obligations and the obligations of
    the preferred stock depositary under the deposit agreement will
    be limited to performance in good faith of Hovnanian&#146;s and
    their duties thereunder, and neither Hovnanian nor they will be
    obligated to prosecute or defend any legal proceeding in respect
    of any depositary shares, depositary receipts or shares of
    preferred stock unless satisfactory indemnity is furnished.
    Hovnanian and the preferred stock depositary may rely upon
    written advice of counsel or accountants, or upon information
    provided by holders of depositary receipts or other persons
    believed to be competent and on documents believed to be genuine.
</DIV>

<DIV style="margin-top: 12pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: transparent">

    <B><FONT style="font-family: 'Times New Roman', Times">Concerning
    the Preferred Stock Depositary</FONT></B>
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    Information concerning the preferred stock depositary for a
    series of preferred stock represented by depositary shares will
    be set forth in the prospectus supplement relating to that
    series of preferred stock. Hovnanian and certain of its
    subsidiaries may maintain bank accounts, borrow money and have
    other commercial banking, investment banking and other business
    relationships with the preferred stock depositary and its
    affiliates in the ordinary course of business. The preferred
    stock depositary or its affiliates may participate as
    underwriters, agents or dealers in any offering of depositary
    shares.
</DIV>
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    <BR>
    23
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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#Y88639tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
<!-- XBRL Pagebreak End -->

<A name='Y88639112'>
<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: transparent">

    <B><FONT style="font-family: 'Times New Roman', Times">DESCRIPTION
    OF STOCK PURCHASE CONTRACTS AND STOCK PURCHASE UNITS</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    The following description of stock purchase contracts and stock
    purchase units sets forth certain general terms of the stock
    purchase contracts
    <FONT style="white-space: nowrap">and/or</FONT> stock
    purchase units that Hovnanian may issue. The particular terms of
    any stock purchase contracts or stock purchase units will be
    described in the prospectus supplement relating to the stock
    purchase contracts or stock purchase units. The description set
    forth below and in any prospectus supplement is not complete,
    and is subject to, and qualified in its entirety by reference
    to, the stock purchase contracts, the collateral arrangements
    and any depositary arrangements relating to such stock purchase
    contracts or stock purchase units and, if applicable, the
    prepaid securities and the document pursuant to which the
    prepaid securities will be issued which will be filed with the
    Commission promptly after the offering of such stock purchase
    contracts or stock purchase units and, if applicable, prepaid
    securities.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    Hovnanian may issue stock purchase contracts representing
    contracts obligating holders to purchase from Hovnanian and
    Hovnanian to sell to the holders shares of Class&#160;A Common
    Stock, shares of preferred stock or depositary shares at a
    future date or dates. The price per share of Class&#160;A Common
    Stock, preferred stock or depositary shares may be fixed at the
    time the stock purchase contracts are issued or may be
    determined by reference to a specific formula set forth in the
    stock purchase contracts.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    The stock purchase contracts may be issued separately or as a
    part of units, often known as stock purchase units, consisting
    of a stock purchase contract and either:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    debt securities issued by either Hovnanian or K.
    Hovnanian,&#160;or
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    debt obligations of third parties, including U.S.&#160;Treasury
    securities,
</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    securing the holder&#146;s obligations to purchase the
    Class&#160;A Common Stock, preferred stock or depositary shares
    under the stock purchase contracts. The stock purchase contracts
    may require us to make periodic payments to the holders of the
    stock purchase units or vice versa, and such payments may be
    unsecured or prefunded on some basis. The stock purchase
    contracts may require holders to secure their obligations in a
    specified manner and in certain circumstances we may deliver
    newly issued prepaid stock purchase contracts, often known as
    prepaid securities, upon release to a holder of any collateral
    securing each holder&#146;s obligations under the original stock
    purchase contract.
</DIV>

<A name='Y88639113'>
<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: transparent">

    <B><FONT style="font-family: 'Times New Roman', Times">DESCRIPTION
    OF UNITS</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    As specified in the applicable prospectus supplement, Hovnanian
    or K. Hovnanian may issue units consisting of one or more
    warrants, debt securities, shares of Class&#160;A Common Stock
    or preferred stock, depositary shares or any combination of such
    securities. The applicable prospectus supplement will describe:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    the terms of the Units and of the warrants, debt securities,
    common stock, depository shares and preferred stock comprising
    the units, including whether and under what circumstances the
    securities comprising the units may be traded separately;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    a description of the terms of any unit agreement governing the
    units;&#160;and
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    a description of the provisions for the payment, settlement,
    transfer or exchange or the units.
</TD>
</TR>

</TABLE>

<A name='Y88639114'>
<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: transparent">

    <B><FONT style="font-family: 'Times New Roman', Times">DESCRIPTION
    OF WARRANTS</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    The following description of the terms of the warrants sets
    forth certain general terms that may apply to the warrants that
    Hovnanian or K. Hovnanian may offer. The particular terms of any
    warrants will be described in the applicable prospectus
    supplement accompanying this prospectus. The description set
    forth below and in any prospectus supplement is not complete,
    and is subject to, and qualified in its entirety by reference
    to, the applicable warrant agreement, a form of which has been
    incorporated by reference as an exhibit to the Registration
    Statement of which this prospectus forms a part. The specific
    terms of warrants as described in the applicable prospectus
    supplement will supplement and, if applicable, may modify or
    replace the general terms described in this prospectus.
</DIV>
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    <BR>
    24
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<H5 align="left" style="page-break-before:always"><A HREF="#Y88639tocpage">Table of Contents</A></H5><P>

<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
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<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    Hovnanian may issue warrants, including warrants to purchase
    Class&#160;A Common Stock, preferred stock or Depositary Shares
    and warrants to purchase Hovnanian Debt Securities. K. Hovnanian
    may issue warrants to purchase K. Hovnanian Debt Securities. All
    obligations of K. Hovnanian under the K. Hovnanian warrants will
    be fully and unconditionally guaranteed by Hovnanian. Warrants
    may be issued independently of or together with any other
    securities and may be attached to or separate from such
    securities. Obligations of Hovnanian and K.&#160;Hovnanian under
    the warrants may be guaranteed by the subsidiary guarantors.
    Each series of warrants will be issued under a separate warrant
    agreement, each a &#147;warrant agreement&#148; to be entered
    into among Hovnanian
    <FONT style="white-space: nowrap">and/or</FONT> K.
    Hovnanian and any subsidiary guarantors and a warrant agent, the
    &#147;warrant agent&#148;. The warrant agent will act solely as
    an agent of Hovnanian
    <FONT style="white-space: nowrap">and/or</FONT> K.
    Hovnanian in connection with the warrants of that series and
    will not assume any obligation or relationship of agency or
    trust for or with holders or beneficial owners of warrants. The
    following describes some general terms and provisions of the
    warrants offered hereby. Further terms of the warrants and the
    applicable warrant agreement will be described in the applicable
    prospectus supplement.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    The applicable prospectus supplement will describe the following
    terms, where applicable, of the warrants in respect of which
    this prospectus is being delivered:
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="4%"></TD>
    <TD width="2%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    the title of the warrants;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    the aggregate number of the warrants;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    the price or prices at which the warrants will be issued;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    the designation, aggregate principal amount and terms of the
    securities purchasable upon exercise of the warrants;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    the designation and terms of the securities with which the
    warrants are issued and the number of the warrants issued with
    each such security;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    if applicable, the date on and after which the warrants and the
    related securities will be separately transferable;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    the price at which the securities purchasable upon exercise of
    the warrants may be purchased, and any provisions for changes to
    or adjustments in such exercise price;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    the date on which the right to exercise the warrants will
    commence and the date on which the right will expire;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    the minimum or maximum amount of the warrants that may be
    exercised at any one time;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    information with respect to book-entry procedures, if any;
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    a discussion of certain United States Federal income tax
    considerations;&#160;and
</TD>
</TR>


<TR style="line-height: 6pt; font-size: 1pt"><TD>&nbsp;</TD></TR>


<TR valign="top" style="font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    <TD>&nbsp;</TD>
    <TD>    &#149;&#160;
</TD>
    <TD align="left">
    any other terms of the warrants, including terms, procedures and
    limitations relating to the exercise of the warrants.
</TD>
</TR>

</TABLE>

<A name='Y88639115'>
<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: transparent">

    <B><FONT style="font-family: 'Times New Roman', Times">PLAN OF
    DISTRIBUTION</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    Hovnanian and K. Hovnanian may sell the securities to or through
    underwriters or dealers, and also may sell the offered
    securities directly to one or more other purchasers or through
    agents. The applicable prospectus supplement will list the names
    of any underwriters or agents involved in the sale of the
    offered securities and any applicable commissions or discounts,
    and will also describe the method of distribution of the
    securities offered thereby, the purchase price and the proceeds
    to be received from the sale, and any securities exchanges on
    which the securities of such series may be listed.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    Hovnanian, K. Hovnanian or any of their agents may directly
    solicit offers to purchase these securities. The applicable
    prospectus supplement will name any agent, who may be deemed to
    be an underwriter as that term is defined in the Securities Act,
    involved in the offer or sale of the securities in respect of
    which this prospectus is delivered, and will set forth any
    commissions payable to that agent by Hovnanian or K. Hovnanian,
    as the case may be. Unless otherwise indicated in the prospectus
    supplement, any such agency will be acting in a best efforts
    basis for the
</DIV>
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    <BR>
    25
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<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
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<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    period of its appointment (ordinarily five business days or
    less). Agents, dealers and underwriters may be customers of,
    engage in transactions with, or perform services for Hovnanian
    or K. Hovnanian in the ordinary course of business.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    If Hovnanian or K. Hovnanian utilizes an underwriter or
    underwriters in the sale, they will execute an underwriting
    agreement with such underwriters at the time of sale to them and
    will set forth in the applicable prospectus supplement the names
    of the underwriters and the terms of the transaction. The
    underwriters will use the prospectus supplement to make releases
    of the securities in respect of which this prospectus is
    delivered to the public.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    If Hovnanian or K. Hovnanian utilizes a dealer in the sale of
    the securities in respect of which this prospectus is delivered,
    Hovnanian or K. Hovnanian, as the case may be, will sell the
    securities to the dealer, as principal. The dealer may then
    resell the securities to the public at varying prices to be
    determined by the dealer at the time of resale. The prospectus
    supplement will set forth the name of the dealer and the terms
    of the transaction.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    Underwriters, dealers or agents may offer and sell the offered
    securities at a fixed price or prices, which may be changed, or
    from time to time at market prices prevailing at the time of
    sale, at prices related to the prevailing market prices or at
    negotiated prices. In connection with the sale of the
    securities, underwriters or agents may be deemed to have
    received compensation from Hovnanian or K. Hovnanian in the form
    of underwriting discounts or commissions and may also receive
    commissions from purchasers of the securities for whom they may
    act as agent. Underwriters or agents may sell the securities to
    or through dealers, and such dealers may receive compensation in
    the form of discounts, concessions or commissions from the
    underwriters or commissions from the purchasers for whom they
    may act as agent.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    The preferred stock, depositary shares, debt securities, stock
    purchase contracts, stock purchase units, units and warrants,
    when first issued, will have no established trading market. Any
    underwriters or agents to or through whom offered securities are
    sold by Hovnanian or K. Hovnanian for public offering and sale
    may make a market in such offered securities, but the
    underwriters or agents will not be obligated to do so and may
    discontinue any market making at any time without notice. No
    assurance can be given as to the liquidity of the trading market
    for any offered securities. The applicable prospectus supplement
    set forth whether or not underwriters or agents may over-allot
    or effect transactions that stabilize, maintain or otherwise
    affect the market price of debt securities offered thereby at
    levels above those that might otherwise prevail in the open
    market, including, for example, by entering stabilizing bids,
    effecting syndicate covering transactions or imposing penalty
    bids.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    Any underwriters, dealers or agents participating in the
    distribution of the offered securities may be deemed to be
    underwriters, and any discounts and commissions received by them
    and any profit realized by them on resale of the offered
    securities may be deemed to be underwriting discounts and
    commissions under the Securities Act. Underwriters, dealers or
    agents may be entitled, under agreements entered into with
    Hovnanian or K. Hovnanian, to indemnification against or
    contribution toward certain civil liabilities, including
    liabilities under the Securities Act.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    If so indicated in the prospectus supplement, Hovnanian or K.
    Hovnanian will authorize underwriters or other persons acting as
    its or their agents to solicit offers by certain institutions to
    purchase securities from it or them pursuant to contracts
    providing for payment and delivery on a future date.
    Institutions with which contracts may be made include commercial
    and savings banks, insurance companies, pension funds,
    investment companies, educational and charitable institutions
    and others, but in all cases will be subject to the condition
    that the purchase of the securities will not at the time of
    delivery be prohibited under the laws of the jurisdiction to
    which such purchaser is subject. The underwriters and agents
    will not have any responsibility in respect of the validity or
    performance of such contracts.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    The applicable prospectus supplement will set forth the place
    and time of delivery for the securities in respect of which this
    prospectus is delivered.
</DIV>

<A name='Y88639116'>
<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: transparent">

    <B><FONT style="font-family: 'Times New Roman', Times">LEGAL
    MATTERS</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    Certain legal matters with respect to the validity of the
    offered securities will be passed upon for Hovnanian and K.
    Hovnanian by Simpson Thacher&#160;&#038; Bartlett LLP, New York,
    New York. Simpson Thacher&#160;&#038; Bartlett LLP will rely, as
    to matters of California law, on the opinion of Peter S.
    Reinhart,&#160;Esq., Senior Vice-President and General Counsel
    for Hovnanian and K. Hovnanian. Peter S. Reinhart,&#160;Esq.,
    beneficially owns, directly and
</DIV>
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    <BR>
    26
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<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
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<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 0%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    indirectly, less than 1% of the common stock of Hovnanian, which
    does not include any shares of common stock over which
    Mr.&#160;Reinhart may have investment or voting power in his
    capacity as trustee of a trust in which he has no financial
    interest. Certain legal matters in connection with the offered
    securities may also be passed upon for any agents or
    underwriters by counsel specified in the prospectus supplement.
</DIV>

<A name='Y88639117'>
<DIV style="margin-top: 18pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="center" style="margin-left: 0%; margin-right: 0%; font-size: 10pt; font-family: Arial, Helvetica; color: #000000; background: transparent">

    <B><FONT style="font-family: 'Times New Roman', Times">EXPERTS</FONT></B>
</DIV>
</A>
<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    The consolidated financial statements as of October&#160;31,
    2010 and 2009, and for the years then ended incorporated by
    reference in this prospectus from the Company&#146;s Annual
    Report on
    <FONT style="white-space: nowrap">Form&#160;10-K</FONT>
    for the year ended October&#160;31, 2010 and the effectiveness
    of Hovnanian&#146;s internal control over financial reporting as
    of October&#160;31, 2010, have been audited by
    Deloitte&#160;&#038; Touche LLP, an independent registered
    public accounting firm, as stated in their reports, which are
    incorporated herein by reference. Such consolidated financial
    statements are incorporated herein by reference in reliance upon
    the reports of such firm given on their authority as experts in
    accounting and auditing.
</DIV>

<DIV style="margin-top: 6pt; font-size: 1pt">&nbsp;</DIV>

<DIV align="left" style="margin-left: 0%; margin-right: 0%; text-indent: 4%; font-size: 10pt; font-family: 'Times New Roman', Times; color: #000000; background: transparent">
    The consolidated financial statements of Hovnanian for the year
    ended October&#160;31, 2008 appearing in Hovnanian&#146;s Annual
    Report
    <FONT style="white-space: nowrap">(Form&#160;10-K)</FONT>
    for the year ended October&#160;31, 2010 have been audited by
    Ernst&#160;&#038; Young LLP,  independent registered public
    accounting firm, as set forth in their report thereon, included
    therein, and incorporated herein by reference. Such consolidated
    financial statements are incorporated herein by reference in
    reliance upon such report given on the authority of such firm as
    experts in accounting and auditing.
</DIV>
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    <BR>
    27
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<DIV style="width: 87%; margin-left: 6%"><!-- BEGIN PAGE WIDTH -->
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    <IMG src="y89359b5y8863900a.gif" alt="(HOVNANIAN ENTERPRISES, INC.)">
</DIV>

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