Exhibit 10.4

 

EXECUTION COPY

 

 

 

PARENT GUARANTEE AGREEMENT

 

between

 

ORLEANS HOMEBUILDERS, INC

as Parent Guarantor,

 

 

and

 

 

THE BANK OF NEW YORK MELLON,

as Guarantee Trustee

 

 

Dated as of August 3, 2009

 

 

OHI FINANCING, INC.

 

 

 

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TABLE OF CONTENTS

 

 

 

 

 

Page

 

 

 

 

 

ARTICLE I

 

INTERPRETATION AND DEFINITIONS

 

1

 

 

 

 

 

Section 1.1.

 

Interpretation

 

1

Section 1.2.

 

Definitions

 

2

 

 

 

 

 

ARTICLE II

 

REPORTS

 

5

 

 

 

 

 

Section 2.1.

 

List of Holders

 

5

Section 2.2.

 

Periodic Reports to the Guarantee Trustee

 

5

Section 2.3.

 

Event of Default; Waiver

 

6

Section 2.4.

 

Event of Default; Notice

 

6

 

 

 

 

 

ARTICLE III

 

POWERS, DUTIES AND RIGHTS OF THE GUARANTEE TRUSTEE

 

6

 

 

 

 

 

Section 3.1.

 

Powers and Duties of the Guarantee Trustee

 

6

Section 3.2.

 

Certain Rights of the Guarantee Trustee

 

7

Section 3.3.

 

Compensation

 

8

Section 3.4.

 

Indemnity

 

9

Section 3.5.

 

Securities

 

9

 

 

 

 

 

ARTICLE IV

 

GUARANTEE TRUSTEE

 

9

 

 

 

 

 

Section 4.1.

 

Guarantee Trustee; Eligibility

 

9

Section 4.2.

 

Appointment, Removal and Resignation of the Guarantee Trustee

 

10

 

 

 

 

 

ARTICLE V

 

PARENT GUARANTEE

 

10

 

 

 

 

 

Section 5.1.

 

Parent Guarantee

 

10

Section 5.2.

 

Waiver of Notice and Demand

 

11

Section 5.3.

 

Obligations Not Affected

 

11

Section 5.4.

 

Rights of Holders, the Note Holders and the Trust

 

12

Section 5.5.

 

Guarantee of Payment

 

12

Section 5.6.

 

Subrogation

 

12

Section 5.7.

 

Independent Obligations

 

12

Section 5.8.

 

Enforcement

 

12

Section 5.9.

 

Subordination

 

13

 

 

 

 

 

ARTICLE VI

 

TERMINATION

 

13

 

 

 

 

 

Section 6.1.

 

Termination

 

13

 

 

 

 

 

ARTICLE VII

 

MISCELLANEOUS

 

13

 

 

 

 

 

Section 7.1.

 

Successors and Assigns

 

13

Section 7.2.

 

Amendments

 

13

Section 7.3.

 

Notices

 

14

Section 7.4.

 

Benefit

 

14

Section 7.5.

 

Governing Law

 

14

Section 7.6.

 

Submission to Jurisdiction

 

15

Section 7.7.

 

Counterparts

 

15

Section 7.8.

 

The Indenture

 

15

 

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ARTICLE VIII

 

CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE AND OWNERSHIP OF THE
COMPANY

 

15

 

 

 

 

 

Section 8.1.

 

Parent Guarantor May Consolidate, etc., Only on Certain Terms

 

15

Section 8.2.

 

Dividends, Distributions and Payments

 

16

Section 8.3.

 

Successor Company Substituted

 

17

Section 8.4.

 

Ownership of the Company

 

17

 

 

 

 

 

ARTICLE IX

 

REPRESENTATIONS AND WARRANTIES

 

17

 

 

 

 

 

Section 9.1.

 

Representations and Warranties of Parent Guarantor

 

17

 

2

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This PARENT GUARANTEE AGREEMENT, dated as of August 3, 2009, executed and
delivered by Orleans Homebuilders, Inc., a Delaware corporation (the “Parent
Guarantor”) having its principal office at 3333 Street Road, Suite 101,
Bensalem, PA 19020, and The Bank of New York Mellon, a New York banking
corporation, as trustee (in such capacity, the “Guarantee Trustee”), for the
benefit of the Holders (as defined herein) from time to time of the Notes (as
defined herein) of OHI Financing, Inc., a Delaware corporation (the “Company”).

 

WITNESSETH:

 

WHEREAS, pursuant to an Indenture, dated as of the date hereof (the
“Indenture”), among the Company and The Bank of New York Mellon, as trustee, the
Company is issuing Ninety-three Million Seven Hundred and Fifty Thousand
($93,750,000) aggregate principal amount of its junior subordinated notes (the
“Notes”) having the terms set forth in the Indenture to the Holders (as defined
herein);

 

WHEREAS, the Parent Guarantor owns one hundred percent (100%) of the outstanding
capital stock of the Company, and will substantially benefit from the issuance
of the Notes by the Company; and

 

WHEREAS, as incentive for the Holders (as defined herein) to exchange their
existing preferred securities (the “Preferred Securities”) of Orleans
Homebuilders Trust II for the Notes, the Parent Guarantor desires irrevocably
and unconditionally to agree, to the extent set forth herein, to pay to the
Holders (as defined herein) the Parent Guarantee Payments (as defined herein)
and to make certain other payments on the terms and conditions set forth herein.

 

NOW, THEREFORE, in consideration of the exchange by the Holders of Preferred
Securities for the Notes, the Parent Guarantor executes and delivers this Parent
Guarantee Agreement to provide as follows to the Guarantee Trustee for the
benefit of the Holders (as defined herein):

 

ARTICLE I

 

INTERPRETATION AND DEFINITIONS

 

Section 1.1.     Interpretation.

 

In this Parent Guarantee Agreement, unless the context otherwise requires:

 

(a)           capitalized terms used in this Parent Guarantee Agreement but not
defined in the preamble hereto have the respective meanings assigned to them in
Section 1.2;

 

(b)           the words “include”, “includes” and “including” shall be deemed to
be followed by the phrase “without limitation”;

 

(c)           all references to “the Parent Guarantee Agreement” or “this Parent
Guarantee Agreement” are to this Parent Guarantee Agreement, as modified,
supplemented or amended from time to time;

 

(d)           all references in this Parent Guarantee Agreement to articles and
sections are to articles and sections of this Parent Guarantee Agreement unless
otherwise specified;

 

(e)           the words “hereby”, “herein”, “hereof’ and “hereunder” and other
words of similar import refer to this Parent Guarantee Agreement as a whole and
not to any particular Article, Section or other subdivision;

 

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(f)            a reference to the singular includes the plural and vice versa;

 

(g)           the masculine, feminine or neuter genders used herein shall
include the masculine, feminine and neuter genders.

 

Section 1.2.     Definitions.

 

As used in this Parent Guarantee Agreement, the terms set forth below shall,
unless the context otherwise requires, have the following meanings:

 

“Affiliate” of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person.  For the purposes of this definition,
“control” when used with respect to any specified Person means the power to
direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise;
and the terms “controlling” and “controlled’ have meanings correlative to the
foregoing.

 

“Beneficiaries” means the Guarantee Trustee and the Holders.

 

“Board of Directors” means either the board of directors of the Parent Guarantor
or any duly authorized committee of that board.

 

“Change of Control” means the occurrence of one or more of the following events:

 

(I)      ANY SALE, LEASE, EXCHANGE OR OTHER TRANSFER (IN ONE TRANSACTION OR A
SERIES OF RELATED TRANSACTIONS) OF ALL OR SUBSTANTIALLY ALL OF THE ASSETS OF THE
PARENT GUARANTOR TO ANY PERSON OR GROUP OF RELATED PERSONS FOR PURPOSES OF
SECTION 13(D) OF THE EXCHANGE ACT (A “GROUP”), TOGETHER WITH ANY AFFILIATES
THEREOF, ON AN ARM’S LENGTH BASIS WITH AN ENTITY THAT IS NOT AN AFFILIATE OF THE
COMPANY OR THE GUARANTOR; OR

 

(II)     ANY PERSON OR GROUP (OTHER THAN JEFFREY P. ORLEANS AND HIS AFFILIATES
AND FAMILY OR ANY AFFILIATE OF THE COMPANY OR THE PARENT GUARANTOR
(COLLECTIVELY, A “JPO PARTY”)) SHALL ACQUIRE EITHER BY PURCHASE FROM A JPO PARTY
OR FROM THE PARENT GUARANTOR THROUGH PURCHASE OR MERGER OR OTHERWISE, DIRECTLY
OR INDIRECTLY, BENEFICIALLY OR OF RECORD, SHARES REPRESENTING MORE THAN 80% OF
THE ISSUED AND OUTSTANDING EQUITY INTERESTS OF THE PARENT GUARANTOR AND MORE
THAN 50% OF THE AGGREGATE ORDINARY VOTING POWER REPRESENTED BY THE ISSUED AND
OUTSTANDING EQUITY INTERESTS OF THE PARENT GUARANTOR.

 

“Debt” means with respect to any Person, whether recourse is to all or a portion
of the assets of such Person, whether currently existing or hereafter incurred,
and whether or not contingent and without duplication, (i) every obligation of
such Person for money borrowed; (ii) every obligation of such Person evidenced
by bonds, debentures, notes or other similar instruments, including obligations
incurred in connection with the acquisition of property, assets or businesses;
(iii) every reimbursement obligation of such Person with respect to letters of
credit, bankers’ acceptances or similar facilities issued for the account of
such Person; (iv) every obligation of such Person issued or assumed as the
deferred purchase price of property or services (but excluding trade accounts
payable arising in the ordinary course of business); (v) every capital lease
obligation of such Person; (vi) all indebtedness of such Person, whether
incurred on or prior to the date of this Parent Guarantee Agreement or
thereafter incurred, for claims in respect of derivative products, including
interest rate, foreign exchange rate and commodity forward contracts, options,
swaps and similar arrangements; (vii) every obligation of the type referred to
in clauses (i)

 

2

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through (vi) of another Person and all dividends of another Person the payment
of which, in either case, such Person has guaranteed or is responsible or liable
for, directly or indirectly, as obligor or otherwise; and (viii) any renewals,
extensions, refundings, amendments or modifications of any obligation of the
type referred to in clauses (i) through (vii).

 

“Equity Interests” means (a) the common or preferred equity interest in a
corporation, (b) the membership interests in a limited liability company and (c)
the partnership interests (general or limited) in a partnership.

 

“Event of Default” means a default by the Parent Guarantor on any of its payment
or other obligations under this Parent Guarantee Agreement; provided that except
with respect to a default in payment of any Parent Guarantee Payments, such
default shall not be an Event of Default unless the Parent Guarantor shall have
received notice of such default in accordance with the terms herein from the
Guarantee Trustee or any Holder and shall have failed to cure such default
within five (5) days after receipt of such notice.

 

“Guarantee Trustee” means The Bank of New York Mellon, until a Successor
Guarantee Trustee, as defined below, has been appointed and has accepted such
appointment pursuant to the terms of this Parent Guarantee Agreement, and
thereafter means each such Successor Guarantee Trustee, in any case solely in
its capacity as guarantee trustee and not in its individual capacity.

 

“Holder” means any holder, as registered on the books and records of the Trustee
(as defined in the Indenture), of any Notes; provided that in determining
whether the holders of the requisite percentage of Notes have given any request,
notice, consent or waiver hereunder, “Holder” shall not include either the
Parent Guarantor, the Company, the Guarantee Trustee or any Affiliate of the
Parent Guarantor, the Company or the Guarantee Trustee.

 

“List of Holders” has the meaning specified in Section 2.1.

 

“Majority in Principal Amount of the Notes” means a vote by the Holder(s),
voting separately as a class, of more than fifty percent (50%) of the aggregate
principal amount of all then outstanding Notes.

 

“Officers’ Certificate” means, with respect to any Person, a certificate signed
by the Chief Executive Officer, President or a vice President of such Person,
and by the Chief Financial Officer, Treasurer, an Assistant Treasurer, the
Secretary or an Assistant Secretary of such Person, and delivered to the
Guarantee Trustee.  Any Officers’ Certificate delivered with respect to
compliance with a condition or covenant provided for in this Parent Guarantee
Agreement (other than the certificate provided pursuant to Section 2.2) or the
Indenture shall include:

 

(a)                                  a statement that each officer signing the
Officers’ Certificate has read the covenant or condition and the definitions
relating thereto;

 

(b)                                 a brief statement of the nature and scope of
the examination or investigation undertaken by each officer in rendering the
Officers’ Certificate;

 

(c)                                  a statement that each officer has made such
examination or investigation as, in such officer’s opinion, is necessary to
enable such officer to express an informed opinion as to whether or not such
covenant or condition has been complied with; and

 

3

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(d)                                 a statement as to whether, in the opinion of
each officer, such condition or covenant has been complied with.

 

“Opinion of Counsel” means a written opinion of counsel, who may be counsel for,
or an employee of, the Guarantor.

 

“Other Securities” means the trust preferred securities in the amount of
$30,000,000 and the related notes evidencing indebtedness, outstanding as of the
issue date of the Notes, under the Junior Subordinated Indenture between the
Company, as issuer, the Guarantor, as guarantor, and the trustee named therein,
dated as of September 20, 2005, and any notes evidencing the exchange of such
Other Securities for subordinated debt securities of the Company.

 

“Parent Guarantee Payments” means the following payments or distributions,
without duplication, with respect to the Notes, to the extent not fully and
promptly paid or made by the Company immediately upon the expiration of any
grace or cure period applicable to the Company under the terms of the Indenture:
(a) any accumulated and unpaid payments of interest or principal, and all other
amounts (including without limitation Additional Interest and payments due in
connection with Distributions of the Company or the Guarantor or payments on the
Notes in connection with a Change of Control) required to be paid on and in
accordance with terms and provisions of the Notes and the Indenture; and (b)
payment of any other amounts to be paid by the Company under and in accordance
with the Indenture, including all amounts due to any Beneficiary by the Company.

 

“Person” means a legal person, including any individual, corporation, estate,
partnership, joint venture, association, joint stock company, limited liability
company, trust, unincorporated association, government or any agency or
political subdivision thereof or any other entity of whatever nature.

 

“Principal Hurdle Requirement” means, as of the applicable date, the redemption,
whether optional or mandatory, or prepayment of Notes, from the original issue
date of the Notes to such date, in cash in an aggregate principal amount, if
calculated on or before December 31, 2012, of at least $17,580,000 or, if
calculated after December 31, 2012, $21,975,000.

 

“Responsible Officer” means, with respect to the Guarantee Trustee, the officer
in the Worldwide Securities Services department of the Trustee having direct
responsibility for the administration of this Parent Guarantee Agreement.

 

“Rights Plan” means a plan of the Parent Guarantor or any subsidiary of the
Parent Guarantor, as the case may be, providing for the issuance by the Parent
Guarantor or such subsidiary to all holders of its common stock of rights
entitling the holders thereof to subscribe for or purchase shares of any class
or series of capital stock of the Parent Guarantor or other subsidiary, as the
case may be, which rights (i) are deemed to be transferred with such shares of
such common stock and (ii) are also issued in respect of future issuances of
such common stock, in each case until the occurrence of a specified event or
events.

 

“Senior Debt” means the principal of and any premium and interest on (including
interest accruing on or after the filing of any petition in bankruptcy or for
reorganization relating to the Parent Guarantor, whether or not such claim for
post-petition interest is allowed in such proceeding) all Debt of the Parent
Guarantor, whether incurred on or prior to the date of this Parent Guarantee
Agreement or thereafter incurred, unless it is provided in the instrument
creating or evidencing the same or pursuant to which the same is outstanding,
that such obligations are not

 

4

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superior in right of payment to the Notes issued under the Indenture and the
Parent Guarantee Payments; provided that Senior Debt shall not be deemed to
include any (i) debt or (ii) other debt securities (and guarantees, if any, in
respect of such debt securities) issued to any trust other than the Trust (or a
trustee of any such trust), partnership or other entity affiliated with the
Parent Guarantor or the Company that is a financing vehicle of the Parent
Guarantor or the Company (a “financing entity”) in connection with the issuance
by such financing entity of equity securities or other securities, in each case
of (i) or (ii) pursuant to an instrument that ranks pari passu with or junior in
right to payment of the Notes issued under the Indenture and the Parent
Guarantee Payments or the Other Securities.

 

“Successor Guarantee Trustee” means a successor Guarantee Trustee possessing the
qualifications to act as Guarantee Trustee under Section 4.1.

 

“Trust Indenture Act” means the Trust Indenture Act of 1939, as amended and as
in effect on the date of this Parent Guarantee Agreement.

 

Capitalized or otherwise defined terms used but not otherwise defined herein
shall have the meanings assigned to such terms in the Indenture as in effect on
the date hereof.

 

ARTICLE II

 

REPORTS

 

Section 2.1.     List of Holders.

 

The Parent Guarantor shall furnish or cause to be furnished to the Guarantee
Trustee at such times as the Guarantee Trustee may request in writing, within
thirty (30) days after the receipt by the Parent Guarantor of any such request,
a list, in such form as the Guarantee Trustee may reasonably require, of the
names and addresses of the Holders (a “List of Holders”) as of a date not more
than fifteen (15) days prior to the time such list is furnished, in each case to
the extent such information is in the possession or control of the Parent
Guarantor or the Company and is not identical to a previously supplied List of
Holders or has not otherwise been received by the Guarantee Trustee in its
capacity as such.  The Guarantee Trustee may destroy any List of Holders
previously given to it on receipt of a new List of Holders.

 

Section 2.2.     Periodic Reports to the Guarantee Trustee.

 

(A)           THE PARENT GUARANTOR SHALL DELIVER TO THE GUARANTEE TRUSTEE,
WITHIN NINETY (90) DAYS AFTER THE END OF EACH FISCAL YEAR OF THE PARENT
GUARANTOR ENDING AFTER THE DATE OF THIS PARENT GUARANTEE AGREEMENT, AN OFFICERS’
CERTIFICATE COVERING THE PRECEDING FISCAL YEAR, STATING WHETHER OR NOT TO THE
KNOWLEDGE OF THE SIGNERS THEREOF THE PARENT GUARANTOR IS IN DEFAULT IN THE
PERFORMANCE OR OBSERVANCE OF ANY OF THE TERMS OR PROVISIONS OR ANY OF THE
CONDITIONS OF THIS PARENT GUARANTEE AGREEMENT (WITHOUT REGARD TO ANY PERIOD OF
GRACE OR REQUIREMENT OF NOTICE PROVIDED HEREUNDER) AND IF THE COMPANY OR THE
GUARANTOR IS IN DEFAULT UNDER THE TERMS OF THE INDENTURE OR IF THE PARENT
GUARANTOR SHALL BE IN DEFAULT HEREOF, SPECIFYING ALL SUCH DEFAULTS AND THE
NATURE AND STATUS THEREOF OF WHICH THEY HAVE KNOWLEDGE.

 

(B)           THE PARENT GUARANTOR SHALL FURNISH THE INFORMATION AND
DOCUMENTATION THE COMPANY IS REQUIRED TO FURNISH PURSUANT TO SECTIONS 7.3, 10.3,
10.7 AND 10.8 OF THE INDENTURE, SUBJECT TO THE CONFIDENTIALITY PROVISIONS
THEREOF. THE DELIVERY REQUIREMENT UNDER THIS SECTION 2.2(B) MAY BE SATISFIED BY
THE COMPANY’S COMPLIANCE WITH THE INDENTURE.

 

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SECTION 2.3.     EVENT OF DEFAULT; WAIVER.

 

The Holders of a Majority in Principal Amount of the Notes may waive any past
Event of Default and its consequences.  Upon such waiver, any such Event of
Default shall cease to exist, and any Event of Default arising therefrom shall
be deemed to have been cured, for every purpose of this Parent Guarantee
Agreement, but no such waiver shall extend to any subsequent or other default or
Event of Default or impair any right consequent therefrom.

 

SECTION 2.4.     EVENT OF DEFAULT; NOTICE.

 

(A)           THE GUARANTEE TRUSTEE SHALL, WITHIN NINETY (90) DAYS AFTER THE
OCCURRENCE HEREUNDER OF A DEFAULT, TRANSMIT TO THE COMPANY AND THE HOLDERS
NOTICES OF ALL DEFAULTS ACTUALLY KNOWN TO THE GUARANTEE TRUSTEE, UNLESS SUCH
DEFAULTS HAVE BEEN CURED OR WAIVED BEFORE THE GIVING OF SUCH NOTICE.  FOR THE
PURPOSE OF THIS SECTION 2.4, THE TERM “DEFAULT” MEANS ANY EVENT THAT IS, OR
AFTER NOTICE OR LAPSE OF TIME OR BOTH WOULD BECOME, AN EVENT OF DEFAULT.

 

(B)           THE GUARANTEE TRUSTEE SHALL NOT BE DEEMED TO HAVE KNOWLEDGE OF ANY
EVENT OF DEFAULT UNLESS THE GUARANTEE TRUSTEE SHALL HAVE RECEIVED WRITTEN
NOTICE, OR A RESPONSIBLE OFFICER CHARGED WITH THE ADMINISTRATION OF THIS PARENT
GUARANTEE AGREEMENT SHALL HAVE OBTAINED WRITTEN NOTICE, OF SUCH EVENT OF DEFAULT
FROM THE PARENT GUARANTOR, THE COMPANY OR A HOLDER.

 

ARTICLE III

 

POWERS, DUTIES AND RIGHTS OF THE GUARANTEE TRUSTEE

 

Section 3.1.     Powers and Duties of the Guarantee Trustee.

 

(A)           THIS PARENT GUARANTEE AGREEMENT SHALL BE HELD BY THE GUARANTEE
TRUSTEE FOR THE BENEFIT OF THE HOLDERS, AND THE GUARANTEE TRUSTEE SHALL NOT
TRANSFER THIS PARENT GUARANTEE AGREEMENT TO ANY PERSON EXCEPT A HOLDER
EXERCISING ITS RIGHTS PURSUANT TO SECTION 5.4(D) OR TO A SUCCESSOR GUARANTEE
TRUSTEE UPON ACCEPTANCE BY SUCH SUCCESSOR GUARANTEE TRUSTEE OF ITS APPOINTMENT
TO ACT AS SUCCESSOR GUARANTEE TRUSTEE.  THE RIGHT, TITLE AND INTEREST OF THE
GUARANTEE TRUSTEE SHALL AUTOMATICALLY VEST IN ANY SUCCESSOR GUARANTEE TRUSTEE,
UPON ACCEPTANCE BY SUCH SUCCESSOR GUARANTEE TRUSTEE OF ITS APPOINTMENT
HEREUNDER, AND SUCH VESTING AND SUCCESSION OF TITLE SHALL BE EFFECTIVE WHETHER
OR NOT CONVEYANCING DOCUMENTS HAVE BEEN EXECUTED AND DELIVERED PURSUANT TO THE
APPOINTMENT OF SUCH SUCCESSOR GUARANTEE TRUSTEE.

 

(B)           THE RIGHTS, IMMUNITIES, DUTIES AND RESPONSIBILITIES OF THE
GUARANTEE TRUSTEE SHALL BE AS PROVIDED BY THIS PARENT GUARANTEE AGREEMENT AND
THERE SHALL BE NO OTHER DUTIES OR OBLIGATIONS, EXPRESS OR IMPLIED, OF THE
GUARANTEE TRUSTEE.  NOTWITHSTANDING THE FOREGOING, NO PROVISIONS OF THIS PARENT
GUARANTEE AGREEMENT SHALL REQUIRE THE GUARANTEE TRUSTEE TO EXPEND OR RISK ITS
OWN FUNDS OR OTHERWISE INCUR ANY FINANCIAL LIABILITY IN THE PERFORMANCE OF ANY
OF ITS DUTIES HEREUNDER, OR IN THE EXERCISE OF ANY OF ITS RIGHTS OR POWERS, IF
IT SHALL HAVE REASONABLE GROUNDS FOR BELIEVING THAT REPAYMENT OF SUCH FUNDS OR
ADEQUATE INDEMNITY AGAINST SUCH RISK OR LIABILITY IS NOT REASONABLY ASSURED TO
IT.  WHETHER OR NOT HEREIN EXPRESSLY SO PROVIDED, EVERY PROVISION OF THIS PARENT
GUARANTEE AGREEMENT RELATING TO THE CONDUCT OR AFFECTING THE LIABILITY OF OR
AFFORDING PROTECTION TO THE GUARANTEE TRUSTEE SHALL BE SUBJECT TO THE PROVISIONS
OF THIS SECTION 3.1. TO THE EXTENT THAT, AT LAW OR IN EQUITY, THE GUARANTEE
TRUSTEE HAS DUTIES AND LIABILITIES RELATING TO THE HOLDERS, THE GUARANTEE
TRUSTEE SHALL NOT BE LIABLE TO ANY HOLDER FOR THE GUARANTEE TRUSTEE’S GOOD FAITH
RELIANCE ON THE PROVISIONS OF THIS PARENT GUARANTEE AGREEMENT.  THE PROVISIONS
OF THIS PARENT GUARANTEE AGREEMENT, TO THE EXTENT THAT THEY RESTRICT THE DUTIES
AND LIABILITIES OF THE GUARANTEE TRUSTEE OTHERWISE EXISTING AT LAW OR IN EQUITY,
ARE AGREED BY THE PARENT GUARANTOR AND THE HOLDERS TO REPLACE SUCH OTHER DUTIES
AND LIABILITIES OF THE GUARANTEE TRUSTEE.

 

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(C)           NO PROVISION OF THIS PARENT GUARANTEE AGREEMENT SHALL BE CONSTRUED
TO RELIEVE THE GUARANTEE TRUSTEE FROM LIABILITY FOR ITS OWN NEGLIGENT ACTION,
NEGLIGENT FAILURE TO ACT OR OWN WILLFUL MISCONDUCT, EXCEPT THAT:

 

(I)      THE GUARANTEE TRUSTEE SHALL NOT BE LIABLE FOR ANY ERROR OF JUDGMENT
MADE IN GOOD FAITH BY A RESPONSIBLE OFFICER OF THE GUARANTEE TRUSTEE, UNLESS IT
SHALL BE PROVED THAT THE GUARANTEE TRUSTEE WAS NEGLIGENT IN ASCERTAINING THE
PERTINENT FACTS UPON WHICH SUCH JUDGMENT WAS MADE; AND

 

(II)     THE GUARANTEE TRUSTEE SHALL NOT BE LIABLE WITH RESPECT TO ANY ACTION
TAKEN OR OMITTED TO BE TAKEN BY IT IN GOOD FAITH IN ACCORDANCE WITH THE
DIRECTION OF THE HOLDERS OF NOT LESS THAN A MAJORITY IN PRINCIPAL AMOUNT OF THE
NOTES RELATING TO THE TIME, METHOD AND PLACE OF CONDUCTING ANY PROCEEDING FOR
ANY REMEDY AVAILABLE TO THE GUARANTEE TRUSTEE, OR EXERCISING ANY TRUST OR POWER
CONFERRED UPON THE GUARANTEE TRUSTEE UNDER THIS PARENT GUARANTEE AGREEMENT.

 

Section 3.2.     Certain Rights of the Guarantee Trustee.

 

(A)           SUBJECT TO THE PROVISIONS OF SECTION 3.1:

 

(I)      THE GUARANTEE TRUSTEE MAY CONCLUSIVELY RELY, AND SHALL BE FULLY
PROTECTED IN ACTING OR REFRAINING FROM ACTING IN GOOD FAITH AND IN ACCORDANCE
WITH THE TERMS HEREOF, UPON ANY RESOLUTION, CERTIFICATE, STATEMENT, INSTRUMENT,
OPINION, REPORT, NOTICE, REQUEST, DIRECTION, CONSENT, ORDER, BOND, DEBENTURE,
NOTE, OTHER EVIDENCE OF INDEBTEDNESS OR OTHER PAPER OR DOCUMENT REASONABLY
BELIEVED BY IT TO BE GENUINE AND TO HAVE BEEN SIGNED, SENT OR PRESENTED BY THE
PROPER PARTY OR PARTIES;

 

(II)     ANY DIRECTION OR ACT OF THE PARENT GUARANTOR CONTEMPLATED BY THIS
PARENT GUARANTEE AGREEMENT SHALL BE SUFFICIENTLY EVIDENCED BY AN OFFICERS’
CERTIFICATE UNLESS OTHERWISE PRESCRIBED HEREIN;

 

(III)    THE GUARANTEE TRUSTEE MAY CONSULT WITH COUNSEL, AND THE ADVICE OF SUCH
COUNSEL SHALL BE FULL AND COMPLETE AUTHORIZATION AND PROTECTION IN RESPECT OF
ANY ACTION TAKEN, SUFFERED OR OMITTED TO BE TAKEN BY IT HEREUNDER IN GOOD FAITH
AND IN RELIANCE THEREON AND IN ACCORDANCE WITH SUCH ADVICE.  SUCH COUNSEL MAY BE
COUNSEL TO THE GUARANTEE TRUSTEE, THE PARENT GUARANTOR OR ANY OF THEIR
RESPECTIVE AFFILIATES AND MAY BE ONE OF THE GUARANTEE TRUSTEE’S EMPLOYEES.  THE
GUARANTEE TRUSTEE SHALL HAVE THE RIGHT AT ANY TIME TO SEEK INSTRUCTIONS
CONCERNING THE ADMINISTRATION OF THIS PARENT GUARANTEE AGREEMENT FROM ANY COURT
OF COMPETENT JURISDICTION;

 

(IV)    THE GUARANTEE TRUSTEE SHALL BE UNDER NO OBLIGATION TO EXERCISE ANY OF
THE RIGHTS OR POWERS VESTED IN IT BY THIS PARENT GUARANTEE AGREEMENT AT THE
REQUEST OR DIRECTION OF ANY HOLDER, UNLESS SUCH HOLDER SHALL HAVE OFFERED TO THE
GUARANTEE TRUSTEE REASONABLE SECURITY OR INDEMNITY AGAINST THE COSTS, EXPENSES
(INCLUDING REASONABLE ATTORNEYS’ FEES AND EXPENSES) AND LIABILITIES THAT MIGHT
BE INCURRED BY IT IN COMPLYING WITH SUCH REQUEST OR DIRECTION, INCLUDING SUCH
REASONABLE ADVANCES AS MAY BE REQUESTED BY THE GUARANTEE TRUSTEE; PROVIDED THAT
NOTHING CONTAINED IN THIS SECTION 3.2(A)(IV) SHALL BE TAKEN TO RELIEVE THE
GUARANTEE TRUSTEE, UPON THE OCCURRENCE OF AN EVENT OF DEFAULT, OF ITS OBLIGATION
TO EXERCISE THE RIGHTS AND POWERS VESTED IN IT BY THIS PARENT GUARANTEE
AGREEMENT; PROVIDED, FURTHER, THAT NOTHING CONTAINED IN THIS SECTION 3.2(A)(IV)
SHALL PREVENT THE GUARANTEE TRUSTEE FROM EXERCISING ITS RIGHTS UNDER SECTION 4.2
HEREOF;

 

(V)     THE GUARANTEE TRUSTEE SHALL NOT BE BOUND TO MAKE ANY INVESTIGATION INTO
THE FACTS OR MATTERS STATED IN ANY RESOLUTION, CERTIFICATE, STATEMENT,
INSTRUMENT, OPINION, REPORT, NOTICE,

 

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REQUEST, DIRECTION, CONSENT, ORDER, BOND, DEBENTURE, NOTE, OTHER EVIDENCE OF
INDEBTEDNESS OR OTHER PAPER OR DOCUMENT, BUT THE GUARANTEE TRUSTEE, IN ITS
DISCRETION, MAY MAKE SUCH FURTHER INQUIRY OR INVESTIGATION INTO SUCH FACTS OR
MATTERS AS IT MAY SEE FIT, AND IF THE GUARANTEE TRUSTEE SHALL DETERMINE TO MAKE
SUCH INQUIRY OR INVESTIGATION, IT SHALL BE ENTITLED TO EXAMINE THE BOOKS,
RECORDS AND PREMISES OF THE PARENT GUARANTOR, PERSONALLY OR BY AGENT OR
ATTORNEY;

 

(VI)    THE GUARANTEE TRUSTEE MAY EXECUTE ANY OF THE TRUSTS OR POWERS HEREUNDER
OR PERFORM ANY DUTIES HEREUNDER EITHER DIRECTLY OR BY OR THROUGH ITS AGENTS,
ATTORNEYS, CUSTODIANS OR NOMINEES AND THE GUARANTEE TRUSTEE SHALL NOT BE
RESPONSIBLE FOR ANY MISCONDUCT OR NEGLIGENCE ON THE PART OF ANY SUCH AGENT,
ATTORNEY, CUSTODIAN OR NOMINEE APPOINTED WITH DUE CARE BY IT HEREUNDER;

 

(VII)   WHENEVER IN THE ADMINISTRATION OF THIS PARENT GUARANTEE AGREEMENT THE
GUARANTEE TRUSTEE SHALL DEEM IT DESIRABLE TO RECEIVE INSTRUCTIONS WITH RESPECT
TO ENFORCING ANY REMEDY OR RIGHT HEREUNDER, THE GUARANTEE TRUSTEE (A) MAY
REQUEST INSTRUCTIONS FROM THE HOLDERS OF A MAJORITY IN PRINCIPAL AMOUNT OF THE
NOTES, (B) MAY REFRAIN FROM ENFORCING SUCH REMEDY OR RIGHT OR TAKING SUCH OTHER
ACTION UNTIL SUCH REQUESTED INSTRUCTIONS ARE RECEIVED AND (C) SHALL BE PROTECTED
IN ACTING IN ACCORDANCE WITH SUCH INSTRUCTIONS;

 

(VIII)  EXCEPT AS OTHERWISE EXPRESSLY PROVIDED BY THIS PARENT GUARANTEE
AGREEMENT, THE GUARANTEE TRUSTEE SHALL NOT BE UNDER ANY OBLIGATION TO TAKE ANY
ACTION THAT IS DISCRETIONARY UNDER THE PROVISIONS OF THIS PARENT GUARANTEE
AGREEMENT; AND

 

(IX)    WHENEVER, IN THE ADMINISTRATION OF THIS PARENT GUARANTEE AGREEMENT, THE
GUARANTEE TRUSTEE SHALL DEEM IT DESIRABLE THAT A MATTER BE PROVED OR ESTABLISHED
BEFORE TAKING, SUFFERING OR OMITTING TO TAKE ANY ACTION HEREUNDER, THE GUARANTEE
TRUSTEE (UNLESS OTHER EVIDENCE IS HEREIN SPECIFICALLY PRESCRIBED) MAY, IN THE
ABSENCE OF BAD FAITH ON ITS PART, REQUEST AND RELY UPON AN OFFICERS’ CERTIFICATE
WHICH, UPON RECEIPT OF SUCH REQUEST FROM THE GUARANTEE TRUSTEE, SHALL BE
PROMPTLY DELIVERED BY THE PARENT GUARANTOR.

 

(B)           NO PROVISION OF THIS PARENT GUARANTEE AGREEMENT SHALL BE DEEMED TO
IMPOSE ANY DUTY OR OBLIGATION ON THE GUARANTEE TRUSTEE TO PERFORM ANY ACT OR
ACTS OR EXERCISE ANY RIGHT, POWER, DUTY OR OBLIGATION CONFERRED OR IMPOSED ON IT
IN ANY JURISDICTION IN WHICH IT SHALL BE ILLEGAL, OR IN WHICH THE GUARANTEE
TRUSTEE SHALL BE UNQUALIFIED OR INCOMPETENT IN ACCORDANCE WITH APPLICABLE LAW,
TO PERFORM ANY SUCH ACT OR ACTS OR TO EXERCISE ANY SUCH RIGHT, POWER, DUTY OR
OBLIGATION.  NO PERMISSIVE POWER OR AUTHORITY AVAILABLE TO THE GUARANTEE TRUSTEE
SHALL BE CONSTRUED TO BE A DUTY TO ACT IN ACCORDANCE WITH SUCH POWER AND
AUTHORITY.

 

Section 3.3.     Compensation.

 

The Parent Guarantor agrees to pay to the Guarantee Trustee from time to time
reasonable compensation for all services rendered by it hereunder in such
amounts as the Company and the Guarantee Trustee shall agree from time to time
(which compensation shall not be limited by any provisions of law in regard to
the compensation of a trustee of an express trust) and to reimburse the
Guarantee Trustee upon request for all reasonable expenses, disbursements and
advances (including the reasonable fees and expenses of its attorneys and
agents) incurred or made by the Guarantee Trustee in accordance with any
provisions of this Parent Guarantee Agreement except any such expense,
disbursement or advance as may be attributable to the negligence, bad faith or
willful misconduct of the Guarantee Trustee.

 

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Section 3.4.     Indemnity.

 

The Parent Guarantor agrees to indemnify and hold harmless the Guarantee Trustee
and any of its Affiliates and any of their officers, directors, shareholders,
employees, representatives or agents from and against any loss, damage,
liability, tax (other than income, franchise or other taxes imposed on amounts
paid pursuant to Section 3.3), penalty, expense or claim of any kind or nature
whatsoever incurred without negligence, bad faith or willful misconduct on its
part, arising out of or in connection with the acceptance or administration of
this Parent Guarantee Agreement, including the costs and expenses of defending
itself against any claim or liability in connection with the exercise or
performance of any of its powers or duties hereunder.  The Guarantee Trustee
will not claim or exact any lien or charge on any Parent Guarantee Payments as a
result of any amount due to it under this Parent Guarantee Agreement.  This
indemnity shall survive the termination of this Parent Guarantee Agreement or
the resignation or removal of the Guarantee Trustee.

 

In no event shall the Guarantee Trustee be liable for any indirect, special,
punitive or consequential loss or damage of any kind whatsoever, including, but
not limited to, lost profits, even if the Guarantee Trustee has been advised of
the likelihood of such loss or damage and regardless of the form of action.

 

In no event shall the Guarantee Trustee be liable for any failure or delay in
the performance of its obligations hereunder because of circumstances beyond its
control, including, but not limited to, acts of God, flood, war (declared or
undeclared), terrorism, fire, riot, embargo, government action, including any
laws, ordinances, regulations, governmental action or the like which delay,
restrict or prohibit the providing of the services contemplated by this Parent
Guarantee Agreement.

 

Section 3.5.     Securities.

 

The Guarantee Trustee or any other agent of the Guarantee Trustee, in its
individual or any other capacity, may become the owner or pledgee of the Notes.

 

ARTICLE IV

 

GUARANTEE TRUSTEE

 

Section 4.1.     Guarantee Trustee; Eligibility.

 

(A)           THERE SHALL AT ALL TIMES BE A GUARANTEE TRUSTEE WHICH SHALL:

 

(I)      NOT BE AN AFFILIATE OF THE PARENT GUARANTOR OR THE COMPANY; AND

 

(II)     BE A CORPORATION ORGANIZED AND DOING BUSINESS UNDER THE LAWS OF THE
UNITED STATES OR OF ANY STATE THEREOF, AUTHORIZED TO EXERCISE CORPORATE TRUST
POWERS, HAVING A COMBINED CAPITAL AND SURPLUS OF AT LEAST FIFTY MILLION DOLLARS
($50,000,000), SUBJECT TO SUPERVISION OR EXAMINATION BY FEDERAL OR STATE
AUTHORITY AND HAVING AN OFFICE WITHIN THE UNITED STATES.  IF SUCH CORPORATION
PUBLISHES REPORTS OF CONDITION AT LEAST ANNUALLY, PURSUANT TO LAW OR TO THE
REQUIREMENTS OF SUCH SUPERVISING OR EXAMINING AUTHORITY, THEN, FOR THE PURPOSES
OF THIS SECTION 4.1, THE COMBINED CAPITAL AND SURPLUS OF SUCH CORPORATION SHALL
BE DEEMED TO BE ITS COMBINED CAPITAL AND SURPLUS AS SET FORTH IN ITS MOST RECENT
REPORT OF CONDITION SO PUBLISHED.

 

(B)           IF AT ANY TIME THE GUARANTEE TRUSTEE SHALL CEASE TO BE ELIGIBLE TO
SO ACT UNDER SECTION 4.1(A), THE GUARANTEE TRUSTEE SHALL IMMEDIATELY RESIGN IN
THE MANNER AND WITH THE EFFECT SET OUT IN SECTION 4.2(C).

 

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(C)           IF THE GUARANTEE TRUSTEE HAS OR SHALL ACQUIRE ANY “CONFLICTING
INTEREST” WITHIN THE MEANING OF SECTION 310(B) OF THE TRUST INDENTURE ACT, THE
GUARANTEE TRUSTEE SHALL EITHER ELIMINATE SUCH INTEREST OR RESIGN IN THE MANNER
AND WITH THE EFFECT SET OUT IN SECTION 4.2(C).

 

SECTION 4.2.     APPOINTMENT, REMOVAL AND RESIGNATION OF THE GUARANTEE TRUSTEE.

 

(A)           SUBJECT TO SECTION 4.2(B), THE GUARANTEE TRUSTEE MAY BE APPOINTED
OR REMOVED WITHOUT CAUSE AT ANY TIME BY THE HOLDERS OF A MAJORITY IN PRINCIPAL
AMOUNT OF THE NOTES.

 

(B)           THE GUARANTEE TRUSTEE SHALL NOT BE REMOVED UNTIL A SUCCESSOR
GUARANTEE TRUSTEE HAS BEEN APPOINTED AND HAS ACCEPTED SUCH APPOINTMENT BY
WRITTEN INSTRUMENT EXECUTED BY SUCH SUCCESSOR GUARANTEE TRUSTEE AND DELIVERED TO
THE PARENT GUARANTOR.

 

(C)           THE GUARANTEE TRUSTEE APPOINTED HEREUNDER SHALL HOLD OFFICE UNTIL
A SUCCESSOR GUARANTEE TRUSTEE SHALL HAVE BEEN APPOINTED OR UNTIL ITS REMOVAL OR
RESIGNATION.  THE GUARANTEE TRUSTEE MAY RESIGN FROM OFFICE (WITHOUT NEED FOR
PRIOR OR SUBSEQUENT ACCOUNTING) BY AN INSTRUMENT IN WRITING EXECUTED BY THE
GUARANTEE TRUSTEE AND DELIVERED TO THE PARENT GUARANTOR AND THE HOLDERS, WHICH
RESIGNATION SHALL NOT TAKE EFFECT UNTIL A SUCCESSOR GUARANTEE TRUSTEE HAS BEEN
APPOINTED AND HAS ACCEPTED SUCH APPOINTMENT BY INSTRUMENT IN WRITING EXECUTED BY
SUCH SUCCESSOR GUARANTEE TRUSTEE AND DELIVERED TO THE PARENT GUARANTOR, THE
HOLDERS AND THE RESIGNING GUARANTEE TRUSTEE.

 

(D)           IF NO SUCCESSOR GUARANTEE TRUSTEE SHALL HAVE BEEN APPOINTED AND
ACCEPTED APPOINTMENT AS PROVIDED IN THIS SECTION 4.2 WITHIN THIRTY (30) DAYS
AFTER DELIVERY TO THE PARENT GUARANTOR OF AN INSTRUMENT OF RESIGNATION, THE
RESIGNING GUARANTEE TRUSTEE MAY PETITION, AT THE EXPENSE OF THE PARENT
GUARANTOR, ANY COURT OF COMPETENT JURISDICTION FOR APPOINTMENT OF A SUCCESSOR
GUARANTEE TRUSTEE. SUCH COURT MAY THEREUPON, AFTER PRESCRIBING SUCH NOTICE, IF
ANY, AS IT MAY DEEM PROPER, APPOINT A SUCCESSOR GUARANTEE TRUSTEE.

 

ARTICLE V

 

PARENT GUARANTEE

 

Section 5.1.     Parent Guarantee.

 

(A)           THE PARENT GUARANTOR IRREVOCABLY AND UNCONDITIONALLY AGREES TO PAY
IN FULL TO THE HOLDERS THE PARENT GUARANTEE PAYMENTS (WITHOUT DUPLICATION OF
AMOUNTS THERETOFORE PAID BY OR ON BEHALF OF THE COMPANY), AS AND WHEN DUE,
REGARDLESS OF ANY DEFENSE (EXCEPT FOR THE DEFENSE OF PAYMENT BY THE COMPANY),
RIGHT OF SETOFF OR COUNTERCLAIM WHICH THE COMPANY OR THE GUARANTOR MAY HAVE OR
ASSERT.  THE PARENT GUARANTOR’S OBLIGATION TO MAKE A PARENT GUARANTEE PAYMENT
MAY BE SATISFIED BY DIRECT PAYMENT OF THE REQUIRED AMOUNTS BY THE PARENT
GUARANTOR TO THE HOLDERS OR BY CAUSING THE COMPANY TO PAY SUCH AMOUNTS TO THE
HOLDERS.  THE PARENT GUARANTOR SHALL GIVE PROMPT WRITTEN NOTICE TO THE GUARANTEE
TRUSTEE IN THE EVENT THE PARENT GUARANTOR MAKES ANY DIRECT PAYMENT TO THE
HOLDERS.

 

(B)           THE PARENT GUARANTOR EXPRESSLY AGREES THAT THE GUARANTEE SET FORTH
IN THE IMMEDIATELY PRECEDING PARAGRAPH INCLUDES, BUT IS NOT LIMITED TO, THE
GUARANTEE OF THE FULL AND PROMPT PAYMENT OF THE PARENT GUARANTOR’S OBLIGATION TO
MAKE ANY AND ALL INTEREST AND PRINCIPAL PAYMENTS ON THE NOTES WHICH WOULD BE
REQUIRED TO BE MADE BY THE COMPANY OR THE GUARANTOR UNDER THE INDENTURE,
INCLUDING, WITHOUT LIMITATION, ANY AMOUNTS OF ADDITIONAL INTEREST, THE OPTIONAL
REDEMPTION PRICE, OR ANY OTHER AMOUNT SET FORTH IN THE INDENTURE OR THE NOTE,
INCLUDING WITHOUT LIMITATION PAYMENTS DUE IN CONNECTION WITH ANY APPLICABLE
PRINCIPAL HURDLE REQUIREMENTS, DISTRIBUTIONS AND DISTRIBUTION REQUIREMENTS OF
THE COMPANY OR THE GUARANTOR OR ANY OTHER PAYMENTS ON THE NOTES IN CONNECTION
WITH A CHANGE OF CONTROL.

 

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(C)           ALL PARENT GUARANTEE PAYMENTS MADE FROM TIME TO TIME WITH RESPECT
TO THIS PARENT GUARANTEE AGREEMENT SHALL BE IN U.S. DOLLARS.

 

Section 5.2.     Waiver of Notice and Demand.

 

The Parent Guarantor hereby waives notice of acceptance of the Parent Guarantee
Agreement and of any liability to which it applies or may apply, presentment,
demand for payment, any right to require a proceeding first against the
Guarantee Trustee, the Company, the Holders or any other Person before
proceeding against the Parent Guarantor, protest, notice of nonpayment, notice
of dishonor, notice of redemption and all other notices and demands.

 

Section 5.3.     Obligations Not Affected.

 

The obligations, covenants, agreements and duties of the Parent Guarantor under
this Parent Guarantee Agreement shall be absolute and unconditional, and shall
in no way be affected or impaired by reason of the happening from time to time
of any of the following:

 

(a)           the release or waiver, by operation of law or otherwise, of the
performance or observance by the Company of any express or implied agreement,
covenant, term or condition relating to the Notes or the Indenture to be
performed or observed by the Company;

 

(b)           the extension of time for the payment by the Company of all or any
portion of the obligations under the Notes (including the extension of any
interest payment period on the Notes as provided in the Indenture) or any other
sums payable under the terms of the Notes or the extension of time for the
performance of any other obligation under, arising out of, or in connection
with, the Notes;

 

(c)           any failure, omission, delay or lack of diligence on the part of
the Holders to enforce, assert or exercise any right, privilege, power or remedy
conferred on the Holders pursuant to the terms of the Notes, or any action on
the part of the Company granting indulgence or extension of any kind;

 

(d)           the voluntary or involuntary liquidation, dissolution, sale of any
collateral, receivership, insolvency, bankruptcy, assignment for the benefit of
creditors, reorganization, arrangement, composition or readjustment of debt of,
or other similar proceedings affecting, the Company or any of the assets of the
Company;

 

(e)           any invalidity of, or defect or deficiency in, the Notes or the
Indenture;

 

(f)            the settlement or compromise of any obligation guaranteed hereby
or hereby incurred; or

 

(g)           any other circumstance whatsoever that might otherwise constitute
a legal or equitable discharge or defense of a guarantor, it being the intent of
this Section 5.3 that the obligations of the Parent Guarantor hereunder shall be
absolute and unconditional under any and all circumstances.

 

There shall be no obligation of the Holders to give notice to, or obtain the
consent of, the Parent Guarantor with respect to the happening of any of the
foregoing.  No set-off, counterclaim, reduction or diminution of any obligation,
or any defense of any kind or nature that the Parent Guarantor has or may have

 

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shall be available hereunder to the Parent Guarantor against any Holder to
reduce the payments thereto under this Parent Guarantee Agreement.

 

Section 5.4.     Rights of Holders.

 

The Parent Guarantor expressly acknowledges that: (a) this Parent Guarantee
Agreement will be deposited with the Guarantee Trustee to be held for the
benefit of the Holders; (b) the Guarantee Trustee has the right to enforce this
Parent Guarantee Agreement on behalf of the Holders; (c) the Holders of a
Majority in Principal Amount of the Notes have the right to direct the time,
method and place of conducting any proceeding for any remedy available to the
Guarantee Trustee in respect of this Parent Guarantee Agreement or exercising
any trust or power conferred upon the Guarantee Trustee under this Parent
Guarantee Agreement; and (d) the Trust or any Holder may institute a legal
proceeding directly against the Parent Guarantor to enforce their respective
rights under this Parent Guarantee Agreement, without first instituting a legal
proceeding against the Guarantee Trustee, the Company or any other Person.

 

Section 5.5.     Guarantee of Payment.

 

This Parent Guarantee Agreement creates a guarantee of payment and not of
collection.  This Parent Guarantee Agreement will not be discharged except by
payment of the Parent Guarantee Payments in full (without duplication of amounts
theretofore paid by the Company) or upon payment in full of the Notes and all
amounts owed by the Company or Guarantor under the Indenture to the Holders or
beneficiary thereof.

 

Section 5.6.     Subrogation.

 

The Parent Guarantor shall be subrogated to all (if any) rights of the Holders
against the Company in respect of any amounts paid to the Holders by the Parent
Guarantor under this Parent Guarantee Agreement and shall have the right to
waive payment by the Company pursuant to Section 5.1 provided that the Parent
Guarantor shall not (except to the extent required by mandatory provisions of
law) be entitled to enforce or exercise any rights it may acquire by way of
subrogation or any indemnity, reimbursement or other agreement, in all cases as
a result of payment under this Parent Guarantee Agreement, if, at the time of
any such payment, any amounts are due and unpaid under this Parent Guarantee
Agreement.  If any amount shall be paid to the Parent Guarantor in violation of
the preceding sentence, the Parent Guarantor agrees to hold such amount in trust
for the Holders and the holders of any beneficial interests thereof and to pay
over such amount to the appropriate Holder.

 

Section 5.7.     Independent Obligations.

 

The Parent Guarantor acknowledges that its obligations hereunder are independent
of the obligations of the Company with respect to the Notes, the Indenture,any
other guarantee agreement and with respect to any obligations of the Parent
Guarantor or the Company with respect to the Notes or the Indenture and that the
Parent Guarantor shall be liable as principal and as debtor hereunder to make
Parent Guarantee Payments pursuant to the terms of this Parent Guarantee
Agreement notwithstanding the occurrence of any event referred to in subsections
(a) through (g), inclusive, of Section 5.3.

 

Section 5.8.     Enforcement.

 

A Holder may enforce the obligations of the Parent Guarantor contained in
Section 5.1 directly against the Parent Guarantor, and the Parent Guarantor
waives any right or remedy to require that any action be brought against the
Company or any other person or entity before proceeding against the Parent
Guarantor.

 

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Section 5.9.     Subordination.

 

The obligations of the Parent Guarantor under this Parent Guarantee Agreement
shall constitute unsecured obligations of the Parent Guarantor and shall rank
subordinate and junior in right of payment to the prior payment in full of all
Senior Debt of the Parent Guarantor to the same extent and in the same manner
that the payment of the principal of and any premium and interest (including any
Additional Interest) on the Securities (as defined in the Indenture) is
subordinated to the prior payment in full of all Senior Debt (as defined in the
Indenture).  The subordination provisions contained in Article XII of the
Indenture shall apply to the obligations of the Parent Guarantor under this
Parent Guarantee Agreement as if such Article XII were set forth herein at
length with such changes to such Article XII as necessary to make the provisions
of Article XII fully applicable to the Parent Guarantor and its Senior Debt on
the one hand and the Holders and Beneficiaries on the other.

 

ARTICLE VI

 

TERMINATION

 

Section 6.1.     Termination.

 

This Parent Guarantee Agreement shall terminate and be of no further force and
effect upon the full payment of the Notes and all amounts payable in accordance
with the Indenture.  Notwithstanding the foregoing, this Parent Guarantee
Agreement will continue to be effective or will be reinstated, as the case may
be, if at any time any Holder must restore payment of any sums paid with respect
to any Notes or the Indenture (including amounts paid under this Parent
Guarantee Agreement).  The obligations of the Parent Guarantor under Section 3.3
and Section 3.4 shall survive any such termination or the resignation and
removal of the Guarantee Trustee.

 

ARTICLE VII

 

MISCELLANEOUS

 

Section 7.1.     Successors and Assigns.

 

All guarantees and agreements contained in this Parent Guarantee Agreement shall
bind the successors, assigns, receivers, trustees and representatives of the
Parent Guarantor and shall inure to the benefit of the Holders.  Except in
connection with a consolidation, merger or sale involving the Parent Guarantor
that is permitted under Article VIII hereof and Article VIII of the Indenture,
and pursuant to which the successor or assignee agrees in writing to perform the
Parent Guarantor’s obligations hereunder, the Parent Guarantor shall not assign
its rights or delegate its obligations hereunder without the prior approval of
the Holders of a Majority in Principal Amount of the Notes.

 

Section 7.2.     Amendments.

 

Except with respect to any changes that do not adversely affect the rights of
the Holders in any material respect (in which case no consent of the Holders
will be required), this Parent Guarantee Agreement may only be amended with the
prior approval of the Parent Guarantor, the Guarantee Trustee and the Holders of
not less than a Majority in Principal Amount of the Notes.

 

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Section 7.3.     Notices.

 

Any notice, request or other communication required or permitted to be given
hereunder shall be in writing, duly signed by the party giving such notice, and
delivered, telecopied or mailed by first class mail as follows:

 

(a)           if given to the Parent Guarantor, to the address or facsimile
number set forth below or such other address, facsimile number or to the
attention of such other Person as the Parent Guarantor may give notice to the
Guarantee Trustee and the Holders:

 

Orleans Homebuilders, Inc.
3333 Street Road, Suite 101 Bensalem, PA 19020
Facsimile No.:  (215) 633-2352
Attention:  Chief Financial Officer

 

(b)          if given to the Company, at the address or forth below or such
other address, facsimile number such other Person as the Company may give notice
to and the Holders:

 

OHI Financing, Inc.
3333 Street Road, Suite 101
Bensalem, PA 19020
Facsimile No.:  (215) 633-2352
Attention:  Chief Financial Officer

 

(d)           if given to the Guarantee Trustee, at the address or facsimile
number set forth below or such other address, facsimile number or to the
attention of such other Person as the Guarantee Trustee may give notice to the
Parent Guarantor and the Holders:

 

The Bank of New York Mellon
101 Barclay Street
New York, New York 10286
Attention: Corporate Trust - OHI Financing

 

(e)           if given to any Holder, at the address set forth on the books and
records of the Trustee (as defined in the Indenture).

 

All notices hereunder shall be deemed to have been given when received in
person, telecopied with receipt confirmed, or mailed by first class mail,
postage prepaid, except that if a notice or other document is refused delivery
or cannot be delivered because of a changed address of which no notice was
given, such notice or other document shall be deemed to have been delivered on
the date of such refusal or inability to deliver.

 

Section 7.4.     Benefit.

 

This Parent Guarantee Agreement is solely for the benefit of the Holders and is
not separately transferable from the Notes.

 

Section 7.5.     Governing Law.

 

THIS PARENT GUARANTEE AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF EACH PARTY
HERETO, SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH

 

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AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK WITHOUT REFERENCE TO ITS
CONFLICT OF LAWS PROVISIONS (OTHER THAN SECTION 5-1401 OF THE GENERAL
OBLIGATIONS LAW).

 

Section 7.6.     Submission to Jurisdiction.

 

ANY LEGAL ACTION OR PROCEEDING BY OR AGAINST ANY PARTY HERETO OR WITH RESPECT TO
OR ARISING OUT OF THIS PARENT GUARANTEE AGREEMENT MAY BE BROUGHT IN OR REMOVED
TO THE COURTS OF THE STATE OF NEW YORK, IN AND FOR THE COUNTY OF NEW YORK, OR OF
THE UNITED STATES OF AMERICA FOR THE SOUTHERN DISTRICT OF NEW YORK (IN EACH CASE
SITTING IN THE BOROUGH OF MANHATTAN). BY EXECUTION AND DELIVERY OF THIS PARENT
GUARANTEE AGREEMENT, EACH PARTY ACCEPTS, FOR ITSELF AND IN RESPECT OF ITS
PROPERTY, GENERALLY AND UNCONDITIONALLY, THE JURISDICTION OF THE AFORESAID
COURTS (AND COURTS OF APPEALS THEREFROM) FOR LEGAL PROCEEDINGS ARISING OUT OF OR
IN CONNECTION WITH THIS PARENT GUARANTEE AGREEMENT.

 

Section 7.7.     Counterparts.

 

This instrument may be executed in any number of counterparts, each of which so
executed shall be deemed to be an original, but all such counterparts shall
together constitute but one and the same instrument.

 

Section 7.8.     The Indenture.

 

Each of the parties hereto hereby acknowledges that it is familiar with the
terms of the Indenture. The Indenture shall be deemed to be specifically
described in this Parent Guarantee Agreement.

 

ARTICLE VIII

 

CONSOLIDATION, MERGER,

CONVEYANCE, TRANSFER OR LEASE AND OWNERSHIP OF THE COMPANY

 

Section 8.1.     Parent Guarantor May Consolidate, etc., Only on Certain Terms.

 

The Parent Guarantor shall not consolidate with or merge into any other Person
or convey, transfer or lease its properties and assets substantially as an
entirety to any Person, and no Person shall consolidate with or merge into the
Parent Guarantor or convey, transfer or lease its properties and assets
substantially as an entirety to the Parent Guarantor, unless:

 

(a)           if the Parent Guarantor shall consolidate with or merge into
another Person or convey, transfer or lease its properties and assets
substantially as an entirety to any Person, the entity formed by such
consolidation or into which the Parent Guarantor is merged or the Person that
acquires by conveyance or transfer, or that leases, the properties and assets of
the Parent Guarantor substantially as an entirety shall be an entity organized
and existing under the laws of the United States of America or any State or
Territory thereof or the District of Columbia and shall expressly assume, in
writing, executed and delivered to the Guarantee Trustee, in form reasonably
satisfactory to the Guarantee Trustee, the due and punctual payment of the
Parent Guarantee Payments required hereunder and the performance of all other
obligations and every covenant, term and provision of the Parent Guarantor to be
performed under this Parent Guarantee Agreement on the part of the Parent
Guarantor to be performed or observed;

 

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(b)           immediately after giving effect to such transaction, no Event of
Default, and no event that, after notice or lapse of time, or both, would
constitute an Event of Default, shall have happened and be continuing; and

 

(C)           THE PARENT GUARANTOR HAS DELIVERED TO THE GUARANTEE TRUSTEE AN
OFFICERS’ CERTIFICATE AND AN OPINION OF COUNSEL, EACH STATING THAT SUCH
CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE AND, IF A WRITTEN AGREEMENT
EVIDENCING ANY ASSIGNMENT OR ASSUMPTION IS REQUIRED IN CONNECTION WITH SUCH
TRANSACTION, ANY SUCH AGREEMENT COMPLIES WITH THIS ARTICLE VIII AND THAT ALL
CONDITIONS PRECEDENT HEREIN PROVIDED FOR RELATING TO SUCH TRANSACTION HAVE BEEN
COMPLIED WITH; AND THE TRUSTEE MAY RELY UPON SUCH OFFICERS’ CERTIFICATE AND
OPINION OF COUNSEL AS CONCLUSIVE EVIDENCE THAT SUCH TRANSACTION COMPLIES WITH
THIS SECTION 8.1;

 

(D)           PRIOR WRITTEN APPROVAL OF SUCH TRANSACTION BY THE HOLDERS OF A
MAJORITY IN PRINCIPAL AMOUNT OF THE NOTES;

 

provided, however, that, in lieu of the foregoing clauses (a), (b), (c) and (d),
the Guarantor may consolidate with or merge with or into any other Person, or
convey, transfer or lease its properties and assets substantially as an entirety
to any Person if such consolidation, merger, conveyance, transfer or lease
constitutes a Change of Control and, in connection with such transaction, the
Guarantor and the Company comply with Section 10.5  of the Indenture and 
delivers to the Guarantee Trustee an Officers’ Certificate attesting to such
compliance, as to which the Guarantee Trustee may rely as conclusive evidence
that such transaction complies with this Section 8.1.

 

Section 8.2.     Dividends, Distributions and Payments.

 

If (a) at any time on or before the later of (1) July 30, 2014 and (2) until
satisfaction of the Principal Hurdle Requirement (including the payment of
accrued interest (and Additional Interest) with respect to any Notes redeemed,
paid or prepaid) or (b) there shall have occurred and be continuing an Event of
Default hereunder or an “Event of Default” under the Indenture, then the Parent
Guarantor shall not (i) declare or pay any dividends or distributions on, or
redeem, purchase, acquire or make a liquidation payment with respect to, any of
the Guarantor’s Equity Interests (as defined in the Indenture), (ii) vote in
favor of or permit or otherwise allow any of the subsidiaries to declare or pay
any dividends or distributions on, or redeem, purchase, acquire or make a
liquidation payment with respect to or otherwise retire, any shares of any such
subsidiary’s preferred stock or other Equity Interests entitling the holders
thereof to a stated rate of return (for the avoidance of doubt, whether such
preferred stock or other Equity Interests are perpetual or otherwise) to any
entity other than the Guarantor or a direct or indirect Subsidiary of the
Guarantor, or (iii) allow the Company to make any payment of principal of or any
interest or premium, if any, on or repay, repurchase or redeem any debt
securities of the Company or the Guarantor that rank pari passu in all respects
with or junior in interest to the Notes, except with respect to pari passu debt,
payments made on a pari passu basis with payments made with respect to the
Notes, and payments made on a correlative basis on the Other Securities; other
than, in the case of (i) and (ii) (A) repurchases, redemptions or other
acquisitions of shares of capital stock or other Equity Interests of the Parent
Guarantor or any subsidiary (other than the Company) in connection with any
employment contract, benefit plan or other similar arrangement with or for the
benefit of any one or more employees, officers, directors or consultants, in
connection with a dividend reinvestment or stockholder stock purchase plan (or
similar equity purchase plan) or in connection with the issuance of capital
stock or other Equity Interests of the Parent Guarantor or any subsidiary (or
securities convertible into or exercisable for such capital stock or Equity
Interests) as consideration in an acquisition transaction entered into prior to
the applicable Event of Default, (B) as a result of an exchange or conversion of
any class or series of the capital stock or Equity

 

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Interests of the Parent Guarantor or any subsidiary for any class or series of
the capital stock or Equity Interests of the Parent Guarantor or any subsidiary
or of any class of the Parent Guarantor or any subsidiary for any class or
series of the capital stock or other Equity Interests of the Parent Guarantor or
any subsidiary, (C) the purchase of fractional interests in shares of the
capital stock or other Equity Interests of the Parent Guarantor or any
subsidiary pursuant to the conversion or exchange provisions of such capital
stock, other Equity Interests or the security being converted or exchanged, (D)
any declaration of a dividend in connection with any Rights Plan, the issuance
of rights, stock or other property under any Rights Plan or the redemption or
repurchase of rights pursuant thereto, (E) any dividend in the form of stock,
Equity Interests, warrants, options or other rights where the dividend stock or
Equity Interests or the stock or Equity Interests issuable upon exercise of such
warrants, options or other rights is the same stock as that on which the
dividend is being paid or ranks pari passu with or junior to such stock or (F)
so long as no Default or Event of Default has occurred and is continuing
andafter satisfaction of the Principal Hurdle Requirement (including the payment
of accrued interest (including Additional Interest) and any other amounts then
due and payable with respect to any Securities redeemed, paid or prepaid), any
Distributions as to which the Distribution Requirements have been satisfied.

 

Section 8.3.     Successor Company Substituted.

 

Upon any consolidation or merger by the Parent Guarantor with or into any other
Person, or any conveyance, transfer or lease by the Parent Guarantor of its
properties and assets substantially as an entirety to any Person in accordance
with Section 8.1 and the execution and delivery to the Trustee of the written
agreement described in Section 8.1(a), the successor entity formed by such
consolidation or into which the Parent Guarantor is merged or to which such
conveyance, transfer or lease is made shall succeed to, and be substituted for,
and shall be liable for every obligation of and may exercise every right and
power of, the Parent Guarantor under this Parent Guarantee Agreement with the
same effect as if such successor Person had been named as the Parent Guarantor
herein; and in the event of any such conveyance, or transfer, or lease following
the execution and delivery of such written agreement, the Parent Guarantor shall
be discharged from all obligations and covenants under the Parent Guarantee
Agreement and the Notes.

 

Section 8.4.     Ownership of the Company.

 

At all times while this Parent Guarantee Agreement is in effect and while any of
the obligations of the Parent Guarantor hereunder remain outstanding, one
hundred percent (100%) of the outstanding capital stock of the Company shall be
owned by the Parent Guarantor.

 

ARTICLE IX

 

REPRESENTATIONS AND WARRANTIES

 

Section 9.1.     Representations and Warranties of Parent Guarantor.

 

The Parent Guarantor hereby represents and warrants for the benefit of the
Holders that:

 

(a)           the Parent Guarantor is a corporation duly organized, validly
existing and in good standing under the laws of Delaware.

 

(b)           the Parent Guarantor has full corporate power, authority and legal
right to execute, deliver and perform its obligations under this Parent
Guarantee Agreement and has taken all necessary action to authorize the
execution, delivery and performance by it of this Parent Guarantee Agreement;

 

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(c)           this Parent Guarantee Agreement has been duly authorized, executed
and delivered by the Parent Guarantor and constitutes the legal, valid and
binding agreement of the Parent Guarantor enforceable against the Parent
Guarantor in accordance with its terms, subject to applicable bankruptcy,
insolvency and similar laws affecting creditors’ rights generally and to general
principles of equity;

 

(d)           the execution, delivery and performance of this Parent Guarantee
Agreement have been duly authorized by all necessary corporate or other action
on the part of the Parent Guarantor and do not require any approval of
stockholders of the Parent Guarantor and such execution, delivery and
performance will not (i) violate the articles or certificate of incorporation or
by-laws (or other organizational documents) of the Parent Guarantor or (ii)
violate any applicable law, governmental rule or regulation governing the Parent
Guarantor, any material agreement to which it is a party or any material portion
of its property or any order, judgment or decree applicable to the Company or
the Parent Guarantor, respectively, or any material portion of its property;

 

[SIGNATURE PAGE FOLLOWS]

 

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IN WITNESS WHEREOF, the undersigned have executed this Parent Guarantee
Agreement as of the date first above written.

 

 

ORLEANS HOMEBUILDERS, INC.

 

 

 

 

 

 

By:

/s/ Garry P.Herdler

 

 

Name: Garry P.Herdler

 

 

Title    EVP&CFO

 

 

 

 

CHI FINANCING, INC.

 

 

 

 

 

 

By:

/s/ Garry P.Herdler

 

 

Name: Garry P.Herdler

 

 

Title:   EVP&CFO

 

 

 

 

THE BANK OF NEW YORK MELLON, as Guarantee Trustee

 

 

 

 

 

 

By:

/s/ Jared Fischer

 

 

Name: Jared Fischer

 

 

Title:   Assistant Treasurer

 

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