EXHIBIT 10.35


 


SECURITY AGREEMENT


 


This SECURITY AGREEMENT
(this “Agreement”) is dated as of September 29
, 2008 and entered into by and among ORLEANS HOMEBUILDERS, INC.,
a Delaware corporation (“Company”),
(each of THE UNDERSIGNED AFFILIATES of Company
(each of such undersigned affiliates being a “Affiliate Grantor” and
collectively “Affiliate Grantors”) and each ADDITIONAL GRANTOR that may become a party hereto after the
date hereof in accordance with Section 22 hereof (each of Company, each
Affiliate Grantor, and each Additional Grantor being a “Grantor”
and collectively the “Grantors”) and WACHOVIA BANK, NATIONAL ASSOCIATION, as Agent for and
representative of (in such capacity herein called “Secured
Party”) the Lenders (as hereinafter defined).


 


PRELIMINARY STATEMENTS


 


A.                                   Pursuant to the
Second Amended and Restated Revolving Credit Loan Agreement dated as of September 29,
2008 (said Credit Agreement, as it may hereafter be amended, restated,
supplemented or otherwise modified from time to time, being the “Credit
Agreement”),Wachovia Bank, National Association, as Agent, and Lenders have
made certain commitments, subject to the terms and conditions set forth in the
Credit Agreement, continue to make loans and extend certain credit facilities
to Affiliate Grantors.


 


B.                                     Company has
executed and delivered the Guaranty, in favor of Secured Party for the benefit
of Lenders, pursuant to which Company has guarantied the prompt payment and
performance when due of all obligations of Affiliate Grantors under the Credit
Agreement.


 


C.                                     It is a condition
precedent to the continued extensions of credit by Lenders under the Credit
Agreement that Grantor shall have granted the security interests and undertaken
the obligations contemplated by this Agreement.


 


NOW, THEREFORE, in
consideration of the premises and in order to induce Lenders to make loans and
other extensions of credit under the Credit Agreement, and for other good and
valuable consideration, the receipt and adequacy of which are hereby
acknowledged, each Grantor hereby agrees with Secured Party as follows:


 


SECTION 1.                        Grant
of Security.


 


Grantor hereby assigns to Secured Party, and
hereby grants to Secured Party a security interest in, all of such Grantor’s
right, title and interest in and to the following personal property of such
Grantor, in each case whether now or hereafter existing, whether tangible or
intangible, whether now owned or hereafter acquired and wherever the same may
be located (the “Collateral”):


 


(a)                                  all
federal and state income tax refunds received by or payable to Grantors, in
each case after the Closing Date (collectively, “Refund Collateral”);


 

















 


(b)                                 all
Proceeds with respect to any of the foregoing Collateral.


 


Each category of Collateral set forth above
shall have the meaning set forth in the UCC.


 


SECTION 2.                        Security
for Obligations.


 


This Agreement secures, and the Collateral is
collateral security for, the prompt payment in full when due, whether at stated
maturity, by required prepayment, declaration, acceleration, demand or
otherwise, of all Secured Obligations of each Grantor. “Secured
Obligations” means:


 


(a)                                  with
respect to Company, all obligations and liabilities of every nature of Company
now or hereafter existing under or arising out of or in connection with the
Guaranty, and


 


(b)                                 with
respect to each Affiliate Grantor and Additional Grantor, all obligations and
liabilities of every nature of such Affiliate Grantor now or hereafter existing
under or arising out of or in connection with the Credit Agreement and the
other Loan Documents,


 


in each case
together with all extensions or renewals thereof, whether for principal,
interest, reimbursement of amounts drawn under letters of credit, fees,
expenses, indemnities or otherwise, whether voluntary or involuntary, direct or
indirect, absolute or contingent, liquidated or unliquidated, whether or not
jointly owed with others, and whether or not from time to time decreased or
extinguished and later increased, created or incurred, and all or any portion
of such obligations or liabilities that are paid, to the extent all or any part
of such payment is avoided or recovered directly or indirectly from Secured
Party or any Lender as a preference, fraudulent transfer or otherwise, and all
obligations of every nature of Grantors now or hereafter existing under this
Agreement (including, without limitation, interest and other amounts that, but
for the filing of a petition in bankruptcy with respect to Company or any other
Grantor, would accrue on such obligations, whether or not a claim is allowed against
Company or such Grantor for such amounts in the related bankruptcy proceeding).


 


SECTION 3.                        Representations
and Warranties.


 


Each Grantor represents and warrants as
follows:


 


(a)                                  Jurisdiction of Organization. Each Grantor’s name as it
appears in official filings in the state of its organization; such Grantor’s
type of organization (i.e. corporation, limited partnership, etc.),
jurisdiction of organization and organization number provided by the applicable
government authority of the jurisdiction of organization are set forth on
Schedule 1 annexed hereto.


 


(b)                                 Names. No Grantor (or predecessor by merger or otherwise of
such Grantor) has, within the four month period preceding the date hereof, or,
in the case of an Additional Grantor, the date of the applicable Counterpart,
had a different name from the name of such Grantor listed or the signature pages hereof.


 


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(c)                                  Due Authorization, etc. Each Grantor is duly formed, validly
existing and in good standing and subsisting under the law of its jurisdiction
of organization and has full entity power and authority to execute, deliver and
perform this Agreement. The execution, delivery and performance of this
Agreement has been duly authorized by all necessary entity action. This
Agreement constitutes a legally valid and binding obligation of each Grantor,
enforceable against such Grantor in accordance with its terms, except as
enforcement hereof may be limited by applicable bankruptcy, insolvency,
reorganization or other similar laws affecting the enforcement of creditors’
rights generally or by general equitable principles.


 


(d)                                 No Conflict. The execution, delivery and performance of this
Agreement by each Grantor will not violate the Organizational Documents of such
Grantor, any provision of law applicable to such Grantor or any order, judgment
or decree of any court or other governmental agency binding on such Grantor.


 


(e)                                  Security Interests. The security interests in the Collateral
granted hereunder constitute valid security interests in the Collateral,
securing payment of the Secured Obligations.


 


SECTION 4.                        Further
Assurances.


 


Each Grantor agrees that from time to time,
at the expense of Grantors and upon the reasonable request of Secured Party,
such Grantor will promptly execute and deliver all further instruments and
documents, and take all further action, that may be necessary or desirable, or
that Secured Party may request, in order to perfect and protect any security
interest granted or purported to be granted hereby or to enable Secured Party
to exercise and enforce its rights and remedies hereunder with respect to any
Collateral. Without limiting the generality of the foregoing, each Grantor,
upon the reasonable request of Securied Party, will: (a) (i) execute
(if necessary) and file such financing or continuation statements, or
amendments thereto, (ii) subject to the provisions of Section 6(f), execute
and deliver, and cause to be executed and delivered, all federal and state tax
forms establishing that Secured Party has a security interest in the Collateral
and the right to directly receive payments from the federal and state
government with respect to such Collateral after the occurrence and during the
continuance of an Event of Default; (iii) deliver such other instruments
or notices, in each case, as may be necessary or desirable, or as Secured Party
may request, in order to perfect and preserve the security interests granted or
purported to be granted hereby; (b) furnish to Secured Party from time to
time statements and schedules further identifying and describing the Collateral
and such other reports in connection with the Collateral as Secured Party may
reasonably request, all in reasonable detail; ; and (c) use commercially
reasonable efforts to obtain any necessary consents of third parties to the
creation and perfection of a security interest in favor of Secured Party with
respect to any Collateral. Each Grantor hereby authorizes Secured Party to file
one or more financing or continuation statements, and amendments thereto,
relative to all or any part of the Collateral.


 


SECTION 5.                        Certain
Covenants of Grantors.


 


Each Grantor shall:


 


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(a)                                  Either
(i) deposit all Refund Collateral received by a Borrower or Guarantor into
a deposit account at a Lender and maintain such Collateral in a deposit account
at a Lender until the Maturity Date, or (ii) make a voluntary prepayment
of the Loans in the amount of such Refund Collateral when such Refund Collateral
is received by a Borrower or Guarantor.


 


(b)                                 not
use or permit any Collateral to be used unlawfully or in violation of any
provision of this Agreement or any applicable statute, regulation or ordinance
or any policy of insurance covering the Collateral;


 


(c)                                  give
Secured Party at least 30 days’ prior written notice of any change in such
Grantor’s name, identity or corporate structure;


 


(d)                                 give
Secured Party at least 30 days’ prior written notice of any reincorporation,
reorganization or other action that results in a change of the jurisdiction of
organization of such Grantor; and


 


(e)                                  permit
representatives of Secured Party at any time during normal business hours to
inspect and make abstracts from records of the Collateral, and each Grantor
agrees to render to Secured Party, at Grantor’s cost and expense, such clerical
and other assistance as may be reasonably requested with regard thereto.


 


SECTION 6.                        Secured
Party Appointed Attorney-in-Fact.


 


Each Grantor hereby irrevocably appoints
Secured Party as such Grantor’s attorney-in-fact, with full authority in the
place and stead of such Grantor and in the name of such Grantor, Secured Party
or otherwise, from time to time in Secured Party’s discretion to take any
action and to execute any instrument that Secured Party may deem necessary or
advisable to accomplish the purposes of this Agreement, including, without
limitation:


 


(a)                                  upon
the occurrence and during the continuance of an Event of Default, to ask for,
demand, collect, sue for, recover, compound, receive and give acquittance and
receipts for moneys due and to become due under or in respect of any of the
Collateral;


 


(b)                                 upon
the occurrence and during the continuance of an Event of Default, to receive,
endorse and collect any drafts or other Instruments, Documents, Chattel Paper
and other documents in connection with clauses (a) above;


 


(c)                                  upon
the occurrence and during the continuance of an Event of Default, to file any
claims or take any action or institute any proceedings that Secured Party may
deem necessary or desirable for the collection of any of the Collateral or
otherwise to enforce or protect the rights of Secured Party with respect to any
of the Collateral;


 


(d)                                 to
pay or discharge liens (other than liens permitted under this Agreement or the
Credit Agreement) levied or placed upon or threatened against the Collateral,
the legality or validity thereof and the amounts necessary to discharge the
same to be determined by Secured Party in its sole discretion, any such
payments made by Secured Party to become obligations of such Grantor to Secured
Party, due and payable immediately without demand; and


 


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(e)                                  upon
the occurrence and during the continuance of an Event of Default, generally to
sell, make any agreement with respect to or otherwise deal with any of the
Collateral as Secured Party may be permitted to do under the UCC in its
capacity as a Secured Party, and to do, at Secured Party’s option and Grantors’
expense, at any time or from time to time, all acts and things that Secured
Party deems necessary to protect, preserve or realize upon the Collateral and
Secured Party’s security interest therein in order to effect the intent of this
Agreement.


 


SECTION 7.                        Secured
Party May Perform.


 


If any Grantor fails to perform any agreement
contained herein, Secured Party may, if such agreement is not performed by such
Grantor within ten days after written notice of such failure is given by
Secured Party to such Grantor, itself perform, or cause performance of, such
agreement, and the expenses of Secured Party incurred in connection therewith
shall be payable by Grantors under Section 11(b) hereof


 


SECTION 8.                        Standard
of Care.


 


The powers conferred on Secured Party
hereunder are solely to protect its interest in the Collateral and shall not
impose any duty upon it to exercise any such powers. Except for the exercise of
reasonable care in the custody of any Collateral in its possession and the
accounting for moneys actually received by it hereunder, Secured Party shall
have no duty as to any Collateral or as to the taking of any necessary steps to
preserve rights against prior parties or any other rights pertaining to any
Collateral. Secured Party shall be deemed to have exercised reasonable care in
the custody and preservation of Collateral in its possession if such Collateral
is accorded treatment substantially equal to that which Secured Party accords
its own property.


 


SECTION 9.                        Remedies.


 


(a)                                  Generally. If any Event of Default shall have occurred and
be continuing, Secured Party may exercise in respect of the Collateral, in
addition to all other rights and remedies provided for herein or otherwise
available to it, all the rights and remedies of a secured party on default
under the UCC (whether or not the UCC applies to the affected Collateral), and
also may (i) enter onto the property where any Collateral is located and
take possession thereof with or without judicial process, (ii) sell the
Collateral or any part thereof in one or more parcels at public or private
sale, at any of Secured Party’s offices or elsewhere, for cash, on credit or
for future delivery, at such time or times and at such price or prices and upon
such other terms as Secured Party may deem commercially reasonable, and (iii) exercise
dominion and control over and refuse to permit further withdrawals from any
Deposit Account constituting part of the Collateral maintained with Secured
Party or any Lender.  Secured Party or
any Lender may be the purchaser of any or all of the Collateral at any such
public sale and Secured Party, shall be entitled, for the purpose of bidding
and making settlement or payment of the purchase price for all or any portion
of the Collateral sold at any such public sale, to use and apply any of the
Secured Obligations as a credit on account of the purchase price for any
Collateral payable by Secured Party at such sale. Each Grantor hereby waives
any claims against Secured Party arising by reason of the fact that the price
at which any Collateral may have been sold at such a private sale was less than
the price which might have been obtained at a public sale, even if Secured
Party accepts the first offer received and does not offer such Collateral to
more than one offeree. 


 


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If the proceeds of
any sale or other disposition of the Collateral are insufficient to pay all the
Secured Obligations, Grantors shall be jointly and severally liable for the
deficiency and the fees of any attorneys employed by Secured Party to collect
such deficiency. Each Grantor further agrees that a breach of any of the
covenants contained in this Section 9 will cause irreparable injury to
Secured Party, that Secured Party may have no adequate remedy at law in respect
of such breach and, as a consequence, that each and every covenant contained in
this Section shall be specifically enforceable against such Grantor.


 


SECTION 10.                 Application
of Proceeds.


 


Except as expressly provided elsewhere in
this Agreement, all proceeds received by Secured Party in respect of any sale
of, collection from, or other realization upon all or any part of the
Collateral shall be applied in the following order of priority:


 


FIRST: To the payment of all costs and
expenses of such sale, collection or other realization, including reasonable
compensation to Secured Party and its agents and counsel, and all other
expenses, liabilities and advances made or incurred by Secured Party in
connection therewith, and all amounts for which Secured Party is entitled to
indemnification hereunder and all advances made by Secured Party hereunder for
the account of Grantors, and to the payment of all costs and expenses paid or
incurred by Secured Party in connection with the exercise of any right or
remedy hereunder;


 


SECOND: To the payment of all other Secured
Obligations (for the ratable benefit of the holders thereof) and, as to
obligations arising under the Credit Agreement, as provided in the Credit
Agreement; and


 


THIRD: To the payment to or upon the order of
Company, or to whosoever may be lawfully entitled to receive the same or as a
court of competent jurisdiction may direct, of any surplus then remaining from
such proceeds.


 


SECTION 11.                 Indemnity
and Expenses.


 


(a)                                  Grantors
jointly and severally agree to indemnify Secured Party and each Lender from and
against any and all claims, losses and liabilities in any way relating to,
growing out of or resulting from this Agreement and the transactions
contemplated hereby (including, without limitation, enforcement of this
Agreement), except to the extent such claims, losses or liabilities result
solely from Secured Party’s or such Lender’s gross negligence or willful
misconduct as finally determined by a court of competent jurisdiction and
except for any breach of this Agreement by Secured Party or any Lender or any
failure of any Secured Party or any Lender to comply with the requirements of
the UCC imposed upon a Secured Party in connection with the enforcement of this
Agreement.


 


(b)                                 Grantors
jointly and severally agree to pay to Secured Party upon demand the amount of
any and all costs and expenses, including the fees and expenses of counsel and
of any experts and agents, that Secured Party may incur in connection with the
custody or preservation of the Collateral, the exercise of rights or remedies
hereunder or the failure by any Grantor to perform or observe any of the
provisions hereof


 


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(c)                                  The
obligations of Grantors in this Section 11 shall survive the termination
of this Agreement and the discharge of Grantors’ other obligations under this
Agreement, the Credit Agreement and the other Loan Documents.


 


SECTION 12.                 Amendments;
Etc.


 


No amendment, modification, termination or
waiver of any provision of this Agreement, and no consent to any departure by
any Grantor therefrom, shall in any event be effective unless the same shall be
in writing and signed by Secured Party and, in the case of any such amendment
or modification or any waiver given by Grantors, by Grantors; provided this
Agreement may be modified by the execution of a Counterpart by an Additional
Grantor in accordance with Section 22 hereof and Grantors hereby waive any
requirement of notice of or consent to any such amendment. Any such waiver or
consent shall be effective only in the specific instance and for the specific
purpose for which it was given.


 


SECTION 13.                 Notices.


 


Any notice or other communication herein
required or permitted to be given shall be in given and delivered in accordance
with Section 13.10 of the Credit Agreement.


 


SECTION 14.                 Failure
or Indulgence Not Waiver; Remedies Cumulative.


 


No failure or delay on the part of Secured
Party in the exercise of any power, right or privilege hereunder shall impair
such power, right or privilege or be construed to be a waiver of any default or
acquiescence therein, nor shall any single or partial exercise of any such
power, right or privilege preclude any other or further exercise thereof or of
any other power, right or privilege. All rights and remedies existing under
this Agreement are cumulative to, and not exclusive of, any rights or remedies
otherwise available.


 


SECTION 15.                 Severability.


 


In case any provision in or obligation under
this Agreement shall be invalid, illegal or unenforceable in any jurisdiction,
the validity, legality and enforceability of the remaining provisions or
obligations, or of such provision or obligation in ,any other jurisdiction,
shall not in any way be affected or impaired thereby.


 


SECTION 16.                 Headings.


 


Section and subsection headings in this
Agreement are included herein for convenience of reference only and shall not
constitute a part of this Agreement for any other purpose or be given any
substantive effect.


 


SECTION 17.                 Governing
Law; Rules of Construction.


 


This Agreement shall in all respects be
governed by the laws of the Commonwealth of Pennsylvania.  This Agreement and all of the other Loan
Documents shall be construed as if drafted equally by all parties hereto.


 


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SECTION 18.                 Consent
to Jurisdiction and Service of Process.


 


IN ANY LEGAL PROCEEDING INVOLVING, DIRECTLY
OR INDIRECTLY, ANY MATTER ARISING OUT OF OR RELATED TO THIS AGREEMENT OR ANY
LOAN DOCUMENT OR THE RELATIONSHIP EVIDENCED HEREBY, AND GRANTORS HEREBY IRREVOCABLY
SUBMIT TO THE NON-EXCLUSIVE JURISDICTION OF THE COURT OF COMMON PLEAS OF
PHILADELPHIA OR BUCKS COUNTY, PENNSYLVANIA, AND THE UNITED STATES DISTRICT
COURT FOR THE EASTERN DISTRICT OF PENNSYLVANIA. 
GRANTORS EXPRESSLY SUBMIT AND CONSENT IN ADVANCE TO SUCH JURISDICTION IN
ANY ACTION OR SUIT COMMENCED IN ANY SUCH COURT, AND BORROWERS HEREBY WAIVE ANY
OBJECTION WHICH GRANTORS MAY HAVE BASED UPON LACK OF PERSONAL
JURISDICTION, IMPROPER VENUE, OR FORUM NON CONVENIENS.  GRANTORS HEREBY WAIVE PERSONAL SERVICE OF THE
SUMMONS, COMPLAINT AND ANY OTHER PROCESS ISSUED IN ANY SUCH ACTION OR SUIT AND
AGREES THAT SERVICE OF SUCH SUMMONS, COMPLAINT, AND ANY OTHER PROCESS MAY BE
MADE BY REGISTERED OR CERTIFIED MAIL ADDRESSED TO GRANTORS AT THE ADDRESS SET
FORTH ABOVE AND THAT SERVICE SO MADE SHALL BE DEEMED COMPLETED UPON THE
PROVIDING OF NOTICE IN ACCORDANCE WITH THE TERMS HEREOF.  NOTHING IN THIS AGREEMENT SHALL BE DEEMED OR
OPERATE TO AFFECT THE RIGHTS OF SECURED PARTY TO SERVE LEGAL PROCESS IN ANY
OTHER MANNER PERMITTED BY LAW, OR TO PRECLUDE THE ENFORCEMENT BY SECURED PARTY
OR LENDERS OF ANY CLAIM, JUDGMENT OR ORDER OBTAINED IN SUCH FORUM, OR THE
TAKING OF ANY ACTION UNDER THIS AGREEMENT OR OTHERWISE TO ENFORCE SAME, IN ANY
OTHER APPROPRIATE FORUM OR JURISDICTION.


 


SECTION 19.                 Waiver
of Jury Trial.


 


GRANTORS AND SECURED PARTY, AFTER
CONSULTATION WITH THEIR RESPECTIVE COUNSEL, EACH HEREBY WAIVE ANY RIGHT WHICH
THEY MAY HAVE TO A JURY TRIAL IN CONNECTION WITH ANY LEGAL PROCEEDING
INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER (WHETHER SOUNDING IN TORT,
CONTRACT OR OTHERWISE) COMMENCED BY OR AGAINST THEM OR ANY OF THEM IN ANY WAY
ARISING OUT OF OR RELATED TO THIS AGREEMENT, ANY LOAN DOCUMENT OR THE
TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT, OR IN ANY WAY PERTAINING TO THE
FACILITY OR THE RELATIONSHIPS EVIDENCED BY THIS AGREEMENT.


 


SECTION 20.                 Counterparts.


 


This Agreement may be executed in one or more
counterparts and by different parties hereto in separate counterparts, each of
which when so executed and delivered shall be deemed an original, but all such
counterparts together shall constitute but one and the same instrument;
signature pages may be detached from multiple separate counterparts and
attached to a single counterpart so that all signature pages are physically
attached to the same document.


 


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SECTION 21.                 Definitions.


 


(a)                                  Each
capitalized term utilized in this Agreement that is not defined in this
Agreement or the Credit Agreement, but that is defined in the UCC, including
the categories of Collateral listed in Section 1 hereof shall have the
meaning set forth in Articles 1, 8 or 9 of the UCC.


 


(b)                                 In
addition, the following terms used in this Agreement shall have the following
meanings:


 


“Additional Grantor”
means an Eligible Affiliate of Company that becomes a party hereto after the
date hereof as an additional Grantor by executing a Counterpart.


 


“Collateral” has the
meaning set forth in Section 1 hereof.


 


“Counterpart” means
a counterpart to this Agreement, in substantially the form set forth as Exhibit I
attached hereto, entered into by an Eligible Affiliate of Company pursuant to Section 22
hereof.


 


“Credit Agreement”
has the meaning set forth in the Preliminary Statements of this Agreement.


 


“Event of Default”
means any Event of Default as defined in the Credit Agreement.


 


“Lender” has the
meaning set forth in the Credit Agreement.


 


“Loan Documents” has
the meaning set forth in the Credit Agreement. “Secured Obligations” has the
meaning set forth in Section 2 hereof. “Eligible Affiliate” has the
meaning set forth in the Credit Agreement.


 


“UCC” means the
Uniform Commercial Code, as it exists on the date of this Agreement or as it
may hereafter be amended, in the Commonwealth of Pennsylvania.


 


SECTION 22.                 Additional
Grantors.


 


The initial Grantors hereunder shall be
Company and such of the Eligible Affiliates of Company as are signatories
hereto on the date hereof. From time to time subsequent to the date hereof,
additional Eligible Affiliates of Company may become Additional Grantors, by
executing a Counterpart. Upon delivery of any such Counterpart to Secured
Party, notice of which is hereby waived by Grantors, each such Additional
Grantor shall be a Grantor and shall be as fully a party hereto as if such
Additional Grantor were an original signatory hereto. Each Grantor expressly
agrees that its obligations arising hereunder shall not be affected or
diminished by the addition or release of any other Grantor hereunder, nor by
any election of Secured Party not to cause any Eligible Affiliate of Company to
become an Additional Grantor hereunder. This Agreement shall be fully effective
as to any Grantor that is or becomes a party hereto regardless of whether any
other Person becomes or fails to become or ceases to be a Grantor hereunder.


 


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IN WITNESS WHEREOF, Grantor and Secured Party
have caused this Agreement to be duly executed and delivered by their
respective officers thereunto duly authorized as of the date first written
above.


 


	
   

  	
  Greenwood Financial Inc., a Delaware
  corporation

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Lawrence J. Dugan

  
	
   

  	
   

  	
  Name:

  	
  Lawrence J. Dugan

  
	
   

  	
   

  	
  Title:

  	
  Vice President

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  OHB Homes, Inc.

  
	
   

  	
  Orleans Corporation

  
	
   

  	
  Orleans Corporation of New Jersey

  
	
   

  	
  Orleans Construction Corp.

  
	
   

  	
  Parker & Lancaster Corporation

  
	
   

  	
  Parker & Orleans
  Homebuilders, Inc.

  
	
   

  	
  Sharp Road Farms, Inc.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Lawrence J. Dugan

  
	
   

  	
   

  	
  Name:

  	
  Lawrence J. Dugan

  
	
   

  	
   

  	
  Title:

  	
  Vice President

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Masterpiece Homes, LLC

  
	
   

  	
  OPCNC, LLC

  
	
   

  	
  Orleans at Bordentown, LLC

  
	
   

  	
  Orleans at Cooks Bridge, LLC

  
	
   

  	
  Orleans at Covington Manor, LLC

  
	
   

  	
  Orleans at Crofton Chase, LLC

  
	
   

  	
  Orleans at East Greenwich, LLC

  
	
   

  	
  Orleans at Elk Township, LLC

  
	
   

  	
  Orleans at Evesham, LLC

  
	
   

  	
  Orleans at Hamilton, LLC

  
	
   

  	
  Orleans at Harrison, LLC

  
	
   

  	
  Orleans at Hidden Creek, LLC

  
	
   

  	
  Orleans at Jennings Mill, LLC

  
	
   

  	
  Orleans at Lambertville, LLC

  
	
   

  	
  Orleans at Lyons Gate, LLC

  
	
   

  	
  Orleans at Mansfield, LLC

  
	
   

  	
  Orleans at Maple Glen, LLC

  
	
   

  	
  Orleans at Meadow Glen, LLC

  
	
   

  	
  Orleans at Millstone, LLC

  



 


[Grantors’
signatures continued on the following page]


 


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  Orleans at Millstone River Preserve, LLC

  
	
   

  	
  Orleans at Moorestown, LLC

  
	
   

  	
  Orleans at Tabernacle, LLC

  
	
   

  	
  Orleans at Upper Freehold, LLC

  
	
   

  	
  Orleans at Wallkill, LLC

  
	
   

  	
  Orleans at Westampton Woods, LLC

  
	
   

  	
  Orleans at Woolwich, LLC

  
	
   

  	
  Orleans Arizona Realty, LLC

  
	
   

  	
  Orleans DK, LLC

  
	
   

  	
  Parker Lancaster, Tidewater, L.L.C.

  
	
   

  	
  Wheatley Meadows Associates, LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Lawrence J. Dugan

  
	
   

  	
   

  	
  Name:

  	
  Lawrence J. Dugan

  
	
   

  	
   

  	
  Title:

  	
  Vice President

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Brookshire Estates, L.P. (f/k/a Orleans at
  Brookshire Estates, L.P.)

  
	
   

  	
  Orleans at Falls, LP

  
	
   

  	
  Orleans at Limerick, LP

  
	
   

  	
  Orleans at Lower Salford, LP

  
	
   

  	
  Orleans at Thornbury, L.P.

  
	
   

  	
  Orleans at Upper Saucon, L.P.

  
	
   

  	
  Orleans at Upper Uwchlan, LP

  
	
   

  	
  Orleans at West Bradford, LP

  
	
   

  	
  Orleans at West Vincent, LP

  
	
   

  	
  Orleans at Windsor Square, LP

  
	
   

  	
  Orleans at Wrightstown, LP

  
	
   

  	
  Stock Grange, LP

  
	
   

  	
   

  
	
   

  	
  By:

  	
  OHI PA GP, LLC, sole General Partner

  
	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Lawrence J. Dugan

  
	
   

  	
   

  	
  Name:

  	
  Lawrence J. Dugan

  
	
   

  	
   

  	
  Title:

  	
  Vice President

  



 


[Grantors’
signatures continued on the following page]


 


12

















 


	
   

  	
  Orleans RHIL, LP

  
	
   

  	
  Realen Homes, L.P.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  RHGP, LLC, sole General Partner

  
	
   

  	
   

  	
  By:

  	
  Orleans Homebuilders, Inc.,

  
	
   

  	
   

  	
   

  	
  Authorized Member

  
	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Garry P. Herdler

  
	
   

  	
   

  	
  Name:

  	
  Garry P. Herdler

  
	
   

  	
   

  	
  Title:

  	
  Executive Vice President and

  
	
   

  	
   

  	
   

  	
  Chief Financial Officer

  
	
   

  	
   

  
	
   

  	
  Orleans Homebuilders, Inc., a Delaware
  corporation

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Garry P. Herdler

  
	
   

  	
   

  	
  Name:

  	
  Garry P. Herdler

  
	
   

  	
   

  	
  Title:

  	
  Executive Vice President and

  
	
   

  	
   

  	
   

  	
  Chief Financial Officer

  



 


13

















 


	
   

  	
  WACHOVIA
  BANK, NATIONAL ASSOCIATION,

  
	
   

  	
  As
  Administrative Agent, as Secured Party

  
	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
						



 


14

















 


SCHEDULE 1

TO

SECURITY AGREEMENT


 


Type and Jurisdiction of Organization


 


	
   

  	
   

  	
  Type of

  	
   

  	
  Jurisdiction of

  	
   

  	
  Organization

  
	
  Name of Grantor

  	
   

  	
  Organization

  	
   

  	
  Organization

  	
   

  	
  Number

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  



 


15

















 


EXHIBIT 1 TO

SECURITY AGREEMENT


 


[FORM OF COUNTERPART]


 


COUNTERPART (this “Counterpart”),
dated as of
                  ,
is delivered pursuant to Section 22 of the Security Agreement referred to
below. The undersigned hereby agrees that this Counterpart may be attached to
the Security Agreement, dated as of September         ,
2008 (said Security Agreement, as it may heretofore have been and as it may
hereafter be further amended, restated, supplemented or otherwise modified from
time to time being the “Security Agreement”; capitalized terms used herein not
otherwise defined herein shall have the meanings ascribed therein), among
Orleans Homebuilders, Inc., the other Grantors named therein, and Wachovia
Bank, National Association, as Secured Party. The undersigned by executing and
delivering this Counterpart hereby becomes a Grantor under the Security
Agreement in accordance with Section 22 thereof and agrees to be bound by
all of the terms thereof. Without limiting the generality of the foregoing, the
undersigned hereby:


 


(i)                                     authorizes the
Secured Party to add the information set forth on the Schedule to this
Agreement to the correlative Schedule attached to the Security Agreement(1);


 


(ii)                                  agrees that all
Collateral of the undersigned, shall become part of the Collateral and shall
secure all Secured Obligations; and


 


(iii)                               makes the
representations and warranties set forth in the Security Agreement, as amended
hereby, to the extent relating to the undersigned.


 


 


	
   

  	
  [NAME OF
  ADDITIONAL GRANTOR]

  
	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
						



 






(1)  The
Schedule to the Counterpart should include the information set forth in
Schedule 1 to the Security Agreement.