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.


 




 





 

















 


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

  



 

















 


	
  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

















 


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;


 

















 


(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

















 


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
















 


(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

















 


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.


 


5

















 


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.


 


6

















 


(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,



 


7

















 


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.


 


8

















 


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).


 


9

















 


(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.


 


10

















 


(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 


 


11

















 


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.


 


12
















 


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.


 


13

















 


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 


 


14

















 


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;


 


15

















 


(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 


 


16

















 


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;


 


17

















 


(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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