Document:

Unassociated Document

     

    Exhibit 10.1

     

    DEBTOR-IN-POSSESSION
LOAN AGREEMENT

     

    among

     

    GREENWOOD
FINANCIAL INC. AND CERTAIN AFFILIATES,

    as
Borrowers

     

    ORLEANS
HOMEBUILDERS, INC.,

    as
Parent

     

    WELLS
FARGO BANK, NATIONAL ASSOCIATION,

    as
Administrative Agent

     

    WELLS
FARGO SECURITIES, LLC,

    as
Lead Arranger and Bookrunner

     

    and

     

    THE
LENDERS PARTY HERETO

     

    $120,000,000

     

    Dated
as of April 21, 2010

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

    TABLE
OF CONTENTS

     

    
      
        
          	 
      	 
      	 
      	 
      	
                  Page

                
	 
      	 
      	 
      	 
      	 
      
	
                  SECTION 1.

                	 
      	
                  DEFINITIONS

                	 
      	
                  2

                
	
                  1.1

                	 
      	
                  Definitions

                	 
      	
                  2

                
	
                  1.2

                	 
      	
                  Construction
      of Terms

                	 
      	
                  23

                
	
                  1.3

                	 
      	
                  Accounting
      Reports and Principles

                	 
      	
                  23

                
	
                  1.4

                	 
      	
                  Business
      Day; Time

                	 
      	
                  23

                
	
                  SECTION 2.

                	 
      	
                  AMOUNT
      AND TERMS OF THE COMMITMENTS, LOANS, LETTERS OF CREDIT AND TRI-PARTY
      AGREEMENTS

                	 
      	
                  24

                
	
                  2.1

                	 
      	
                  The
      Commitments

                	 
      	
                  24

                
	
                  2.2

                	 
      	
                  Letters
      of Credit

                	 
      	
                  26

                
	
                  2.3

                	 
      	
                  Use
      of Proceeds

                	 
      	
                  27

                
	
                  2.4

                	 
      	
                  Loans
      and Advances

                	 
      	
                  27

                
	
                  2.5

                	 
      	
                  Interest
      Rate

                	 
      	
                  34

                
	
                  2.6

                	 
      	
                  Default
      Rate

                	 
      	
                  34

                
	
                  2.7

                	 
      	
                  Fees
      Payable by Borrowers

                	 
      	
                  34

                
	
                  2.8

                	 
      	
                  Repayment

                	 
      	
                  35

                
	
                  2.9

                	 
      	
                  Commitment
      Reductions

                	 
      	
                  36

                
	
                  2.10

                	 
      	
                  Prepayments

                	 
      	
                  36

                
	
                  2.11

                	 
      	
                  General
      Payment Provisions

                	 
      	
                  39

                
	
                  2.12

                	 
      	
                  Payment
      Administration and Cash Management

                	 
      	
                  40

                
	
                  2.13

                	 
      	
                  LIBOR
      Provisions

                	 
      	
                  41

                
	
                  2.14

                	 
      	
                  Notes

                	 
      	
                  42

                
	
                  2.15

                	 
      	
                  Taxes

                	 
      	
                  42

                
	
                  2.16

                	 
      	
                  Increased
      Costs; Capital Adequacy

                	 
      	
                  43

                
	
                  2.17

                	 
      	
                  Survival
      of Indemnity

                	 
      	
                  44

                
	
                  2.18

                	 
      	
                  Replacement
      of Lenders

                	 
      	
                  44

                
	
                  2.19

                	 
      	
                  Lending
      Office

                	 
      	
                  45

                
	
                  SECTION 3.

                	 
      	
                  MATTERS
      RELATING TO REAL ESTATE

                	 
      	
                  45

                
	
                  3.1

                	 
      	
                  Budget

                	 
      	
                  45

                
	
                  3.2

                	 
      	
                  Appraisals

                	 
      	
                  47

                
	
                  3.3

                	 
      	
                  Sale
      of Assets

                	 
      	
                  47

                
	
                  3.4

                	 
      	
                  Marketing
      and Sale of Assets

                	 
      	
                  48

                
	
                  3.5

                	 
      	
                  Advisors

                	 
      	
                  49

                

        

      

    

    
      
         

      

      
        i

        
          

        

      

      
         

      

    

    

    
      
        
          
            	
                    SECTION
      4.

                  	 
      	
                    CONDITIONS
      OF LENDING

                  	 
      	
                    49

                  
	
                    4.1

                  	 
      	
                    Agreement
      to Make Available the Commitments, Loans, Letters of Credit and Tri-Party
      Agreements

                  	 
      	
                    49

                  
	
                    4.2

                  	 
      	
                    Availability
      of Letters of Credit and Tri-Party Agreements

                  	 
      	
                    55

                  
	
                    4.3

                  	 
      	
                    Conditions
      Precedent to Revolving Loans

                  	 
      	
                    55

                  
	
                    SECTION
      5.

                  	 
      	
                    REPRESENTATIONS
      AND WARRANTIES

                  	 
      	
                    56

                  
	
                    5.1

                  	 
      	
                    Use
      of Proceeds

                  	 
      	
                    56

                  
	
                    5.2

                  	 
      	
                    Incorporation,
      Good Standing, and Due Qualification

                  	 
      	
                    56

                  
	
                    5.3

                  	 
      	
                    Power
      and Authority; No Conflict

                  	 
      	
                    57

                  
	
                    5.4

                  	 
      	
                    Legally
      Enforceable Agreement

                  	 
      	
                    57

                  
	
                    5.5

                  	 
      	
                    Financial
      Statements; Accuracy of Information.

                  	 
      	
                    57

                  
	
                    5.6

                  	 
      	
                    Conflicts

                  	 
      	
                    58

                  
	
                    5.7

                  	 
      	
                    Consents

                  	 
      	
                    58

                  
	
                    5.8

                  	 
      	
                    Litigation

                  	 
      	
                    58

                  
	
                    5.9

                  	 
      	
                    Other
      Agreements

                  	 
      	
                    58

                  
	
                    5.10

                  	 
      	
                    No
      Defaults and Outstanding Judgments or Orders

                  	 
      	
                    59

                  
	
                    5.11

                  	 
      	
                    Taxes

                  	 
      	
                    59

                  
	
                    5.12

                  	 
      	
                    Debt

                  	 
      	
                    59

                  
	
                    5.13

                  	 
      	
                    ERISA

                  	 
      	
                    59

                  
	
                    5.14

                  	 
      	
                    Ownership
      and Liens

                  	 
      	
                    59

                  
	
                    5.15

                  	 
      	
                    Representations
      and Warranties as to Real Estate

                  	 
      	
                    60

                  
	
                    5.16

                  	 
      	
                    Representation
      and Warranties as to other Collateral

                  	 
      	
                    61

                  
	
                    5.17

                  	 
      	
                    No
      Violation of Law

                  	 
      	
                    61

                  
	
                    5.18

                  	 
      	
                    Compliance
      with Covenants

                  	 
      	
                    61

                  
	
                    5.19

                  	 
      	
                    Securities
      Activities

                  	 
      	
                    62

                  
	
                    5.20

                  	 
      	
                    DIP
      Representations

                  	 
      	
                    62

                  
	
                    5.21

                  	 
      	
                    CRO

                  	 
      	
                    62

                  
	
                    SECTION
      6.

                  	 
      	
                    AFFIRMATIVE
      COVENANTS

                  	 
      	
                    62

                  
	
                    6.1

                  	 
      	
                    Reporting
      Requirements

                  	 
      	
                    62

                  
	
                    6.2

                  	 
      	
                    Payment
      of Taxes

                  	 
      	
                    64

                  
	
                    6.3

                  	 
      	
                    Access
      to Properties, Books and Records; Inspections

                  	 
      	
                    65

                  
	
                    6.4

                  	 
      	
                    Maintenance
      of Records

                  	 
      	
                    65

                  
	
                    6.5

                  	 
      	
                    Maintenance
      of Existence

                  	 
      	
                    65

                  
	
                    6.6

                  	 
      	
                    Insurance

                  	 
      	
                    65

                  
	
                    6.7

                  	 
      	
                    ERISA

                  	 
      	
                    68

                  
	
                    6.8

                  	 
      	
                    Accounts

                  	 
      	
                    68

                  

          

        

      

    

    
      
         

      

      
        ii

        
          

        

      

      
         

      

    

    

    
      
        
          	
                  6.9

                	 
      	
                  Compliance
      with Laws

                	 
      	
                  68

                
	
                  6.10

                	 
      	
                  Payment
      of Debt

                	 
      	
                  68

                
	
                  6.11

                	 
      	
                  Maintenance
      of Properties

                	 
      	
                  68

                
	
                  6.12

                	 
      	
                  Deposit
      Accounts, Securities Accounts and Cash Management Systems

                	 
      	
                  68

                
	
                  6.13

                	 
      	
                  Tax
      Refunds

                	 
      	
                  69

                
	
                  6.14

                	 
      	
                  Monitoring
      of Expenses

                	 
      	
                  69

                
	
                  6.15

                	 
      	
                  Budget
      Compliance

                	 
      	
                  69

                
	
                  6.16

                	 
      	
                  Other
      Actions

                	 
      	
                  70

                
	
                  6.17

                	 
      	
                  Reduction
      of Letters of Credit

                	 
      	
                  70

                
	
                  6.18

                	 
      	
                  Further
      Assurances

                	 
      	
                  70

                
	
                  6.19

                	 
      	
                  Landlord
      Waivers

                	 
      	
                  70

                
	
                  SECTION
      7.

                	 
      	
                  NEGATIVE
      COVENANTS

                	 
      	
                  71

                
	
                  7.1

                	 
      	
                  Creation
      of Debt

                	 
      	
                  71

                
	
                  7.2

                	 
      	
                  Grant
      of Liens; Equitable Lien; Negative Pledge; Restrictions

                	 
      	
                  71

                
	
                  7.3

                	 
      	
                  Mergers

                	 
      	
                  71

                
	
                  7.4

                	 
      	
                  Asset
      Sales

                	 
      	
                  71

                
	
                  7.5

                	 
      	
                  Transactions
      With Affiliates

                	 
      	
                  72

                
	
                  7.6

                	 
      	
                  Use
      of Proceeds

                	 
      	
                  72

                
	
                  7.7

                	 
      	
                  Restricted
      Payments

                	 
      	
                  72

                
	
                  7.8

                	 
      	
                  Amendments
      of Documents Relating to Subordinated Debt

                	 
      	
                  72

                
	
                  7.9

                	 
      	
                  Nature
      of Business

                	 
      	
                  72

                
	
                  7.10

                	 
      	
                  Subrogation

                	 
      	
                  73

                
	
                  7.11

                	 
      	
                  Investments;
      Acquisitions

                	 
      	
                  73

                
	
                  7.12

                	 
      	
                  ERISA
      and Other Compensation Arrangements

                	 
      	
                  73

                
	
                  7.13

                	 
      	
                  Compensation

                	 
      	
                  73

                
	
                  7.14

                	 
      	
                  DIP
      Financing

                	 
      	
                  74

                
	
                  7.15

                	 
      	
                  Alteration
      of Rights of Lenders

                	 
      	
                  74

                
	
                  7.16

                	 
      	
                  Chapter
      11 Claims

                	 
      	
                  74

                
	
                  7.17

                	 
      	
                  Reclamation
      Claims; Bankruptcy Code § 546(c) Agreements.

                	 
      	
                  74

                
	
                  7.18

                	 
      	
                  506(c)
      Claims

                	 
      	
                  74

                
	
                  7.19

                	 
      	
                  Other
      Payments

                	 
      	
                  74

                
	
                  7.20

                	 
      	
                  Construction

                	 
      	
                  75

                
	
                  SECTION
      8.

                	 
      	
                  FINANCIAL
      COVENANTS

                	 
      	
                  75

                
	
                  8.1

                	 
      	
                  Real
      Estate Acquisitions

                	 
      	
                  75

                
	
                  8.2

                	 
      	
                  Minimum
      Collateral Value Ratio

                	 
      	
                  75

                
	
                  8.3

                	 
      	
                  Limitation
      on Holdings of Cash and Cash Equivalents

                	 
      	
                  75

                

        

      

    

    
      
         

      

      
        iii

        
          

        

      

      
         

      

    

    

    
      
        
          	
                  SECTION
      9.

                	 
      	
                  EVENTS
      OF DEFAULT

                	 
      	
                  75

                
	
                  SECTION 10.

                	 
      	
                  REMEDIES

                	 
      	
                  79

                
	
                  10.1

                	 
      	
                  Remedies
      of Lenders

                	 
      	
                  79

                
	
                  10.2

                	 
      	
                  Effect
      of Delay

                	 
      	
                  80

                
	
                  10.3

                	 
      	
                  Acceptance
      of Partial Payment

                	 
      	
                  80

                
	
                  10.4

                	 
      	
                  Application
      of Proceeds

                	 
      	
                  80

                
	
                  10.5

                	 
      	
                  Other
      Available Remedies

                	 
      	
                  80

                
	
                  10.6

                	 
      	
                  Waiver
      of Marshalling of Assets

                	 
      	
                  80

                
	
                  10.7

                	 
      	
                  Waiver
      of Counterclaim

                	 
      	
                  81

                
	
                  10.8

                	 
      	
                  Relief
      from Stay

                	 
      	
                  81

                
	
                  10.9

                	 
      	
                  Further
      Remedies

                	 
      	
                  81

                
	
                  10.10

                	 
      	
                  Credit
      Bidding

                	 
      	
                  81

                
	
                  SECTION
      11.

                	 
      	
                  THE
      AGENT

                	 
      	
                  82

                
	
                  11.1

                	 
      	
                  Appointment

                	 
      	
                  82

                
	
                  11.2

                	 
      	
                  Delegation
      of Duties

                	 
      	
                  82

                
	
                  11.3

                	 
      	
                  Exculpatory
      Provisions

                	 
      	
                  82

                
	
                  11.4

                	 
      	
                  Reliance
      by Agent

                	 
      	
                  83

                
	
                  11.5

                	 
      	
                  Non-Reliance
      on Agent and Other Lenders

                	 
      	
                  83

                
	
                  11.6

                	 
      	
                  Indemnification

                	 
      	
                  84

                
	
                  11.7

                	 
      	
                  Consequential
      Damages

                	 
      	
                  84

                
	
                  11.8

                	 
      	
                  Agent
      in Its Individual Capacity

                	 
      	
                  84

                
	
                  11.9

                	 
      	
                  Resignation
      or Removal of Agent as Agent

                	 
      	
                  84

                
	
                  11.10

                	 
      	
                  Authority

                	 
      	
                  85

                
	
                  11.11

                	 
      	
                  Borrower
      Default

                	 
      	
                  85

                
	
                  11.12

                	 
      	
                  Lender
      Default

                	 
      	
                  86

                
	
                  11.13

                	 
      	
                  Ratable
      Sharing

                	 
      	
                  87

                
	
                  11.14

                	 
      	
                  Documentation

                	 
      	
                  87

                
	
                  SECTION
      12.

                	 
      	
                  MISCELLANEOUS

                	 
      	
                  88

                
	
                  12.1

                	 
      	
                  Modifications;
      Amendments, Waivers and Consents

                	 
      	
                  88

                
	
                  12.2

                	 
      	
                  Binding
      Nature

                	 
      	
                  88

                
	
                  12.3

                	 
      	
                  Governing
      Law

                	 
      	
                  89

                
	
                  12.4

                	 
      	
                  Time
      of Performance

                	 
      	
                  89

                
	
                  12.5

                	 
      	
                  Severability

                	 
      	
                  89

                
	
                  12.6

                	 
      	
                  Captions

                	 
      	
                  89

                
	
                  12.7

                	 
      	
                  Computations

                	 
      	
                  89

                
	
                  12.8

                	 
      	
                  Continuing
      Obligation

                	 
      	
                  89

                

        

      

    

    
      
         

      

      
        iv

        
          

        

      

      
         

      

    

    

    
      
        
          	
                  12.9

                	 
      	
                  Assignment
      and Participation

                	 
      	
                  89

                
	
                  12.10

                	 
      	
                  Notices

                	 
      	
                  92

                
	
                  12.11

                	 
      	
                  Cumulative
      Remedies

                	 
      	
                  96

                
	
                  12.12

                	 
      	
                  Third
      Party Beneficiaries

                	 
      	
                  96

                
	
                  12.13

                	 
      	
                  Entire
      Agreement

                	 
      	
                  96

                
	
                  12.14

                	 
      	
                  Counterparts

                	 
      	
                  96

                
	
                  12.15

                	 
      	
                  Expenses
      and Indemnification.

                	 
      	
                  97

                
	
                  12.16

                	 
      	
                  Relationship
      of Parties

                	 
      	
                  99

                
	
                  12.17

                	 
      	
                  Damage
      Waiver

                	 
      	
                  99

                
	
                  12.18

                	 
      	
                  Publicity

                	 
      	
                  99

                
	
                  12.19

                	 
      	
                  No
      Implied Waiver

                	 
      	
                  99

                
	
                  12.20

                	 
      	
                  USA
      Patriot Act

                	 
      	
                  99

                
	
                  12.21

                	 
      	
                  Conflict;
      Construction of Documents; Reliance

                	 
      	
                  100

                
	
                  12.22

                	 
      	
                  Jurisdiction

                	 
      	
                  100

                
	
                  12.23

                	 
      	
                  Waiver
      of Jury Trial

                	 
      	
                  100

                
	
                  12.24

                	 
      	
                  Interim
      Loan Documents; No Novation or Impairment of Security
      Interests

                	 
      	
                  101

                
	
                  12.25

                	 
      	
                  General
      Acknowledgments

                	 
      	
                  101

                
	
                  12.26

                	
                    

                	
                  Releases

                	
                    

                	
                  101

                

        

      

    

     

    
      
        
          
            
              
                
                  
                    
                      
                        	
                                Exhibits

                              
	 
      	 
      	 
      	 
      	 
      
	
                                A

                              	 
      	
                                -

                              	 
      	
                                Form
      of Term Note

                              
	
                                B

                              	 
      	
                                -

                              	 
      	
                                Form
      of Revolving Note

                              
	
                                C

                              	 
      	
                                -

                              	 
      	
                                Form
      of Request for Revolving Loan

                              
	
                                D

                              	 
      	
                                -

                              	 
      	
                                Form
      of Application and Agreement for Irrevocable Standby Letter of
      Credit

                              
	
                                E

                              	 
      	
                                -

                              	 
      	
                                Form
      of Budget

                              
	
                                F

                              	 
      	
                                -

                              	 
      	
                                Form
      of Compliance Certificate

                              
	
                                G

                              	 
      	
                                -

                              	 
      	
                                Form
      of Assignment and Assumption

                              
	
                                H

                              	 
      	
                                -

                              	 
      	
                                Form
      of Common Interest and Confidentiality Agreement

                              
	
                                I

                              	 
      	
                                -

                              	 
      	
                                Final
      Order

                              
	 
      	 
      	 
      	 
      	 
      
	
                                Schedules

                              
	 
      	 
      	 
      	 
      	 
      
	
                                1(a)

                              	 
      	
                                -

                              	 
      	
                                Schedule
      of Borrowers

                              
	
                                1(b)

                              	 
      	
                                -

                              	 
      	
                                Schedule
      of Allocated Values

                              
	
                                2.1

                              	 
      	
                                -

                              	 
      	
                                Schedule
      of Commitments

                              
	
                                2.2(a)

                              	 
      	
                                -

                              	 
      	
                                Schedule
      of Letters of Credit and Tri-Party Agreements

                              
	
                                3.4

                              	 
      	
                                -

                              	 
      	
                                Schedule
      of Guideline Prices

                              
	
                                5.2

                              	 
      	
                                -

                              	 
      	
                                Schedule
      of Ownership and Jurisdiction of Organization

                              
	
                                5.14

                              	 
      	
                                -

                              	 
      	
                                Schedule
      of Real Estate

                              
	
                                5.15

                              	
                                  

                              	
                                -

                              	
                                  

                              	
                                Schedule
      of New Jersey Real Estate Subject to Obligation to Remediate Discharge of
      Hazardous
Substance

                              

                      

                    

                  

                

              

            

          

        

      

    

    
      
         

      

      
        v

        
          

        

      

      
         

      

    

    

    
      
        	
                5.16

              	 
      	
                -

              	 
      	
                Schedule
      of Intellectual Property

              
	
                7.8

              	 
      	
                -

              	 
      	
                Schedule
      of Existing Cost-Sharing Partnerships

              
	
                7.20

              	
                  

              	
                -

              	
                  

              	
                Schedule
      of Units Upon Which Construction May
Occur

              

      

    

    
      
         

      

      
        vi

        
          

        

      

      
         

      

    

    DEBTOR-IN-POSSESSION
LOAN AGREEMENT

     

    This
Debtor-in-Possession Loan Agreement (this “Agreement”), made as of the
21st day of April, 2010, by and among GREENWOOD FINANCIAL, INC., a Delaware
corporation (“Master
Borrower”), ORLEANS HOMEBUILDERS, INC. (“Parent”), each of the other
Subsidiaries of Parent identified on Schedule 1(a)
that is attached hereto as borrowers (together with Master Borrower and Parent,
each a “Borrower” and,
collectively, the “Borrowers”), the Lenders who
are or may become a party hereto, and WELLS FARGO BANK, NATIONAL ASSOCIATION, as
Agent for the Lenders (“Agent”).

     

    BACKGROUND

     

    A.          Pursuant
to that certain Amended and Restated Revolving Credit Loan Agreement dated as of
December 22, 2004 (the “Original Credit Agreement”),
executed by Master Borrower, certain of the other Borrowers, Agent and certain
of the Lenders, such Lenders agreed to provide a credit facility to Borrowers on
the terms and conditions contained in the Original Credit Agreement to finance
Borrowers’ acquisition of residential real estate and construction
activities.

     

    B.           Pursuant
to that certain Amended and Restated Revolving Credit Loan Agreement dated as of
January 24, 2006 (as amended prior to the date hereof, the “Amended Credit Agreement”),
executed by Master Borrower, certain of the other Borrowers, Agent and certain
of the Lenders, such Lenders agreed to amend and restate the Original Credit
Agreement on the terms and conditions contained in the Amended Credit
Agreement.

     

    C.        
  Pursuant to that certain Second Amended and Restated Revolving
Credit Loan Agreement dated as of September 30, 2008 (as amended prior to the
date hereof, the “Pre-Petition
Credit Agreement”), executed by Master Borrower, certain of the other
Borrowers, Agent and certain of the Lenders (the “Pre-Petition Lenders”), such
Pre-Petition Lenders agreed to amend and restate the Amended Credit Agreement on
the terms and conditions contained in the Pre-Petition Credit
Agreement.

     

    D.          The
Pre-Petition Credit Agreement matured on December 20, 2009 and the Borrowers
thereunder were unable to repay the Pre-Petition Balance at such
time.

     

    E.           Certain
Borrowers and Parent requested, and Agent and Pre-Petition Lenders agreed, to
enter into a limited waiver on December 18, 2009 to provide the parties until
February 12, 2010 to establish the terms and conditions under which the Agent
and Pre-Petition Lenders might extend the maturity of the Pre-Petition Credit
Agreement and no such agreement was reached.

     

    F.           On
March 1, 2010 (the “Petition
Date”), the Borrowers each filed voluntary petitions for relief under
chapter 11 of the Bankruptcy Code which are being jointly administered under
Case No. 10-10684 (collectively, the “Bankruptcy Cases”) and are pending in the
United States Bankruptcy Court for the District of Delaware (the “Bankruptcy
Court”).

    
      
         

      

      
        1

        
          

        

      

      
         

      

    

    G.           On
March 3, 2010 (the “Interim
Order Date”), the Bankruptcy Court entered that certain Interim Order
Pursuant to Bankruptcy Code Section 105, 361, 362, 363, 364 and 507 and
Bankruptcy Rules 2002, 4001 and 9014 (I) Authorizing the Borrowers (A) to obtain
Post-Petition Financing and (B) to use Cash Collateral and (II) Granting (A)
Adequate Protection to Pre-Petition Secured Parties and (B) Related Relief
(together with all exhibits and schedules thereto, collectively, the “Interim Order”), which among
other things approved certain interim financing pursuant to the terms and
conditions of the term sheet (the “Term Sheet”) and letter
agreement (the “Letter
Agreement”, together with the Interim Order and the Term Sheet, the
“Interim Loan
Documents”).

     

    H.           The
Borrowers, the Lenders, and the Agent desire to set forth the terms and
conditions under which the Lenders will make available to the Borrowers certain
credit facilities to be used for the purposes specified in this Agreement and
amend and restate the Interim Loan Documents;

     

    I.
           Borrowers
desire to secure all of the Indebtedness hereunder and under the other Loan
Documents with a first priority Lien on all of its real, personal and mixed
property.

     

    NOW,
THEREFORE, for good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged and intending to be legally bound, the parties
hereto agree to amend and restate the Interim Loan Documents as
follows:

     

    
      	
              SECTION
      1.

            	
              DEFINITIONS

            

    

     

    
      
        1.1        
Definitions.  In
addition to other words and terms defined elsewhere in this Agreement, as used
in this Agreement, the following words and terms shall have the following
meanings, respectively, unless the context hereof otherwise clearly
requires:

      

    

     

    “Administrative Questionnaire”
means an Administrative Questionnaire in a form supplied by Agent.

     

    “Advisory Agent” means Capstone
Advisory Group LLC or any successor satisfactory to Agent.

     

    “Affiliate” means, with respect
to a specified Person, another Person that directly, or indirectly through one
or more intermediaries, Controls or is Controlled by or is under common Control
with the Person specified.

     

    “Agent” means Wells Fargo Bank,
National Association, in its capacity as agent for Lenders, and any successor
thereto appointed pursuant to Section 11.9.

     

    “Agreement” means this
Debtor-in-Possession Loan Agreement, and any schedules, exhibits, riders,
extensions, supplements, amendments, or modifications to this
Debtor-in-Possession Loan Agreement.

     

    “Allocated Value” means the
value attributed to Projects in the Borrowing Base Certificate delivered
pursuant to Section 4.1(c)(viii) and set forth on Schedule
1(b).

     

    “Alternate Interest Rate”
means, at any time, the per annum rate of interest that is equal to the sum of
(A) the higher of (i) the Prime Rate, (ii) the rate that is 1.50% in excess of
the 1-month LIBOR Rate, (iii) the rate that is 1.50% in excess of the Federal
Funds Rate, or (iv) two percent (2%) plus (B) the Applicable Spread in effect on
such day.  Any change in the Base Rate due to a change in the Prime
Rate, the LIBOR Rate or the Federal Funds Rate shall be effective on the
effective date of such change.

    
      
         

      

      
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    “Amended Credit Agreement” has
the meaning assigned to such term in the Recitals to this
Agreement.

     

    “Applicable Spread” means the
following amounts per annum:

     

    
      
        
          
            
              
                	
                        Term Loan

                        Margin

                      	 	
                        Revolving Loan

                        Margin

                      	 
	
                        3.50%

                      	 	8.50%	 

              

            

          

        

      

    

     

    “Appraisal” means an appraisal
or re-appraisal of the Appraised Value of Real Estate  that (i) is
directed to Agent, and (ii) contains terms and conditions satisfactory to Agent
and (iii) conforms in all respects to Title X of the Federal Financial and
Institutional Reform, Recovery and Enforcement Act of 1989
(FIRREA).

     

    “Appraised Value” means, with
respect to the Real Estate in any Project, the value thereof as determined on an
“as completed, fair market value” basis pursuant to Section 3.2; provided that until
Agent has determined the Appraised Value pursuant to Appraisals ordered pursuant
to Section 3.2(b), the Appraised Value of a Project shall be deemed to be its
Allocated Value.

     

    “Approved Bank” any commercial
bank incorporated under the laws of the United States or any state thereof,
having capital and unimpaired surplus in excess of $1,000,000,000.

     

    “Approved Fund” means, with
respect to any Lender, any Fund that is administered or managed by (i) such
Lender, (ii) an Affiliate of such Lender or (iii) an entity or an Affiliate of
an entity that administers or manages a Lender.

     

    “Asset Sale” means the sale by
any Borrower (other than to another Borrower) to any Person of (i) any of
the stock of any Borrower or its Subsidiaries, (ii) substantially all of
the assets of any division or line of business of any Borrower, or
(iii) any other assets (whether tangible or intangible) of any
Borrower.

     

    “Assignment and Assumption”
means an assignment and assumption entered into by a Lender and an Eligible
Assignee (with the consent of any party whose consent is required by Section
12.9(b), and accepted by Agent), in substantially the form of Exhibit G attached
hereto.

     

    “Authorized Signer” means any of the
Persons listed on the certificate to be delivered to Agent at Closing in
accordance with Section 4.1(a)(iv) or on any replacement certificate with
respect thereto subsequently delivered to Agent at any time.

    
      
         

      

      
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    “Avoidance Actions” means all
causes of action for preferences, fraudulent conveyances, and other avoidance
power claims, including, without limitation, any recoveries under Sections
506(c), 542, 545, 547, 548, 549, 550, 552(b) and 553 of the Bankruptcy Code and
other avoidance or similar actions under the Bankruptcy Code , whether received
by judgment, settlement or otherwise.

     

    “Bankruptcy Cases” has the
meaning assigned to such term in the Recitals to this Agreement.

     

    “Bankruptcy Code” means 11 U.S.C. § 101
et. seq., as amended from time to time.

     

    “Bankruptcy Court” has the
meaning assigned to such term in the Recitals to this Agreement.

     

    “Borrower” has the meaning
assigned to such term in the Introductory Paragraph of this
Agreement.

     

    “Budget” has the meaning
assigned to such term in Section 3.1(a).

     

    “Budget Availability” means, at any
time, the amount determined pursuant to Section 3.1 scheduled to be made
available for operations until the next Revolving Loan, based on the most
recently delivered Budget, plus, to the extent available, the Excess Variance
Amount.

     

    “Business” means the
improvement of land in the States of Pennsylvania, New Jersey, New York,
Illinois, Virginia, North Carolina, South Carolina and Florida with residential
dwellings, and the sale of such dwellings.

     

    “Business Day” means any day other than
a Saturday, a Sunday, a public holiday under the laws of the Commonwealth of
Pennsylvania or of the State of North Carolina or another day on which banking
institutions in such jurisdictions are authorized or obligated to
close.

     

    “Capital Lease” means all leases that
have been or should be capitalized on the books of the lessee in accordance with
GAAP.

     

    “Capital Stock” means the capital stock
of or other equity interests in a Person, including the common or preferred
equity interest in a corporation, the membership interests in a limited
liability company and the partnership interests (general or limited) in a
partnership and any equivalent ownership interest in any other Person, as well
as all warrants, rights or options to purchase or acquire any of the
foregoing.

     

    “Carve-Out” has the meaning
assigned to such term in the Final Order.

     

    “Carve-Out Collateral Account”
has the meaning assigned to such term in Section 2.12(e).

     

    “Cash” means money, currency or
a credit balance in an unrestricted Deposit Account or a Securities Account
controlled by a Borrower.

     

    “Cash Collateral Account” means, collectively,
any and all Deposit Accounts of the Borrowers other than the Revolving Loan
Collateral Account, the Letter of Credit Collateral Account, and the Carve-Out
Collateral Account.

    
      
         

      

      
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    “Cash Equivalents” means, as at any
date of determination, (i) marketable securities issued or directly and fully
guaranteed or insured by the United States or any agency or instrumentality
thereof (provided that the full faith and credit of the United States is pledged
in support thereof) having maturities of not more than one (1) year from the
date of acquisition, (ii) time deposits, certificates of deposit or
bankers’ acceptances of any Approved Bank, with such deposits, acceptances or
certificates having maturities of not more than one (1) year from the date of
acquisition, (iii) repurchase obligations with a term of not more than
seven (7) days for underlying securities of the types described in clauses (i)
or (ii) and entered into with any Approved Bank, (iv) commercial paper or
finance company paper issued by any Person incorporated under the laws of the
United States or any state thereof and rated at least A-1 or the equivalent
thereof by Standard & Poor’s (“S&P”) or at least P-1 or
the equivalent thereof by Moody’s Investors Service, Inc. (“Moody’s”), and in each case
maturing not more than one year after the date of acquisition, and (iv)
investments in money market funds or mutual funds, at least ninety five percent
(95%) of whose assets consist of securities and other obligations of the type
described in clause (i) through (iv) above, that has net assets of not less than
$1,000,000,000, and has the highest rating obtainable from either S&P or
Moody’s.  All such Cash Equivalents must be denominated solely for
payment in Dollars.  Overnight deposits and demand deposits maintained
in the ordinary course of business shall be considered cash.

     

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

     

    1.           the
occurrence of a change in the composition of the Board of Directors of Parent
such that a majority of the members of Board of Directors are not a member who
(i) was a member of such Board of Directors on the Closing Date or (ii) was
nominated for election or elected to such Board of Directors with the
affirmative vote of a majority of the members who were either members of such
Board of Directors on the Closing Date or whose nomination or election was
previously so approved; or

     

    2.           Mitchell
Arden ceases to be the CRO of Parent and he is not replaced within five (5)
Business Days by a Person satisfactory to Agent and Majority Revolving
Lenders.

     

    “Change in Law” means the
occurrence, after the date of this Agreement, of any of the following: (i) the
adoption or taking effect of any law, rule, regulation or treaty, (ii) any
change in any law, rule, regulation or treaty or in the administration,
interpretation or application thereof by any Governmental Authority, central
bank or comparable agency charged with the interpretation or administration
thereof or (iii) the making or issuance of any request, guideline or directive
(whether or not having the force of law) by any Governmental
Authority.

     

    “Closing” and “Closing Date” means the date on which
each of the Loan Documents has been executed and delivered by all of the parties
thereto and all of the conditions contained in Section 4.1 have been
satisfied.

     

    “Code” means the Internal
Revenue Code of 1986, as amended from time to time.

     

    “Collateral” means, at any
time, all of the real, personal and mixed property in which a Lien is purported
to be granted pursuant to the Orders or any Collateral Documents as security for
the Indebtedness, including without limitation, inventory, accounts receivable,
chattel paper, contract rights, documents, equipment, fixtures, deposit
accounts, general intangibles (including, without limitation, all tax refunds,
copyrights, licensing agreements, patents, trademarks, and trade names),
instruments, real property, securities and other investment property, all cash
collateral, Avoidance Actions and proceeds of all of the foregoing, wherever
located.

    
      
         

      

      
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    “Collateral Documents” means
the Security Agreements, the Mortgages, the Control Agreements and all other
instruments or documents delivered by any Borrower pursuant to this Agreement or
any of the other Loan Documents in order to grant to Agent, on behalf of
Lenders, a Lien on any real, personal or mixed property of that Borrower as
security for the Indebtedness.

     

    “Collateral Value Ratio” means,
as of any date of determination, the ratio of (a) aggregate Appraised Value
(based on the most recent Appraisal) of all Real Estate minus Cost-to-Complete
(excluding on a Project level basis where Allocated Value is used) and minus the Appraised Value of
Units or Lots sold, to (b) the sum of (x) outstanding Revolving Loans plus
outstanding Term Loans plus (y) the face amount of any issued Letters of Credit
minus (z) Cash Collateral held in the Revolving Loan Collateral Account, the
Letter of Credit Collateral Account, the Cash Collateral Account, and the
Carve-Out Collateral Account; provided that the
following limitations shall apply:

     

    (i)           Generally.  The
amount of Appraised Value attributable to Projects in any jurisdiction in which
the liens of Mortgages are limited to a stated amount that is less than the
Commitments shall at no time exceed such stated amount (which shall not be an
aggregate amount) contained in each of the then-outstanding Mortgages in such
jurisdiction (that is, for example, if there are five (5) Mortgages encumbering
Projects in Florida, each with a stated principal amount of $75,000,000, the
maximum Appraised Value, at any time, on account of Florida Projects would be
$75,000,000).

     

    (ii)         New
York.  The amount of Appraised Value attributable to any
Project in the State of New York shall at no time exceed the stated amount of
the Mortgage that encumbers such Project.

     

    (iii)        Purchase Money
Mortgages.  The aggregate amount of Appraised Value shall at
all times be reduced by the then-outstanding aggregate principal balance of all
purchase money mortgages encumbering Projects that are Permitted Liens and that
do not secure the Indebtedness.

     

    (v)         Documentation.  No
Appraised Value shall be attributed to a Project that has not satisfied the
requirements of Section 4.1(d).

     

    “Commitments” means the
aggregate Term Loan Commitments and the Revolving Loan Commitments.

     

    “Committee” means the official
committee of unsecured creditors duly appointed in the Bankruptcy
Cases.

     

    “Compliance Certificate” means a
certificate in the form attached hereto as Exhibit
F.

    
      
         

      

      
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    “Common Interest and Confidentiality
Agreement” means that certain Common Interest and Confidentiality
Agreement entered into by the Lenders effective as of the Closing Date
substantially in the form of Exhibit H attached
hereto, as amended from time to time.

     

    “Company Certified” means
reviewed by the CRO and certified by the CFO or other authorized officer
acceptable to the Agent that such information is true and correct to the best of
such certifying officer’s knowledge.

     

    “Control” means the possession,
directly or indirectly, of the power to direct or cause the direction of the
management or policies of a Person, whether through the ability to exercise
voting power, by contract or otherwise.  “Controlling” and
“Controlled” have meanings correlative thereto.

     

    “Control Agreement” means an
agreement, satisfactory in form and substance to Agent and executed by the
financial institution or securities intermediary at which a Deposit Account or a
Securities Account, as the case may be, is maintained, pursuant to which such
financial institution or securities intermediary confirms and acknowledges
Agent’s security interest in such account, and agrees that the financial
institution or securities intermediary, as the case may be, will comply with
instructions originated by Agent as to disposition of funds in such account,
without further consent by any Borrower.

     

    “Cost Incurred” means:

     

    (a)         With
regard to the Appraised Value of finished Units, the total amount incurred to
date to construct the Unit; and

     

    (b)         With
regard to the Appraised Value of Lots of Improved Land, the then-current book
value thereof, determined in accordance with GAAP.

     

    “Cost-to-Complete”
means:

     

    (a)         With
regard to the Appraised Value of finished Units, the total budgeted cost of
constructing the vertical structure of the Unit equal to (i) the base budget for
the Unit type plus (ii) the higher of customized changes from the base budget
actually proposed by the buyer and customized changes estimated by management
based on historical experience, less Cost Incurred; and

     

    (b)         With
regard to the Appraised Value of Lots of Improved Land, the total budgeted cost
of land improvement (it being understood that total budgeted costs exclude
contingencies), less Cost Incurred.

     

    “CRO” means Mitchell Arden, in
his capacity as Chief Restructuring Officer of Parent or any replacement officer
satisfactory to Agent and Majority Revolving Lenders.

    
      
         

      

      
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    “Debt” means, for any Person as
of any date, without duplication, all (i) indebtedness or liability for
borrowed money; (ii) obligations, whether or not for money borrowed
(a) represented by notes payable, or drafts accepted, in each case
representing extensions of credit, (b) evidenced by bonds, debentures,
notes or similar instruments, or (c) constituting purchase money
indebtedness, title retention debt instruments or other similar instruments,
upon which interest charges are customarily paid or that are issued or assumed
as full or partial payment for property or services rendered; (iii) lease
obligations and obligations that are treated as capitalized leases under GAAP;
(iv) reimbursement obligations under surety bonds, letters of credit and/or
tri-party agreements issued with respect to Improvements (whether or not the
same have been presented for payment); (v) reimbursement obligations under
Financial Letters of Credit and surety bonds (regardless of whether the same
have been presented for payment); (vi) obligations, contingent or
otherwise, under any synthetic lease, tax retention operating lease, off balance
sheet loan or similar off balance sheet financing arrangement if the transaction
giving rise to such obligation (a) is considered indebtedness for borrowed
money for tax purposes but is classified as an operating lease under GAAP and
(b) does not (and is not required pursuant to GAAP to) appear as a
liability on the balance sheet of a Person; (vii) liabilities arising under
any “swap agreement” (as that term is defined in 11 U.S.C. § 101, as heretofore
or hereafter amended; and (viii) without duplication, all liabilities of
third parties of the type described in (i)–(vii), inclusive, that are guaranteed
by or otherwise recourse to a Person, whether or not the obligations have been
assumed.

     

    “Defaulting Lender” has the meaning
assigned to such term in Section 11.12.

     

    “Default Rate” means a rate of interest
that is equal to the applicable Interest Rate otherwise payable with respect to
Loans plus two and one-quarter percent (2.25%) per annum.

     

    “Deficiency Claim” means the
unsecured portion of any claim the Agent or Lenders have against the Borrowers
relating to the Pre-Petition Debt or the Indebtedness.

     

    “Deposit Account” means a demand, time,
savings, passbook or like account with a federally insured bank or savings and
loan association, other than an account evidenced by a negotiable certificate of
deposit.

     

    “Dollars” and the sign “$” mean lawful money of the
United States of America.

     

    “Eligible Assignee” means (i) a Lender,
an Affiliate of a Lender, an Approved Fund, and (ii) (a) a commercial bank
organized under the laws of the United States or any state thereof; (b) a
savings and loan association or savings bank organized under the laws of the
United States or any state thereof; (c) a commercial bank organized under
the laws of any other country or a political subdivision thereof; provided that
(1) such bank is acting through a branch or agency located in the United
States or (2) such bank is organized under the laws of a country that is a
member of the Organization for Economic Cooperation and Development or a
political subdivision of such country; and (d) any other entity that is an
“accredited investor” (as defined in Regulation D under the Securities Act) that
extends credit or buys loans as one of its businesses including insurance
companies, mutual funds and lease financing companies; provided that,
notwithstanding the foregoing, “Eligible Assignee” shall not include (v) any
Person with net assets of less than $500,000,000, (w) Parent or any of Parent’s
Affiliates, (x) any Person taking directions from or working in concert with
Parent or any of Parent’s Affiliates, (y) any competitor of Parent or its
Affiliates in the homebuilding industry or any Affiliate of such competitor, or
(z) any natural Person.

    
      
         

      

      
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    “Environmental Claims” means
any and all administrative, regulatory or judicial actions, suits, demands,
demand letters, claims, liens, accusations, allegations, notices of
noncompliance or violation, investigations (other than internal reports prepared
by any Person in the ordinary course of business and not in response to any
third party action or request of any kind) or proceedings relating in any way to
any actual or alleged violation of or liability under any Environmental Law or
relating to any permit issued, or any approval given, under any such
Environmental Law, including, without limitation, any and all claims by
Governmental Authorities for enforcement, cleanup, removal, response, remedial
or other actions or damages, contribution, indemnification cost recovery,
compensation or injunctive relief resulting from Hazardous Substances or arising
from alleged injury or threat of injury to human health or the
environment.

     

    “Environmental Condition” means (i) the
presence or likely presence of any Hazardous Substance under conditions
indicating an existing, past, or a material threat of Release at, to, or from
structures on property or the environment, regardless of whether the presence or
likely presence of such Hazardous Substance is in compliance with Environmental
Law; (ii) any condition in air, soil, surface water or ground water which
adversely affects a work place where a business operation occurs or an actual or
intended residence, (iii) any damage to a natural resource; and (iv) any
contamination which must be assessed, investigated, or remediated under any of
the Environmental Laws.

     

    “Environmental Law” means any presently
existing or hereafter enacted or decided federal, state or local statutory or
common law relating to pollution or the protection of human health or the
environment, including without limitation, any common law of nuisance or
trespass, any judicial or administrative order, decree or consent order
pertaining to any Environmental Condition, and any law or regulation relating to
emissions, discharges, releases or threatened release of any Hazardous Substance
into the environment (including without limitation, ambient air, surface water,
groundwater, land surface or subsurface strata) or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling of any Hazardous Substance.

     

    “Environmental Report” means any Phase I or
Phase II environmental site assessment, preliminary assessment report, site
investigation, remedial investigation workplan, or remedial action work plan or
remediation report that is (i) prepared with respect to any lots within any of
the Projects, or for any of the Projects, in accordance with any Environmental
Law applicable at the time of preparation and the Agent’s then-current protocol
for environmental studies of land for residential development by a qualified
environmental engineer, geologist or hydrogeologist acceptable to Agent in its
reasonable business judgment, (ii) in the case of any Phase I environmental site
assessment, dated not earlier than twelve (12) months prior to the acquisition
by any of the Borrowers or any affiliate of the Borrowers of the property
assessed by such Phase I environmental site assessment, (iii) in the case of any
Phase I environmental site assessment prepared after November 1, 2005, prepared
in accordance with the standards and practices for all appropriate inquiries
codified at 40 C.F.R. Part 312, and (iv) if not addressed to Agent, as agent for
the Lenders, accompanied by a reliance letter (in form acceptable to Agent in
good faith) addressed to Agent as agent for the Lenders.

     

    “ERISA” means the Employee
Retirement Income Security Act of 1974, as amended from time to time, and the
regulations and published interpretations thereof.

    
      
         

      

      
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    “ERISA Affiliate” means any trade or
business (whether or not incorporated), which together with any Borrower (or
some or all of them) would be treated as a single employer under Section 414 of
the Code or Section 4001 of ERISA.

     

    “Eurocurrency Reserve Requirements” means, for any
day as applied to a Loan, the aggregate (without duplication) of the rates
(expressed as a decimal fraction) of reserve requirements in effect on such day
(including, without limitation, basic, supplemental, marginal and emergency
reserves under any regulations of the Board of Governors of the Federal Reserve
System or other Governmental Authority having jurisdiction with respect thereto)
dealing with reserve requirements prescribed for eurocurrency funding (currently
referred to as “Eurocurrency Liabilities” in Regulation D of the Board of
Governors of the Federal Reserve System) maintained by a member bank of the
Federal Reserve System.

     

    “Event of Default” means any of the
events specified in Section 9.

     

    “Excess Variance Amount” has
the meaning assigned to such term in Section 6.15(a).

     

    “Excluded Taxes” means, with respect to
Agent, any Lender or any other recipient of any payment to be made by or on
account of any obligation of any Borrower hereunder (i) income and
franchise taxes imposed on (or measured by) its net income or net profits (or
franchise taxes imposed in lieu of net income taxes) imposed on Agent, such
Lender or other recipient as a result of a present or former connection between
Agent, such Lender or such other recipient and the jurisdiction of the
Governmental Authority imposing such tax or any political subdivision or taxing
authority thereof or therein (other than any such connection arising solely from
Agent or such Lender having executed, delivered or performed its obligations or
received a payment hereunder, or enforced, this Agreement, (ii) any branch
profits taxes imposed by the United States of America or any similar tax imposed
by any other jurisdiction (iii) any withholding tax that is imposed on
amounts payable to Agent, such Lender or any other recipient of any payment to
be made by or on account of any obligation of any Borrower hereunder, at the
time such Lender becomes a party to this Agreement (or designates a new Lending
Office), except to the extent such Lender (or its assignor, if any) was
entitled, immediately prior to the time of designation of a new Lending Office
or assignment), to receive additional amounts from the Borrowers with respect to
such withholding tax pursuant to Section 2.15(a), and (iv) Taxes
attributable to such Lender’s failure to comply with Section
2.15(e).

     

    “Federal Funds Rate” means for any day the
rate per annum, based on a year of 360 days and actual days elapsed, and rounded
upward to the nearest 1/100th of one percent (0.01%) announced by the Federal
Reserve Bank of New York (or any successor) on such day as being the weighted
average of the rates on overnight federal funds transactions arranged by Federal
funds brokers on the previous trading day, as computed and announced by such
Federal Reserve Bank (or any successor) in substantially the same manner as such
Federal Reserve Bank computes and announces the weighted average it refers to as
the “Federal Funds Effective Rate” as of the Closing Date; provided that, if
such Federal Reserve Bank (or its successor) does not announce such rate on any
day, the “Federal Funds Effective Rate” for such day shall be the Federal Funds
Rate for the last day on which such rate was announced.

     

    “Final” shall mean, as to any
order, that such order is no longer subject to review, reversal, modification or
amendment by appeal or writ of certiorari.

    
      
         

      

      
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    “Final Order” shall mean an
order of the Bankruptcy Court substantially in the form of Exhibit I attached
hereto.

     

    “Financial Statements” mean the reports
of financial condition required to be delivered pursuant to Sections 6.1(a),
6.1(b) and 6.1(c).

     

    “Fiscal Quarter” means each of the
three (3) month periods that ends on the last day of the third (3rd), sixth
(6th), ninth (9th) and twelfth (12th) months of a Fiscal Year.

     

    “Fiscal Year” means the period of
twelve (12) consecutive calendar months on the basis of which Parent reports its
income for GAAP purposes, which twelve (12) month period currently ends on each
June 30.

     

    “Foreign Lender” means any Lender that
is organized, or lending through a branch that is organized, under the laws of a
jurisdiction other than that in which any Borrower is resident for tax
purposes.  For purposes of this definition, the United States of
America, each State thereof and the District of Columbia shall be deemed to
constitute a single jurisdiction.

     

    “Fund” means any Person (other
than a natural person) that (i) is (or will be) engaged in making, purchasing,
holding or otherwise investing in commercial loans and similar extensions of
credit in the ordinary course of business, or (ii) temporarily warehouses loans
for any Lender or any Person described in clause (i) above.

     

    “Funding Date” means the Business Day
on which an Revolving Loan is made.

     

    “GAAP” means generally accepted
accounting principles as set forth in the opinions and pronouncements of the
Accounting Principles Board of the American Institute of Certified Public
Accountants and statements and pronouncements of the Financial Accounting
Standards Board as in effect on the date hereof or in such other statements by
such other Person as may be approved by a significant segment of the accounting
profession, which are applicable to the circumstances as of the date of
determination and which are applied on a consistent basis.

     

    “Governmental Approvals” means all
authorizations, consents, approvals, permits, licenses and exemptions of,
registrations and filings with, and reports to, all Governmental
Authorities.

     

    “Governmental Authority” means the
government of the United States of America or any other nation, or of any
political subdivision thereof, whether state or local, and any agency,
authority, instrumentality, regulatory body, court, central bank or other entity
exercising executive, legislative, judicial, taxing, regulatory or
administrative powers or functions of or pertaining to government (including any
supra-national bodies such as the European Union or the European Central
Bank).

     

    “Hazardous Substance” means any substance, the
possession, release, manufacture, storage, use, generation, treatment, disposal,
transportation or other management of which is regulated by or pursuant to any
Environmental Law and shall include, without limitation, (i) any substance
defined as hazardous by or pursuant to the federal Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as amended, 42 U.S.C. § 9601
et seq.; (ii) any oil as
defined by the Oil Pollution Act of 1990, as amended, 33 U.S.C. § 2701 et seq.; (iii) any
hazardous, toxic, residual, industrial, municipal, or universal waste or
substance; (iv) any pollutant; (v) any contaminant; (vi) any chemical; and (vii)
any radioactive materials.

    
      
         

      

      
        - 11
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    “Home Sale Order” means that
certain Final Order authorizing the Borrowers (a) to contract and close on sales
of homes; (b) to honor deposits and other contractual obligations; (c) to sell
homes free and clear of all liens, claims, encumbrances, and other interests;
(d) to establish procedures for the resolution of lien and other claims; and (e)
to use proceeds of home sales in accordance with lien procedures.

     

    “Improved Land” means land that (i) has
received all Governmental Approvals necessary for immediate development as
for-sale residential housing, other than building permits, provided that land
that has received all such Governmental Approvals except for state- and
federally-issued permits (but not local subdivision and land development
approvals, which may, however, be conditioned upon the receipt of state- and
federally-issued permits) and that Borrower in good faith believes will be
issued within 120 days may be treated as Improved Land until such permits are
issued but only if such permits are issued within such period of 120 days, and
(ii) is fully developed with Improvements that have been completed (other than
the finish paving of streets).

     

    “Improvements” means the site
improvements required for the development, improvement and sale of a Project,
including, but not limited to, roads, curbs, sidewalks, storm water drainage
lines and facilities and water and sewer lines and facilities.

     

    “Indebtedness” means all
obligations owing to the Agent or Lenders, or any of them, under this Agreement,
the Term Notes, the Revolving Notes (including, but not limited to, the
repayment of the Loans and all interest and other charges due thereon and
hereunder), and all other Loan Documents, whether for past, present or future
advances, renewals, extensions, modifications, interest, late charges, costs and
fees of any type or otherwise.

     

    “Indemnified Taxes” means all Taxes other
than Excluded Taxes and Other Taxes.

     

    “Intellectual Property” means
all patents, trademarks, trademarks, copyrights, technology, software, know-how
and processes used in or necessary for the conduct of the business of the
Borrowers.

     

    “Interest Rate” means, on any day, the
sum (expressed as a per annum rate of interest) of (i) the LIBOR Market Index
Rate as of such day plus (ii) the Applicable Spread in effect on such
day.

     

    “Interim Loan Documents” has
the meaning set forth in the Recitals hereto.

     

    “Interim Order” has the meaning
assigned to such term in the Recitals hereto.

     

    “Interim Order Date” means
March 3, 2010.

     

    “IP Collateral” means,
collectively, the Intellectual Property that constitutes Collateral under the
Security Agreement.

    
      
         

      

      
        - 12
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    “IP Filing Office” means the
United States Patent and Trademark Office, the United States Copyright Office or
any successor or substitute office in which filings are necessary or, in the
opinion of Agent, desirable in order to create or perfect Liens on, or evidence
the interest of Agent and Lenders in, any IP Collateral.

     

    “Investment” means (i) any
direct or indirect purchase or other acquisition by any Borrower of, or of a
beneficial interest in, any Securities (other than Cash or Cash Equivalents) of
any other Person, (other than a Borrower) (ii) any direct or indirect
redemption, retirement, purchase or other acquisition for value, by any Borrower
from any Person (other than a borrower), of any equity Securities of such Person
or (iii) any direct or indirect loan, advance or capital contribution by
any Borrower to any other Person (other than a Borrower), including all
indebtedness and accounts receivable from that other Person that are not current
assets or did not arise from sales to that other Person in the ordinary course
of business.  The amount of any Investment shall be the original cost
of such Investment plus the cost of all additions thereto, without any
adjustments for increases or decreases in value, or write-ups, write-downs or
write-offs with respect to such Investment (other than adjustments for the
repayment of, or the refund of capital with respect to, the original principal
amount of any such Investment).

     

    “Issuance Fee” means the fee
payable by Borrowers pursuant to Section 2.7(c).

     

    “Issuer” means (i) Agent and
(ii) each Approved Bank that has heretofore issued a Letter of Credit or
executed a Tri-Party Agreement hereunder.

     

    “Joint Venture” means an entity that
is engaged principally in the business of for-sale residential real estate and
in which Parent, directly or indirectly, owns at least a 30%
interest.

     

    “Last Reported Fiscal Quarter” means, on any date,
the later of (i) the Fiscal Quarter most recently concluded that ended at least
50 days before such date or (ii) the most recent Fiscal Quarter with respect to
which Borrowers have delivered to Agent a report as required by Section
6.1(b).

     

    “Lender” means each Person
executing this Agreement as a Lender, as set forth on the signature pages
hereto, and each Person that hereafter becomes a party to this Agreement as a
Lender pursuant to Section 12.9; provided that the
term “Lenders”, when used in the context of a particular Commitment, shall mean
Lenders having that Commitment.

     

    “Lending Office” means with respect to
a Lender, the office, branch, subsidiary or affiliate of such Lender identified
in the questionnaire delivered by such Lender to Agent or otherwise selected by
such Lender pursuant to Section 2.19 hereof.

     

    “Letter of Credit” means letters of
credit issued or to be issued by Issuer for the account of a Borrower pursuant
to Section 2.2(a).

     

    “Letter of Credit Collateral
Account” has the meaning assigned to such term in
Section 2.12(c).

     

    “Letter of Credit Fee” means
the fee payable by Borrowers pursuant to Section 2.7(c).

    
      
         

      

      
        - 13
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    “Letter of Credit Sublimit”
means $15,000,000.

     

    “LIBOR Market Index Rate”
means, for any day, the greater of (x) two percent (2%) and (y) a rate per annum
determined in accordance with the following formula (rounded upward to the
nearest 1/100th of 1%):

     

    
      
        	 
      	
                1-month LIBOR Rate

              	 
      
	
                1.0  –  Eurocurrency
      Reserve Requirements

              

      

    

     

    “Lien” means any mortgage, deed
of trust, pledge, security interest, hypothecation, assignment, deposit
arrangement, encumbrance, lien (statutory or other), or preference, priority, or
other security agreement or preferential arrangement, charge, or encumbrance of
any kind or nature whatsoever (including, without limitation, any conditional
sale or other title retention agreement, any financing lease having
substantially the same economic effect as any of the foregoing, and the filing
of any financing statement under the Uniform Commercial Code or comparable law
of any jurisdiction to evidence any of the foregoing).

     

    “Limited Unsecured Claim
Payment” means the payment or distribution made in the Bankruptcy Cases,
whether such payment is made pursuant to a Reorganization Plan or otherwise, of
the first $4,000,000 derived solely from the proceeds of any Avoidance Actions
to or for the benefit of unsecured creditors.

     

    “Loan” or “Loan(s)” means, individually
or collectively, the Term Loans and the Revolving Loans.

     

    “Loan Document(s)” means this
Agreement, the Notes, the Collateral Documents, the Letters of Credit and
Tri-Party Agreements and all documents executed in connection with the Loans
evidenced by this Agreement and the Notes, and may include, without limitation,
all certificates issued with respect to any of the foregoing and any renewals or
modifications thereof.

     

    “Loan Fees” means the various
fees payable by Borrowers from time to time pursuant to Section
2.7.

     

    “London Business Day” means any
Business Day on which commercial banks are open for international business
(including dealings in Dollar deposits) in London and in Charlotte, North
Carolina.

     

    “Lot” or “Lots” shall mean the portions
of Real Estate that have been approved for construction thereon of a single
family Unit.

     

    “Majority Lenders” means, at
any date, any combination of Lenders whose Pro Rata Shares aggregate more than
fifty percent (50%) of the aggregate Term Loan Exposure for all Lenders plus the
aggregate Revolving Loan Exposure of all Lenders.

     

    “Majority Revolving Lenders”
means, at any date, any combination of Revolving Lenders whose Pro Rata Shares
aggregate more than fifty percent (50%) of the aggregate Revolving Loan Exposure
of all Revolving Lenders.

    
      
         

      

      
        - 14
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    “Margin Stock” has the meaning
assigned to that term in Regulation U of the Board of Governors of the Federal
Reserve System as in effect from time to time.

     

    “Master Borrower” has the
meaning assigned to such term in the Introductory Paragraph to this
Agreement.

     

    “Material Adverse Effect”
means, with respect to the Borrowers, or any of them, from and after the
Petition Date, a material and adverse effect upon the business, properties,
assets, operations, condition (financial or otherwise) or prospects of the
Borrowers and their respective subsidiaries taken as a whole, or upon their
ability to perform their respective obligations under the Loan Documents in
accordance with their respective terms.

     

    “Maturity Date” means the
earliest to occur of (i) March 1, 2011, (ii) the effective date of an approved
Reorganization Plan, (iii) conversion of the Bankruptcy Cases to a Chapter 7
proceeding or (iv) any other termination of this Agreement in accordance with
the Final Order or this Agreement.

     

    “Mortgage” or “Mortgages” means the mortgages
or deeds of trust (as appropriate for the jurisdiction in which the Project
subject thereto is located) granted to Agent (for the ratable benefit of the
Lenders) or to a wholly-owned subsidiary of Agent as trustee for Agent (for the
ratable benefit of the Lenders), which shall be security for the repayment of
the Indebtedness, and shall constitute first priority lien(s) upon the
Project(s), subject to Permitted Priority Liens.  The Mortgages shall
be in a form prepared by and acceptable to Agent.

     

    “Multiemployer Plan” means a
Plan described in Section 4001(a)(3) of ERISA and defined in Section 3(37) of
ERISA that covers employees of either of a Borrower or any ERISA
Affiliate.

     

    “Net Asset Sale Proceeds”
means, with respect to any Asset Sale, Cash payments (including any Cash
received by way of deferred payment pursuant to, or by monetization of, a note
receivable or otherwise, but only as and when so received) received from such
sale, net of any bona fide direct costs incurred in connection with such sale,
including (i) transfer taxes or similar taxes customarily paid by seller,
and (ii) payment of the outstanding principal amount of, premium or penalty, if
any, and interest on any Debt (other than the Indebtedness) that is (a) secured
by a Permitted Priority Lien on the asset being sold (b) actually paid at
the time of receipt of such cash payment to a Person that is not an Affiliate of
any Borrower and (c) approved by the Agent, (iii)  from any Asset Sale
outside the ordinary course of business, payment of the outstanding principal
amount of, premium or penalty, if any, and interest on any Debt (other than the
Indebtedness) that is (a) secured by a Permitted Priority Lien on an asset
that was previously sold for which a claim had not been filed at the time of the
relevant Asset Sale, and (b) actually paid at the time of receipt of such
cash payment to a Person that is not an Affiliate of any Borrower, and
(iv) such other customary expenses set forth on HUD closing statement paid
or credited by a Borrower as seller (including, but not limited to, sales
commissions, settlement charges, real estate taxes, sales incentives and
credits, recording fees, escrows for uncompleted items, and title company
charges); provided that in the
case of any sale of any Real Estate, Lot or Unit, the amounts in clause (iv)
shall not exceed ten percent (10%) of the gross Cash payment for such asset
without the consent of Agent (such consent not to be unreasonably
withheld).

    
      
         

      

      
        - 15
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    “Net Insurance/Condemnation
Proceeds” means any Cash payments or proceeds received by any Borrower or
any of its Subsidiaries (i) under any business interruption or casualty
insurance policy in respect of a covered loss thereunder or (ii) as a
result of the taking of any assets of any Borrower or any of its Subsidiaries by
any Person pursuant to the power of eminent domain, condemnation or otherwise,
or pursuant to a sale of any such assets to a purchaser with such power under
threat of such a taking, in each case net of any actual and reasonable
documented costs incurred by any Borrower or any of its Subsidiaries in
connection with the adjustment or settlement of any claims of such Borrower or
such Subsidiary in respect thereof.

     

    “New York Mortgage” means each
Mortgage that encumbers a Project located in the State of New York.

     

    “Notes” means the Term Notes
and the Revolving Notes; “Note” means any of such Notes.

     

    “1-month LIBOR Rate” means,
with respect to each day, the rate for Dollar deposits of one-month maturity as
reported on Reuters Screen LIBOR01 Page as of 11:00 a.m., London time, on such
day or if such day is not a London Business Day, then the immediately preceding
London Business Day (or if not so reported, then as determined by the Agent from
another recognized source or interbank quotation).

     

    “Orders” means, collectively,
the Interim Order and Final Order.

     

    “Organizational Documents”
means, with respect to any entity, the documents pursuant to which a Person is
organized, including without limitation, its articles of incorporation, by-laws,
partnership agreement, certificate of limited partnership, limited liability
company organization or formation agreement, limited liability company
certificate or articles of formation and trust indenture, as appropriate to the
entity.

     

    “Original Credit Agreement” has
the meaning defined in the Recitals to this Agreement.

     

    “Other Taxes” means any and all
present or future stamp or documentary taxes or any other excise or property
taxes, assessments, charges or similar levies imposed by any Governmental
Authority arising from any payment made hereunder or under any other Loan
Document or from the execution, delivery or enforcement of, or otherwise with
respect to, this Agreement or any other Loan Document.

     

    “Parent” means Orleans
Homebuilders, Inc., a Delaware corporation.

     

    “Participant” has the meaning
set forth in Section 12.9(d) hereof.

     

    “PBGC” means the Pension
Benefit Guaranty Corporation or any entity succeeding to any or all of its
functions under ERISA.

     

    “Permitted Critical Vendor
Payment” means an account payable permitted to be paid under Section
7.19(c).

    
      
         

      

      
        - 16
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    “Permitted Debt”
means:

     

    (i)        
    the Indebtedness;

     

    (ii)       
    normal operating liabilities such as trade accounts
payable, taxes payable, and lease obligations as of the Closing Date, and
customer deposits under agreements of sale for the purchase of Real Estate,
Units or Lots in the ordinary course of business;

     

    (iii)           reimbursement
obligations under surety bonds, Letters of Credit or Tri-Party Agreements
(whether or not the same have been presented for payment);

     

    (iv)           purchase
money mortgages and other Debt in existence on the Closing Date and set forth on
Schedule 7.1,
each as in effect, and in the principal amount outstanding, on the Closing
Date;

     

    (v)           obligations
constituting deposits under agreements of sale for Units; and

     

    (v)           other
Debt secured by Permitted Priority Liens not otherwise described
above.

     

    “Permitted Liens”
means:

     

    (i)       
     Liens for taxes, assessments, or similar charges,
incurred in the ordinary course of business, the payment of which is not, at the
time, required by Section 6.2;

     

    (ii)      
     Encumbrances consisting of zoning restrictions,
easements or other restrictions on the use of real property, none of which
materially impairs the use of such property by Borrower in for construction
thereon and of Units, and none of which is violated in any material respect by
existing or proposed structures or land use;

     

    (iii)           Liens,
security interests or mortgages in favor of Agent for the benefit of the Lenders
to secure the Indebtedness;

     

    (iv)           Liens
securing Permitted Debt set forth on Schedule 7.1 and
subordinated to the extent required/permitted pursuant to the Final
Order;

     

    (v)           attachments,
judgments and other similar Liens arising in connection with court proceedings,
to the extent such Lien does not constitute an Event of Default;

     

    (vi)           Statutory
rights of set-off, revocation, refund, chargeback or similar rights or remedies
of banks and other similar financial institutions arising under deposit
agreements or under the Uniform Commercial Code as to Deposit Accounts or
Securities Accounts (including funds or other assets credited thereto or funds
maintained therewith);

     

    (vii)          Licenses
(with respect to Intellectual Property and other property), leases or subleases
granted to third parties in accordance with any applicable terms of the
Collateral Documents and not interfering in any material respect with the
ordinary conduct of the business of any Borrower or resulting in a material
diminution in the value of any Collateral as security for the
Indebtedness;

    
      
         

      

      
        - 17
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    (viii)        any
interest or title of a lessor or sublessor under any lease not prohibited by
this Agreement;

     

    (ix)           Liens
in favor of collecting banks arising under Section 4-210 of the Uniform
Commercial Code and other banker’s Liens arising by operation of
law;

     

    (x)          
 statutory Liens arising in the ordinary course of business in favor of
landlords (a) for amounts not yet overdue or (b) for amounts that are overdue
and that (in the case of any such amounts overdue for a period in excess of 5
days) are being contested in good faith by appropriate proceedings, so long as
(1) such reserves or other appropriate provisions, if any, as shall be required
by GAAP shall have been made for any such contested amounts, and (2) in the case
of a Lien with respect to any portion of the Collateral, such contest
proceedings conclusively operate to stay the sale of any portion of the
Collateral on account of such Lien;

     

    (xi)           Liens
consisting of deposits securing the payment and performance of real estate and
other personal property leases not prohibited by the terms hereof or by any
other Loan Document incurred in the ordinary course of business, so long as no
foreclosure, sale or similar proceedings have been commended with respect to any
portion of the Collateral on account thereof; and

     

    (xii)          other
Permitted Priority Liens not otherwise described above.

     

    “Permitted Priority Liens”
means any unpaid and allowed liens that (a) attached or were eligible to attach
on the Petition Date and that under applicable law are senior to, and (i) have
not been subordinated to or (ii) are avoidable pursuant to an Avoidance Action,
the liens and security interests of the Pre-Petition Lenders and are perfected
prior to the Petition Date or that are perfected subsequent to such commencement
as permitted by Section 546(b) of the Bankruptcy Code and (b) has been
determined to be valid and enforceable pursuant to the terms of the Home Sale
Order.

     

    “Person” means an individual,
partnership, corporation, business trust, joint stock company, trust,
unincorporated association, joint venture, governmental authority, or other
entity of whatever nature.

     

    “Plan” means any plan to
provide benefits other than salary for services rendered, or any other benefit
arrangement, obligation, or practice established, maintained, or to which
contributions have been made by either of the Borrower or any ERISA
Affiliate.

     

    “Potential Event of Default”
means a condition or event that, after notice or lapse of time or both, would
constitute an Event of Default.

     

    “Prescribed Laws” means,
collectively, (a) the Uniting and Strengthening America by Providing Appropriate
Tools Required to Intercept and Obstruct Terrorism Act of 2001 (Public Law
107-56) (The USA PATRIOT ACT), (b) Executive Order No. 13224 on Terrorist
Financing, effective September 24, 2001, and relating to Blocking Property and
Prohibiting Transactions With Persons Who Commit, Threaten to Commit, or Support
Terrorism, (c) the International Emergency Economic Power Act, 50 U.S.C. §1701
et. seq. and (d) all other statutes and laws relating to money laundering or
terrorism.

    
      
         

      

      
        - 18
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    “Petition Date” has the meaning
assigned to such term in the Recitals of this Agreement.

     

    “Pre-Petition Balance” or
“Pre-Petition Debt”
means all unpaid, interest, fees and costs owing by certain Borrowers to the
Agent and the Lenders under the Pre-Petition Loan Documents in the aggregate
amount of approximately $337,956,029.99.

     

    “Pre-Petition Credit Agreement”
shall have the meaning assigned to such term in the Recitals of this
Agreement.

     

    “Pre-Petition Lenders” shall
have the meaning assigned to such term in the Recitals of this
Agreement.

     

    “Pre-Petition Loan Documents”
shall mean the Pre-Petition Credit Agreement and each of the other documents
executed in connection therewith.

     

    “Prohibited Transaction” means
any transaction set forth in Section 406 of ERISA or Section 4975 of the
Code.

     

    “Project” means, at any time, a
tract of Real Estate comprising an identifiable community of Lots that is
marketed as a community and that is then owned by a Borrower.

     

    “Pro Rata Share” means
(i) with respect to all payments, computations and other matters relating
to the Term Loan Commitments or the Term Loan of any Term Lender, the percentage
obtained by dividing (x) the
Term Loan Exposure of that Term Lender by (y) the
aggregate Term Loan Exposure of all Lenders, (ii) with respect to all
payments, computations and other matters relating to the Revolving Loan
Commitment or the Revolving Loans of any Revolving Lender or any Letters of
Credit issued or participations therein deemed purchased by any Revolving
Lender, the percentage obtained by dividing (x) the
Revolving Loan Exposure of that Revolving Lender by (y) the
aggregate Revolving Loan Exposure of all Revolving Lenders, and (iii) for
all other purposes with respect to each Lender, the percentage obtained by dividing (x) the
sum of the Term Loan Exposure of that Lender plus the Revolving
Loan Exposure of that Lender by (y) the sum
of the aggregate Term Loan Exposure of all Lenders plus the aggregate
Revolving Loan Exposure of all Lenders, in any such case as the applicable
percentage may be adjusted by assignments permitted pursuant to
Section 12.9.  The initial Pro Rata Share of each Lender for
purposes of each of clauses (i), (ii) and (iii) of the preceding sentence
is set forth opposite the name of that Lender in Schedule 2.1
annexed hereto.

     

    “Real Estate” means all land,
fee simple title to which is now or hereafter owned by a Borrower, together with
all Improvements and Units now or hereafter constructed thereon.

     

    “Refund Collateral” has the
meaning assigned to such term in the Security Agreement.

     

    “Release” means any release,
spill, emission, leaking, pumping, pouring, injection, escaping, deposit,
disposal, discharge, dispersal, dumping, leaching or migration of Hazardous
Substances into the indoor or outdoor environment (including the abandonment or
disposal of any barrels, containers or other closed receptacles containing any
Hazardous Substances), including the movement of any Hazardous Substances
through the air, soil, surface water or groundwater.

    
      
         

      

      
        - 19
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    “Relevant Accounting Period”
means, at any time, the period of four (4) consecutive Fiscal Quarters, the last
of which is the Last Reported Fiscal Quarter.

     

    “Reorganization Plan” shall
mean a plan of reorganization for the Borrowers proposed pursuant to the
Bankruptcy Code.

     

    “Reportable Event” means any of
the events set forth in Section 4043 of ERISA, other than a reportable event as
to which provision for 30-day notice to the PBGC has been waived under
applicable regulations.

     

    “Requisite Revolving Lenders”
means, at any date, any combination of Revolving Lenders whose Pro Rata Shares
aggregate more than sixty six and two thirds percent (66 2/3%) of the aggregate
Revolving Loan Exposure of all Revolving Lenders.

     

    “Request for Revolving Loan”
means a written notice from a Borrower to Agent, in the appropriate form that is
attached hereto as Exhibit C, requesting
that an Revolving Loan in a specified amount be advanced to such Borrower on a
specified Funding Date.

     

    “Revolving Loan Collateral
Account” has the meaning assigned to such term in
Section 2.12(b).

     

    “Revolving Loan Commitment”
means, as to any Lender, the obligation of such Lender to make Revolving Loans
to Borrowers under Section 2.1(b) and to honor drawings and demands under
Letters of Credit and Tri-Party Agreements issued or executed under Section 2.2,
in an aggregate principal or face amount at any time outstanding not to exceed
the amount set forth opposite such Lender’s name on Schedule 2.1
hereto, as the same may be reduced or modified at any time or from time to time
pursuant to the terms hereof.

     

    “Revolving Loan Exposure”, with
respect to any Revolving Lender, means, as of any date of determination
(i) prior to the termination of the Revolving Loan Commitments, the amount
of that Lender’s Revolving Loan Commitment, and (ii) after the termination
of the Revolving Loan Commitments, the sum of (a) the aggregate outstanding
principal amount of the Revolving Loans of that Lender plus (b) the
aggregate amount of such Lenders’ Pro Rata Share in any outstanding Letters of
Credit or Tri-Party Agreements or any unreimbursed drawings under any Letters of
Credit or Tri-Party Agreements.

     

    “Revolving Lender” means a
Lender that has a Revolving Loan Commitment and/or that has an outstanding
Revolving Loan.

     

    “Revolving Loans” means the
Loans made by Revolving Lenders to Borrowers pursuant to
Section 2.1(b).

     

    “Revolving Loan Sublimit” means
$20,000,000, unless increased to $25,000,000 pursuant to Section
2.1(b)(iii).

     

    “Revolving Loan Termination
Date” has the meaning assigned to such term in
Section 2.1(b)(i).

    
      
         

      

      
        - 20
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    “Revolving Notes” means each of
the promissory notes made by Borrowers, payable to the order of each Lender and
substantially in the form of Exhibit B hereto,
evidencing the Revolving Loans, and any amendments and modifications thereto,
any substitutes therefor, and any replacements, restatements, renewals or
extension thereof, in whole or in part.

     

    “RICO” means the Racketeer
Influenced and Corrupt Organization Act, as amended by the Comprehensive Crime
Control Act of 1984, 18 USC §§1961-68, as amended from time to
time.

     

    “Securities” means any stock,
shares, partnership interests, voting trust certificates, certificates of
interest or participation in any profit-sharing agreement or arrangement,
options, warrants, bonds, debentures, notes, or other evidences of indebtedness,
secured or unsecured, convertible, subordinated, certificated or uncertificated,
or otherwise, or in general any instruments commonly known as “securities” or
any certificates of interest, shares or participations in temporary or interim
certificates for the purchase or acquisition of, or any right to subscribe to,
purchase or acquire, any of the foregoing.

     

    “Securities Account” means an
account to which a financial asset is or may be credited in accordance with an
agreement under which the Person maintaining the account undertakes to treat the
Person for whom the account is maintained as entitled to exercise the rights
that comprise the financial asset.

     

    “Security Agreement” means the
Security Agreement among the Borrowers and Agent pursuant to Section
4.1(a)(ii).

     

    “Special Purpose Collateral
Account” means each of the Revolving Loan Collateral Account, the Letter
of Credit Collateral Account, the Cash Collateral Account, and the Carve-Out
Collateral Account.

     

    “Subordinated Debt” means (i)
Debt for borrowed money, the repayment of which by its terms is subordinated to
the Indebtedness on terms and conditions satisfactory to Agent, (ii) the Debt
incurred pursuant to that certain Junior Subordinated Indenture dated as of
September 20, 2005, among OHI Financing, Inc., Parent and Wilmington Trust
Company, including the guaranty of such Debt by Parent, and (iii) the Debt
incurred pursuant to that certain Junior Subordinated Indenture dated as of
August 3, 2009, between OHI Financing, Inc., as Issuer, and The Bank of New York
Mellon, as Trustee, including the guaranty of such Debt by Parent.

     

    “Subsidiary” means, with
respect to any Person, means any corporation, partnership, trust, limited
liability company, association, joint venture or other business entity of which
more than 50% of the total voting power of shares of stock or other ownership
interests entitled (without regard to the occurrence of any contingency) to vote
in the election of the members of the governing body is at the time owned or
controlled, directly or indirectly, by that Person or one or more of the other
Subsidiaries of that Person or a combination thereof.

     

    “Superpriority Claims” shall
mean Indebtedness or other claims arising out of credit obtained or debt
incurred by the Borrowers having priority in accordance with the provisions of
Section 364(c)(1) of the Bankruptcy Code or any or all administrative expenses
of the kind specified in Section 503(b) or 507(b) of the Bankruptcy
Code.

    
      
         

      

      
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    “Taxes” means any and all
present or future taxes, levies, imposts, duties, deductions, withholdings,
assessments, fees or other charges imposed by any Governmental Authority,
including any interest, additions to tax or penalties applicable
thereto.

     

    “Term Lender” means a Tranche 1
Term Lender and a Tranche 2 Term Lender.

     

    “Term Loan Commitment” means a
Tranche 1 Term Loan Commitment and a Tranche 2 Term Loan
Commitment.

     

    “Term Loan Exposure”, with
respect to any Lender, means, as of any date of determination (i) prior to
the funding of the Term Loans, the amount of that Lender’s Term Loan Commitment,
and (ii), after the funding of the Term Loans, the outstanding principal
amount of the Term Loan of that Lender.

     

    “Term Loans” means the Tranche
1 Term Loans and the Tranche 2 Term Loans.

     

    “Term Note” means each of the
promissory notes made by Borrowers, payable to the order of each Term Lender and
substantially in the form of Exhibit A hereto,
evidencing the Term Loans, and any amendments and modifications thereto, any
substitutes therefor, and any replacements, restatements, renewals or extension
thereof, in whole or in part.

     

    “Tranche 1 Term Lender” means a
Lender that has a Tranche 1 Term Loan Commitment and/or that has an outstanding
Tranche 1 Term Loan.

     

    “Tranche 1 Term Loan
Commitment” means, as to any Lender, the obligation of such Lender to
make Tranche 1 Term Loans to Borrowers under Section 2.1(a), in an aggregate
principal or face amount at any time outstanding not to exceed the amount set
forth opposite such Lender’s name on Schedule 2.1
hereto, as the same may be reduced or modified at any time or from time to time
pursuant to the terms hereof.

     

    “Tranche 1 Term Loans” means
the Loans made by Tranche 1 Term Lenders to Borrowers pursuant to
Section 2.1(a).

     

    “Tranche 2 Term Lender” means a
Lender that has a Tranche 2 Term Loan Commitment and/or that has an outstanding
Tranche 2 Term Loan.

     

    “Tranche 2 Term Loan
Commitment” means, as to any Lender, the obligation of such Lender to
make Tranche 2 Term Loans to Borrowers under Section 2.1(a), in an aggregate
principal or face amount at any time outstanding not to exceed the amount set
forth opposite such Lender’s name on Schedule 2.1
hereto, as the same may be reduced or modified at any time or from time to time
pursuant to the terms hereof.

     

    “Tranche 2 Term Loans” means
the Loans made by Tranche 2 Term Lenders to Borrowers pursuant to
Section 2.1(a).

     

    “Tri-Party Agreement” means a
tri-party agreement issued or to be issued by Issuer for the account of a
Borrower pursuant to Section 2.2(a).

    
      
         

      

      
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    “Unit” or “Units” means an attached or
detached for-sale single-family residential housing facility or an individual
condominium dwelling.

     

    “Unused Fee” means the fee
payable by Borrowers pursuant to Section 2.7(b).

     

    “Up-Front Fee” has the meaning
assigned to such term in Section 2.7(a).

     

    
      1.2   
       Construction of
Terms.  Unless
the context of this Agreement otherwise clearly requires, references to the
plural include the singular, the singular the plural and the part the whole and
“or” has the inclusive meaning represented by the phrase
“and/or.”  References in this Agreement to “determination” by Agent or
Lenders include good faith estimates by Agent or Lenders (in the case of
quantitative determinations) and good faith beliefs by the Agent or Lenders (in
the case of qualitative determinations). The words “hereof,” “herein,”
“hereunder” and similar terms in this Agreement refer to this Agreement as a
whole and not to any particular provision of this Agreement.  The
Section and other headings contained in this Agreement preceding this Agreement
are for reference purposes only and shall not control or affect the construction
of this Agreement or the interpretation thereof in any
respect.  Reference to any Article, Section, Schedule and Exhibit
are to this Agreement, unless otherwise specified.  All definitions
of, and references to, any Loan Document mean the Loan Document that is
identified herein, as the same may from time to time be amended in accordance
with the provisions of this Agreement and the subject Loan
Document.  The use in any of the Loan Documents of the word “include”
or “including”, when following any general statement, term or matter, shall not
be construed to limit such statement, term or matter to the specific items or
matters set forth immediately following such word or to similar items or
matters, whether or not nonlimiting language (such as “without limitation” or
“but not limited to” or words of similar import) is used with reference thereto,
but rather shall be deemed to refer to all other items or matters that fall
within the broadest possible scope of such general statement, term or
matter.

    

     

    
      1.3          
Accounting Reports and
Principles.  The
character or amount of any asset, liability, account or reserve and of any item
of income or expense to be determined, and any consolidation or other accounting
computation to be made, and the construction of any definition containing a
financial term, pursuant to this Agreement or any other Loan Document, shall be
construed, determined or made, as the case may be, in accordance with GAAP,
consistently applied, unless such principles are inconsistent with any express
provision of this Agreement.

    

     

    
      1.4          
Business Day;
Time.  Whenever
any payment or other obligation hereunder, whether under a Note or under another
Loan Document, is due on a day other than a Business Day, such shall be paid or
performed on the Business Day next following the prescribed due date, except as
otherwise specifically provided for herein to the contrary, and such extension
of time shall be included in the computation of interest and
charges.  Any reference made herein or in any other Loan Document to
an hour of day shall refer to the then prevailing Eastern time, unless
specifically provided herein to the contrary.

    

     

    
      
        
        

      

      
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              SECTION
      2.

            	
              AMOUNT
      AND TERMS OF THE COMMITMENTS, LOANS, LETTERS OF CREDIT AND TRI-PARTY
      AGREEMENTS.

            

    

     

    
      	
               
      

            	
              2.1

            	
              The
      Commitments.

            

    

     

    (a)                 Term
Loans.

     

    (i)           
 Tranche 1 Term
Loans.  Subject to the terms and conditions set forth herein,
each Tranche 1 Term Lender severally, in accordance with its respective Pro Rata
Share, shall extend to Borrowers an amount not exceeding such Lender’s Pro Rata
Share of the aggregate amount of the Tranche 1 Term Loan Commitments to be used
for the purposes identified in Section 2.3(a).  All Tranche 1
Term Loans shall be deemed to have been made on the Interim Order
Date.  The amount of each Tranche 1 Term Lender’s Tranche 1 Term Loan
Commitment as of the Closing Date is set forth opposite such Tranche 1 Term
Lender’s name on Schedule 2.1 annexed
hereto and the aggregate amount of the Tranche 1 Term Loan Commitments is
$40,000,000; provided that the
amount of the Tranche 1 Term Loan Commitment of each Lender shall be adjusted
from time to time as required to give effect to any assignment of such Tranche 1
Term Lender’s Term Loan Commitment pursuant to
Section 12.9.  Master Borrower (for the benefit of the Borrowers)
may make only one borrowing under the Tranche 1 Term Loan
Commitments.  Amounts borrowed under this Section 2.1(a) and
subsequently repaid or prepaid may not be reborrowed.

     

    (ii)           
Tranche 2 Term
Loans.  Subject to the terms and conditions set forth herein,
each Tranche 2 Term Lender severally, in accordance with its respective Pro Rata
Share, shall extend to Borrowers an amount not exceeding such Lender’s Pro Rata
Share of the aggregate amount of the Tranche 2 Term Loan Commitments to be used
for the purposes identified in Section 2.3(a).  All Tranche 2
Term Loans shall be deemed to have been made on the Interim Order
Date.  The amount of each Tranche 2 Term Lender’s Tranche 2 Term Loan
Commitment as of the Closing Date is set forth opposite such Tranche 2 Term
Lender’s name on Schedule 2.1 annexed
hereto and the aggregate amount of the Tranche 2 Term Loan Commitments is
$40,000,000; provided that the
amount of the Tranche 2 Term Loan Commitment of each Lender shall be adjusted
from time to time as required to give effect to any assignment of such Tranche 2
Term Lender’s Term Loan Commitment pursuant to
Section 12.9.  Master Borrower (for the benefit of the Borrowers)
may make only one borrowing under the Tranche 2 Term Loan
Commitments.  Amounts borrowed under this Section 2.1(a) and
subsequently repaid or prepaid may not be reborrowed.

     

    (iii)           Notwithstanding
anything contained in the Pre-Petition Loan Documents, each Borrower and each
Lender acknowledges and agrees that the right of the Lenders to participate in
the Term Loans and any compensation or payment that may be received by such
Lenders incremental to that which would have been received had such Term Loans
remained Pre-Petition Debt are hereby authorized as compensation for, in
consideration for, and solely on account of the agreement of such Lender to make
and/or consent to the Loans and the Loan Documents and not as adequate
protection for, repayment of, or otherwise on account of, any Pre-Petition
Debt.

     

    
      
        
        

      

      
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    (b)                 Revolving
Loans.

     

    (i)           
 Subject to the terms and conditions set forth herein, commencing on the
Closing Date and expiring on the earliest of: (x) the occurrence of an Event of
Default or (y) the Business Day immediately preceding the Maturity Date (the
“Revolving Loan Termination
Date”), each Revolving Lender shall extend to the Borrowers from time to
time in accordance with the terms hereof an aggregate amount not exceeding its
Pro Rata Share of the aggregate amount of the Revolving Loan Commitments to be
used for the purposes described in Section 2.3(b); provided that
outstanding principal amount of Revolving Loans (not resulting from the draw of
a Letter of Credit or Tri-Party Agreement) shall not exceed, and the Revolving
Lenders shall not be required to make Revolving Loans (not resulting from the
draw of a Letter of Credit or Tri-Party Agreement) in excess of, the Revolving
Loan Sublimit.  The amount of each Revolving Lender’s Revolving Loan
Commitment as of the Closing Date is set forth opposite such Revolving Lender’s
name on Schedule 2.1
annexed hereto.  As of the Closing Date, the aggregate Revolving Loan
Commitment is $40,000,000, which is comprised of the Revolving Loan Sublimit
plus the Letter of Credit Sublimit; provided that the
amount of the Revolving Loan Commitment of each Revolving Lender shall be
adjusted from time to time as required to give effect to any assignment of such
Revolving Lender’s Revolving Loan Commitment pursuant to Section 12.9 and
shall be reduced from time to time by the amount of any reductions thereto made
pursuant to Section 2.9.  Each Revolving Lender’s Revolving Loan
Commitment shall expire on the Revolving Loan Termination Date and all Revolving
Loans and all other amounts outstanding hereunder with respect to the Revolving
Loans and the Revolving Loan Commitments shall be paid in full no later than the
Maturity Date (other than amounts that may be drawn under Letters of Credit, if
any, whose expiration date is beyond the Maturity Date in accordance with
Section 2.2(b)(iii) hereof).  The parties acknowledge and agree that
any Revolving Loans advanced to the Borrowers as “Revolving Loans” under the
Interim Loan Documents shall be deemed a part of the outstanding principal
balance of the Revolving Loans under this Agreement as of the Closing
Date.  Borrowers may borrow, repay and re-borrow Revolving Loans at
any time and from time to time prior to the Maturity Date.

     

    (ii)           Notwithstanding
anything herein to the contrary, at no time shall Revolving Lenders be obligated
to make any Revolving Loan if, as a result thereof, (i) the amount of the
requested Revolving Loan would exceed the then-current Budget Availability, (ii)
the aggregate outstanding principal balance of all Revolving Loans (including
the amount of any requested Revolving Loan hereunder but excluding any Revolving
Loans made as a result of a drawing under a Letter of Credit or Tri-Party
Agreement) would exceed the Revolving Loan Sublimit, or (iii) the sum of
(x) the aggregate outstanding principal balance of all Revolving Loans
(including the amount of any requested Revolving Loan hereunder) plus (y) the
aggregate maximum exposure of Revolving Lenders pursuant to then-outstanding
Letters of Credit and Tri-Party Agreements plus (z) any Revolving Loans made as
a result of a drawing under a Letter of Credit or Tri-Party Agreement, would
exceed the Revolving Loan Commitments then in effect; provided that
Borrowers may request an amount in excess of the amount required to be borrowed
as projected by the Budget to cover such Defaulting Lender’s share of the
requested Loan in order that the requested amount of an Revolving Loan hereunder
less the amount of such Defaulting Lender(s)’s Pro Rata Share thereof is an
amount that would satisfy the aforesaid conditions; provided, however, that for the
avoidance of doubt, no Lender shall be required to fund any amount in excess of
its Pro Rata Share of the Revolving Loan Commitment.

    
      
         

      

      
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    (iii)           Notwithstanding
the foregoing, the Revolving Loan Sublimit may be increased up to $25,000,000 if
the following conditions are met: (x) the Agent receives a written notice from
the CRO requesting such increase of the Revolving Loan Sublimit, (y) the Agent
shall have received a written certification by the CRO that no Event of Default
or Potential Event of Default has occurred and is continuing, and
(z) Majority Revolving Lenders consent in writing to such
increase.

     

    
      2.2       
 Letters of
Credit.

    

     

    (a)           Amount and Availability of
Letters of Credit and Tri-Party Agreements.  Subject to the
terms and conditions set forth herein, Borrowers may request, and Agent,
pursuant to this Section 2.2(a) shall issue or execute on behalf of the
Revolving Lenders Letters of Credit or Tri-Party Agreements issued as a
replacement or extension of any Letter of Credit or Tri-Party Agreement
identified on Schedule
2.2(a), in each case so long as such Letter of Credit is related to a
Project that secures the Indebtedness and satisfies the requirements of Section
4.1(d).  The Letters of Credit and Tri-Party Agreements listed on
Schedule 2.2(a)
issued under the Pre-Petition Credit Agreement in the aggregate face amount of
$369,610.22 are hereby deemed Letters of Credit and Tri-Party Agreements under
this Agreement.  No
Letter of Credit or Tri-Party Agreement shall be issued or executed by Agent if,
as a result thereof the aggregate liability of Agent and all other Issuers under
all Letters of Credit and Tri-Party Agreements then outstanding or in effect
(together with the amount of any requested Letter of Credit or Tri-Party
Agreement and the amount of any drawings honored under any Letter of Credit or
Tri-Party Agreement issued hereunder) would exceed the Letter of Credit Sublimit
or (y) the sum of (1) the aggregate outstanding principal balance of all
Revolving Loans plus (2) the aggregate maximum exposure of Revolving Lenders
pursuant to then-outstanding Letters of Credit and Tri-Party Agreements
(including the amount of any requested Letter of Credit or Tri-Party Agreement)
would exceed the Revolving Loan Commitments then in effect.

     

    (b)           Letters of Credit and
Tri-Party Agreements Generally.

     

    (i)    
       The terms of all Letters of Credit and
Tri-Party Agreements, and all documents ancillary thereto, shall be subject to
Agent’s and Issuer’s prior approval.

     

    (ii)           At
least five (5) Business Days prior to the date that any Borrower desires Agent
to issue a Letter of Credit, such Borrower shall deliver to Agent and Issuer a
completed and executed Application and Agreement for Irrevocable Standby Letter
of Credit (each a “Letter of
Credit Application”) in the form attached hereto as Exhibit D or such
other form satisfactory to Issuer.

     

    (iii)           No
Letter of Credit shall be issued or renewed or Tri-Party Agreement executed or
maintained for a term that extends beyond March 1, 2011 unless (a) all Revolving
Lenders so agree in writing and in their sole discretion and (b) at the time of
such issuance or renewal, Borrowers deliver to the Agent immediately available
same day funds equal to 105% of Issuer’s maximum exposure under all outstanding
Letters of Credit and Tri-Party Agreements that expire after March 1, 2011,
which funds shall be held by Agent as cash collateral in the Letter of Credit
Collateral Account for Borrowers’ reimbursement obligations and other
Indebtedness, or (c) at the time of such issuance or renewal, with respect
to any such Letter of Credit or Tri-Party Agreement that expires after the
Maturity Date, Borrowers deliver a back-to-back letter of credit issued by an
Approved Bank with a face amount of 105% of the Issuer’s maximum exposure under
all outstanding Letters of Credit and Tri-Party Agreements that expire after
March 1, 2011.

    
      
         

      

      
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    (iv)         No
Letter of Credit shall be issued or renewed or Tri-Party Agreement executed or
maintained while any Revolving Lender is a Defaulting Lender unless the
Borrowers have delivered to Agent immediately available same day funds equal to
each such Defaulting Lender’s Pro Rata Share of such Letter of Credit or
Tri-Party Agreement, to be held as cash collateral in the Letter of Credit
Collateral Account for Borrowers’ reimbursement obligations and other
Indebtedness; provided that
Borrowers shall not be required to comply with this Section 2.2(b)(iv) if there
is an amount in the Letter of Credit Collateral Account sufficient to cover all
exposure of Issuer to such Defaulting Lender under or pursuant to this
Agreement.

     

    (v)          Each
Revolving Lender hereby unconditionally agrees to make a Revolving Loan to
reimburse Issuer for any drawings honored under any Letter of Credit or
Tri-Party Agreement issued hereunder in an amount equal to such Revolving
Lender’s Pro Rata Share of such drawing.

     

    (vi)         Any
Cash or Cash Equivalent received by a Borrower from a beneficiary of a Letter of
Credit or Tri-Party Agreement in exchange for the issuance of such Letter of
Credit or Tri-Party Agreement which is issued as a replacement or extension of
any Letter of Credit or Tri-Party Agreement identified on Schedule 2.2(a),
shall be paid to the Agent who will distribute and apportion among those
Pre-Petition Lenders that were Non-Defaulting Lenders based on their Pro Rata
Share of the amount of the related Loan or Letter of Credit Advance (as defined
under the Pre-Petition Credit Agreement) such Pre-Petition Lenders
funded.

     

    
      2.3         Use of
Proceeds.

    

     

    (a)           Term
Loans.  The proceeds of the Term Loans shall be used to repay a
corresponding amount (on a dollar-for-dollar basis) of the outstanding
Pre-Petition Balance owing to each Term Loan Lender.

     

    (b)           Revolving
Loans.  The proceeds of the Revolving Loans shall be used by
Borrowers in accordance with the initial Budget with modifications as approved
by Agent pursuant to Section 3.1 and for the specific uses set forth in each
Request for Revolving Loan.

     

    
      2.4         Loans and
Advances

    

     

    (a)           Loans
Generally.  Loans shall be made by Term Lenders and Revolving
Lenders simultaneously and proportionately to their Pro Rata Shares, it being
understood that the obligations of Term Lenders and Revolving Lenders to advance
funds to Borrowers hereunder are several and independent and that no Lender
shall be responsible for the Pro Rata Share of Loans of any Defaulting Lender,
nor shall the Commitment of any Lender be increased or decreased as a result of
the failure of any Defaulting Lender to make advances or otherwise perform
hereunder.

    
      
         

      

      
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    (b)           Revolving
Loans.  Borrowers may request Revolving Loans not more
frequently than once a day (unless otherwise approved by Agent), commencing on
the first Business Day after the Closing Date.

     

    (c)           Request for Revolving
Loan.

     

    (i)           Subject
to the provisions of this Section 2, whenever a Borrower desires to request a
Revolving Loan under this Agreement, such Borrower shall deliver to Agent a
properly completed Request for Revolving Loan, executed by an Authorized Signer,
no later than 11:00 A.M. at least two (2) Business Days in advance of the
proposed Funding Date.  The Request for Revolving Loan shall specify
(i) the proposed Funding Date (which shall be a Business Day), (ii) the amount
of the proposed Revolving Loan, (iii) those specific items in the Budget for
which the Revolving Loan will be used and sufficient evidence of such items
including, without limitation, receipts and invoices and other documentation
consistent with past practice and additional supporting documentation requested
by Agent, (iv) with respect to construction expenses, a description of
construction progress made since the prior Request for Revolving Loan for such
construction and the status of completion of such Project, and (v) a
reconciliation describing the manner in which Revolving Loans made pursuant to
the previous Request for Revolving Loan were spent compared to the proposed use
as set forth in such previous Request for Revolving Loan.  Revolving
Loans shall be in integral multiples of $200,000 but may not be in an amount
less than $50,000.  Each request for an Revolving Loan shall include a
representation that all Revolving Loans made as a result of the previous Request
for Revolving Loan were, or prior to the applicable Funding Date will be,
disbursed in a manner materially consistent with such Request for Revolving Loan
and that any payments made to any trade creditor with respect to pre-petition
payables were Permitted Critical Vendor Payments and that all payments were made
in accordance with the Budget in compliance with Section 6.15.  Each
Request for Revolving Loan shall be delivered to Agent at 201 S. College Street,
8th Floor, Charlotte, NC  28288-5708, Attention: Syndication Agency
Services, facsimile 704-383-7989, with a copy to Agent at 301 South College
Street, Charlotte, NC  28202, Attention:  Nathan Rantala,
Director, e-mail Nathan.Rantala@Wachovia.com (or to such other addresses or
facsimile numbers or electronic mail addresses as Agent may from time-to-time
advise Borrowers by written notice).  Agent shall endeavor to review
and approve each Request for Revolving Loan not later than (1) Business Day
prior to the Funding Date (such approval not to be unreasonably withheld or
delayed), and Agent shall endeavor to advise Borrowers of its approval or
rejection of such Request for Revolving Loan (and the reason therefor) as soon
as reasonably possible; provided that failure
to advise Borrowers of such rejection shall not be deemed an approval of such
Request for Revolving Loan.

     

    (ii)          Prior
to the funding of any Revolving Loan, Borrowers shall notify Agent regarding any
matters known to Borrowers which are included in those matters that Borrowers
are required to certify as true and correct in the applicable Request for
Revolving Loan in the event that such certifications will no longer be true and
correct as of the applicable Funding Date.  The acceptance by
Borrowers of the proceeds of any Revolving Loan shall constitute a
re-certification by Borrowers, as of the applicable Funding Date, as to the
matters to which Borrowers are required to certify in the applicable Request for
Revolving Loan.

    
      
         

      

      
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    (d)          Request for Letters of
Credit and Tri-Party Agreements.  Borrowers shall give Agent
written notice (effective upon receipt) of a Borrower’s request for issuance of
a Letter of Credit or execution of a Tri-Party Agreement hereunder, specifying
the purpose of the Letter of Credit or Tri-Party Agreement, the amount thereof
and the date such Borrower desires it be issued or executed.  Each
such request shall be delivered to Agent only at Agent’s office identified in
Section 12.10 (or to such other address as Agent may from time-to-time advise
Master Borrower by written notice), accompanied by a draft of the proposed
Letter of Credit or Tri-Party Agreement (which must be reasonably acceptable to
Agent) together with the other documents required pursuant to Section 2.2(b)
hereof, all of which shall be delivered to Agent at least five (5) Business Days
in advance of the date Borrower desires the Letter of Credit or Tri-Party
Agreement to be issued or executed.  Each Letter of Credit or
Tri-Party Agreement shall be subject to the limitations and requirements
provided in this Agreement.

     

    (e)          Funding of Revolving
Loans.

     

    (i)           By
3:00 P.M. on the day Agent approves a Request for Revolving Loan for a Revolving
Loan pursuant to Section 2.4(c)(i), Agent shall notify each Revolving Lender by
facsimile or electronic (e-mail) transmission of the proposed
borrowing.  Except as provided in Section 2.4(c)(ii), not later than
noon on the Funding Date specified in the Request for Revolving Loan, each
Revolving Lender shall wire transfer to such account of Agent as Agent shall
designate an amount in immediately available funds equal to the amount of each
Revolving Lender’s Pro Rata Share of the Revolving Loan to be made to or for the
account of Borrowers on such Funding Date.  Agent shall cause such
Revolving Loans to be made available to the requesting Borrower on the Funding
Date pertaining thereto by depositing the amount thereof in the a Cash
Collateral Account designated by the requesting Borrower.

     

    (ii)          Each
Revolving Lender shall make the amount of its Pro Rata Share of the Revolving
Loan available to Agent, in same day funds, not later than noon on the Funding
Date, by wire transfer to Syndication Agency Services, 201 S. College Street,
Charlotte, North Carolina, ABA #053 000 219, Account #5000000061196, Ref.
Orleans Homebuilders, Inc. (or to such other account as Agent may from time to
time advise the Revolving Lenders by written notice).  Unless Agent
shall have been notified by any Revolving Lender prior to any Funding Date in
respect of any requested Revolving Loan that such Lender does not intend to make
available to Agent such Revolving Lender’s Pro Rata Share of the requested
Revolving Loan on such Funding Date, Agent may assume that such Revolving Lender
intends to honor Agent’s demand and Agent in its sole discretion may, but shall
not be obligated to, make available to the requesting Borrower a corresponding
amount on such Funding Date by depositing the proceeds thereof in the designated
Cash Collateral Account of the requesting Borrower with Agent.  In
such event, if a Revolving Lender fails to make its Pro Rata Share of the
requested Revolving Loan available to Agent on the Funding Date, then such
Revolving Lender agrees to pay to Agent forthwith on demand, such Revolving
Lender’s Pro Rata Share of the Revolving Loan so advanced, with interest
thereon, for each day from and including the date such amount is made available
to Borrowers to but excluding the date of payment to Agent, at in the case of a
payment to be made by such Revolving Lender, the Federal Funds
Rate.  If such Revolving Lender pays its Pro Rata Share of such
Revolving Loan to Agent, then the amount so paid shall constitute such Revolving
Lender’s Revolving Loan.  Notwithstanding the foregoing, Agent shall
have no obligation to make Revolving Loans to Borrowers in excess of amounts received from Revolving Lenders
pursuant to this Section 2.4(e) and nothing in the foregoing shall relieve any
Lender of any liability for its failure to fund a Revolving Loan as required by
this Agreement.

    
      
         

      

      
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    (f)           Drawings and Reimbursement
of Letters of Credit.

     

    (i)           In
determining whether to honor any drawing under any Letter of Credit or Tri-
Party Agreement by the beneficiary thereof, the Issuer shall be responsible only
to examine the documents delivered under such Letter of Credit with reasonable
care so as to ascertain whether they appear on their face to be in accordance
with the terms and conditions of such Letter of Credit.  As between
Borrowers and any Issuer, Borrowers assume all risks of the acts and omissions
of, or misuse of the Letters of Credit or Tri-Party Agreements issued by such
Issuer by, the respective beneficiaries of such Letters of Credit or Tri-Party
Agreements.  In furtherance and not in limitation of the foregoing,
such Issuer shall not be responsible for:  (i) the form, validity,
sufficiency, accuracy, genuineness or legal effect of any document submitted by
any party in connection with the application for and issuance of any such Letter
of Credit or Tri-Party Agreement, even if it should in fact prove to be in any
or all respects invalid, insufficient, inaccurate, fraudulent or forged; (ii)
the validity or sufficiency of any instrument transferring or assigning or
purporting to transfer or assign any such Letter of Credit or Tri-Party
Agreement or the rights or benefits thereunder or proceeds thereof, in whole or
in part, which may prove to be invalid or ineffective for any reason; (iii)
failure of the beneficiary of any such Letter of Credit or Tri-Party Agreement
to comply fully with any conditions required in order to draw upon such Letter
of Credit or Tri-Party Agreement; (iv) errors, omissions, interruptions or
delays in transmission or delivery of any messages, by mail, cable, telegraph,
telex or otherwise, whether or not they be in cipher; (v) errors in
interpretation of technical terms; (vi) any loss or delay in the transmission or
otherwise of any document required in order to make a drawing under any such
Letter of Credit or Tri-Party Agreement or of the proceeds thereof; (vii) the
misapplication by the beneficiary of any such Letter of Credit or Tri-Party
Agreement of the proceeds of any drawing under such Letter of Credit or
Tri-Party Agreement; or (viii) any consequences arising from causes beyond the
control of such Issuer, including any act or omission by a government authority,
and none of the above shall affect or impair, or prevent the vesting of, any of
such Issuing Lender’s rights or powers hereunder.

     

    (ii)           In
furtherance and extension and not in limitation of the specific provisions set
forth in the first paragraph of this Section 2.4(f), any action taken or omitted
by any Issuing Lender under or in connection with the Letters of Credit issued
by it or any documents and certificates delivered thereunder, if taken or
omitted in good faith, shall not put such Issuing Lender under any resulting
liability to Borrowers.

    
      
         

      

      
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    (iii)         Notwithstanding
anything to the contrary contained in this Section 2.4(f)(iii), Borrowers shall
retain any and all rights each may have against any Issuing Lender for any
liability arising solely out of the gross negligence or willful misconduct of
such Issuing Lender, as determined by a final judgment of a court of competent
jurisdiction.

     

    (iv)         In
the event an Issuer has determined to honor a drawing under a Letter of Credit
or Tri- Party Agreement issued by it, such Issuer shall (A) first, obtain reimbursement
from the Letter of Credit Collateral Account, and (B) second, to the extent there
are not sufficient funds in the Letter of Credit Collateral Account, immediately
notify Borrowers and Agent, and Borrowers shall reimburse such Issuer (x) if
such notice is received on or before 10:30 A.M. on the date of such drawing, on
such date and (y) if such notice is received after 10:30 A.M. on the date of
such drawing, on the next Business Day, in each case in dollars and in same day
funds equal to the amount of such payment; provided that,
anything contained in this Agreement to the contrary notwithstanding, (i) unless
Borrowers shall have notified Administrative Agent and such Issuing Lender prior
to 11:00 A.M. on the date such drawing is honored that Borrowers intend to
reimburse such Issuer for the amount of such payment with funds other than the
proceeds of Revolving Loans, Borrowers shall be deemed to have given a timely
Request for Revolving Loan to Agent requesting Revolving Lenders to make
Revolving Loans on the Funding Date in an amount equal to the amount of such
payment and (ii) subject to satisfaction or waiver of the conditions specified
in Section 4.3, Revolving Lenders shall, on the Funding Date, make Revolving
Loans in the amount of such payment, the proceeds of which shall be applied
directly by Agent to reimburse such Issuer for the amount of such payment; and
provided further that if for
any reason proceeds of Revolving Loans are not received by such Issuer on the
Funding Date in an amount equal to the amount of such payment, Borrowers shall
reimburse such Issuing Lender, on demand, in an amount in same day funds equal
to the excess of the amount of such payment over the aggregate amount of such
Revolving Loans, if any, which are so received.  Nothing in this
Section 2.4(f)(iv) shall be deemed to relieve any Revolving Lender from its
obligation to make Revolving Loans on the terms and conditions set forth in this
Agreement, and Borrowers shall retain any and all rights it may have against any
Revolving Lender resulting from the failure of such Revolving Lender to make
such Revolving Loans under this Section 2.4(f)(iv).

     

    (v)         Notwithstanding the
foregoing, the amount of Revolving Loans funded with respect to a
particular drawing shall be reduced by the amount available in the Letter of
Credit Collateral Account, which shall be used by to reimburse the Issuer
pursuant to Section 2.4(e) and reduce the Borrowers’ funding obligations under
immediately preceding clause (iv) in an amount equal to such reimbursement from
the Letter of Credit Collateral Account.

     

    (vi)         Further, notwithstanding the
foregoing, if any Letter of Credit or Tri-Party Agreement was issued,
renewed, executed or maintained while any Lender was a Defaulting Lender, then
(x) the Agent shall apply cash collateral from the Letter of Credit Collateral
Account as reimbursement of such Defaulting Lender’s Pro Rata Share of such
Letter of Credit or Tri-Party Agreement and (y) the Revolving Loan deemed made
pursuant to Section 2.2(f)(iv) shall be apportioned among those Revolving
Lenders that were Non-Defaulting Lenders at the time the subject Letter of
Credit or Tri-Party Agreement was issued, renewed, executed or maintained based
on their Pro Rata Share of the amount of the Letter of Credit or Tri-Party
Agreement issued, such that the Issuer is completely reimbursed for the payment
made under such Letter of Credit or Tri-Party Agreement.

    
      
         

      

      
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    (vii)        By
3:00 P.M. on the day Agent has actual knowledge that a drawing or a demand for
payment has been or will be made under a Letter of Credit or Tri-Party
Agreement, Agent shall notify each Revolving Lender by facsimile or electronic
(e-mail) transmission of the proposed drawing or demand.  Not later
than noon on the anticipated date of the honoring of any drawing or demand, as
specified in Agent’s notice to the Lenders, each Revolving Lender shall wire
transfer to such account of Agent as Agent shall designate an amount in
immediately available funds equal to the amount of each Revolving Lender’s Pro
Rata Share of the drawing for the account of Issuer on such Funding
Date.  Agent shall cause such Revolving Loans to be made available to
the requesting Issuer on the Funding Date pertaining thereto by depositing the
amount thereof in the designated account of Issuer.

     

    (viii)       Each
Revolving Lender shall make the amount of its Pro Rata Share of the drawing
available to Agent, in same day funds, not later than noon on the Funding Date,
by wire transfer to Syndication Agency Services, 201 S. College Street,
Charlotte, North Carolina, ABA #053 000 219, Account #5000000061196, Ref.
Orleans Homebuilders, Inc. (or to such other account as Agent may from time to
time advise the Revolving Lenders by written notice).  Agent shall
have no obligation to reimburse Issuer in excess
of amounts received from Revolving Lenders pursuant to this Section 2.4(f)(viii)
and nothing in the foregoing shall relieve any Lender of any liability for its
failure to fund a Revolving Loan as required by this
Agreement.

     

    (ix)    
     The obligation of Borrowers to reimburse each
Issuer for payments under the Letters of Credit and Tri-Party Agreements issued
by it and to repay any Revolving Loans made by Revolving Lenders pursuant to
Section 2.4(f) and the obligations of Revolving Lenders under Section 2.4(f)
shall be unconditional and irrevocable and shall be paid strictly in accordance
with the terms of this Agreement under all circumstances including any of the
following circumstances:

     

    (1)           any
lack of validity or enforceability of any Letter of Credit or Tri-Party
Agreement;

     

    (2)           the
existence of any claim, set-off, defense or other right which Borrowers or any
Lender may have at any time against a beneficiary or any transferee of any
Letter of Credit or Tri-Party Agreement (or any Persons for whom any such
transferee may be acting), any Issuer or other Revolving Lender or any other
Person or, in the case of a Revolving Lender, against Borrowers, whether in
connection with this Agreement, the transactions contemplated herein or any
unrelated transaction (including any underlying transaction between Borrowers or
one of its Subsidiaries and the beneficiary for which any Letter of Credit or
Tri-Party Agreement was procured);

    
      
         

      

      
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    (3)           any
draft or other document presented under any Letter of Credit or Tri-Party
Agreement proving to be forged, fraudulent, invalid or insufficient in any
respect or any statement therein being untrue or inaccurate in any
respect;

     

    (4)           payment
by the applicable Issuer under any Letter of Credit or Tri-Party Agreement
against presentation of a draft or other document which does not substantially
comply with the terms of such Letter of Credit or Tri-Party
Agreement;

     

    (5)           any
adverse change in the business, operations, properties, assets, condition
(financial or otherwise) or prospects of Borrowers or any of their
Subsidiaries;

     

    (6)           any
breach of this Agreement or any other Loan Document by any party
thereto;

     

    (7)           any
other circumstance or happening whatsoever, whether or not similar to any of the
foregoing; or

     

    (8)           the
fact that an Event of Default or a Potential Event of Default shall have
occurred and be continuing;

     

    provided, in each
case, that payment by the applicable Issuer under the applicable Letter of
Credit or Tri-Party Agreement shall not have constituted gross negligence or
willful misconduct of such Issuer under the circumstances in question (as
determined by a final judgment of a court of competent
jurisdiction).

     

    (g)           Loans Attributable to New
York Projects.  Following the recording of a Mortgage that
encumbers a Project in the State of New York (each a “New York Mortgage”) the amount
of each Loan thereafter made (until the aggregate amount of such Loans equals
the “Secured Amount” (as
defined in such Mortgage)) shall be deemed to have been advanced under, and
secured by, such New York Mortgage.  The portion of the Indebtedness
secured by such New York Mortgage shall be reduced only by the last and final
sums that Borrowers repay with respect to the Indebtedness (as provided in this
Section 2.4(g)) and, from and after the date on which the aggregate amount of
the Indebtedness first equals or exceeds the Secured Amount, the portion of the
Indebtedness secured by such New York Mortgage shall not be reduced by any
intervening repayments of the Indebtedness by Borrowers until such time as the
aggregate outstanding Indebtedness has been reduced to an amount less than the
Secured Amount.  So long as the outstanding balance of the
Indebtedness exceeds the Secured Amount of a New York Mortgage, any payments and
repayments of the Indebtedness shall not be deemed applied against, or to
reduce, the portion of the Indebtedness secured by such New York Mortgage and
such payments shall be deemed to reduce only such portions of the Indebtedness
as are secured by Mortgages encumbering real property located outside of the
State of New York, except as provided in the next sentence of this Section
2.4(g).  If at any time when more than one New York Mortgage is in
effect a payment of the Indebtedness is made such that the outstanding principal
amount of the Indebtedness would be less than the Secured Amount of any New York
Mortgage, the amount of such payment shall be deemed applied in reduction of the
Secured Amount of such New York Mortgage as shall be specified by Agent by
written notice to Master Borrower.

    
      
         

      

      
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      2.5         
Interest
Rate.

    

     

    (a)           Subject
to the provisions of Sections 2.13 and 2.16, each Loan shall bear interest at
the applicable Interest Rate then in effect.  The Interest Rate shall
change (i) automatically from time to time effective as of the effective date of
each change in the LIBOR Market Index Rate, and (ii) to the extent allowed
by law, on the effective date of any change in the highest lawful
rate.

     

    (b)           Interest
payable on the Loans shall be calculated on the basis of a 360-day year but
charged for each year or portion thereof that any Loan remains
outstanding.

     

    
      2.6        
 Default
Rate.  Any
principal amount not paid when due (at the Maturity Date, by acceleration or
otherwise) shall bear interest thereafter until paid in full (before or after
judgment), payable on demand, at the Default Rate.

    

     

    
      2.7        
 Fees Payable by
Borrowers.  Borrowers
agree to pay to the Agent, for the account of Lenders, as consideration for the
agreement of the Lenders to make available the Commitments, the following Loan
Fees:

    

     

    (a)           Up-Front
Fee.  On the Interim Order Date, Borrowers shall have paid to
Agent for the account of those Revolving Lenders executing this Agreement an
amendment fee (the “Up-Front
Fee”) equal to 1.50% (that is, 150 “basis points”) of the aggregate
amount of such Revolving Lender’s Pro Rata Share of the Revolving Loan
Commitments as of the Interim Order Date.

     

    (b)           Unused
Fee.

     

    (i)           Commencing
on April 15, 2010 (or within three (3) days upon receipt of invoice, whichever
is later), and continuing on the 15th day of each succeeding month thereafter
through and including the month(or within three (3) days upon receipt of
invoice, whichever is later) in which the Maturity Date occurs and on the
Maturity Date, Borrowers shall pay, to Agent for the account of the Revolving
Lenders an unused fee (the “Unused Fee”) in arrears
through (and including) the last day of the immediately preceding calendar
month, at the rate of 1.00% per annum (that is, 100 “basis points”) on the
average daily unused portion of the Revolving Loan Commitment (excluding the
amount of outstanding Letters of Credit and Tri-Party Agreements).

     

    (ii)           The
Unused Fee shall be calculated on the basis of a 360-day year.  Unused
Fees shall be allocated to the Revolving Lenders in accordance with their
respective Pro Rata Shares at the time payment of each Unused Fee is
due.

    
      
         

      

      
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    (c)           Letters of Credit and
Tri-Party Agreement Fee.  Borrowers shall pay quarterly, in
arrears on the fifteenth (15th) day of each Fiscal Quarter during such time that
any Letter of Credit or Tri-Party Agreement remains outstanding, a fee (the
“Letter of Credit Fee”)
based on the amount available to be drawn under such Letter of Credit or
Tri-Party Agreement during the preceding Fiscal Quarter.  Such fee
shall be calculated on the basis of a 360-day year at the per annum rate equal
to the Applicable Spread applicable to Revolving Loans.  From the
Letter of Credit Fee (and for the avoidance of doubt does not constitute an
additional amount to be paid by Borrowers), each Issuer shall also receive a
Letter of Credit and Tri-Party Agreement issuance fee (the “Issuance Fee”) calculated at
the rate of 0.125% per annum (that is, 12.5 “basis points”) of the amount of
such Issuer’s exposure under the Letters of Credit and Tri-Party Agreements
executed by such Issuer for so long as any portion of such Letters of Credit and
Tri-Party Agreements remain undrawn, and the balance of all such fees paid by
Borrowers shall be allocated to the Revolving Lenders in accordance with their
respective Pro Rata Shares at the time payment such fees is due.  The
provisions of this Section 2.7(c) shall supersede all agreements heretofore made
with regard to fees pertaining to Letters of Credit and Tri-Party Agreements
identified on Schedule 2.2(a)
between any Borrower and the Issuers thereof.  In addition to the
Issuance Fee, and not to be paid from the Letter of Credit Fee, Borrowers shall
also pay to each Issuer, for its own account, such Issuer’s letter of credit
issuance, renewal, amendment, delivery and billing fees that are such Issuer’s
standard fees pertaining thereto at the time a Letter of Credit is issued,
renewed or amended.

     

    (d)           Unpaid Loan
Fees.  In the event that Borrowers fail to pay the same when
due, Revolving Lenders may disburse any Loan Fees then due, in whole or in part,
either on the dates as provided above or at any time or times thereafter,
without the consent of Borrowers and without receiving a Request for Revolving
Loan and such disbursements shall be deemed to be Revolving Loans.  If
any such Loan Fee is advanced in the manner described in the preceding sentence,
interest at the Interest Rate as provided herein shall accrue upon the Revolving
Loan made in connection with unpaid Loan Fees.

     

    
      2.8         
 Repayment.

    

     

    (a)           Interest.

     

    (i)           Term
Loans.  Commencing on April 15, 2010 (or within three (3) days
upon receipt of invoice, whichever is later), and continuing on the fifteenth
(15th) day of
each succeeding month (or within three (3) days upon receipt of invoice,
whichever is later) thereafter through and including the month in which the
Maturity Date occurs and on the Maturity Date, the Borrowers shall pay to the
Agent interest at the applicable Interest Rate, in arrears through (and
including) the last day of the immediately preceding calendar month, on the
aggregate outstanding principal balance of the Term Loans.

     

    (ii)          Revolving
Loans.  Commencing on April 15, 2010 (or within three (3) days
upon receipt of invoice, whichever is later), and continuing on the 15th day of
each succeeding month (or within three (3) days upon receipt of invoice,
whichever is later) thereafter through and including the month in which the
Maturity Date occurs and on the Maturity Date, the Borrowers shall pay to the
Agent interest at the applicable Interest Rate, in arrears through (and
including) the last day of the immediately preceding calendar month, on the
aggregate outstanding principal balance of the Revolving Loans.

     

    
      
        
        

      

      
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    (b)           Term Loan
Principal.

     

    (i)           Borrowers
shall prepay the principal amount of the Term Loans, as required from time to
time pursuant to Section 2.10.

     

    (ii)          The
entire outstanding principal balance of all Term Loans, together with all
accrued interest thereon and other amounts payable by Borrowers pursuant to this
Agreement, shall be due and payable without notice or demand on the Maturity
Date.

     

    (c)           Revolving Loan
Principal.

     

    (i)           Borrowers
shall prepay the principal amount of the Revolving Loans as required from time
to time pursuant to Section 2.10.

     

    (ii)          The
entire outstanding principal balance of all Revolving Loans, together with all
accrued interest thereon and other amounts payable by Borrowers pursuant to this
Agreement, shall be due and payable without notice or demand on the Maturity
Date.

     

    
      2.9         
Commitment
Reductions.

    

     

    (a)           Voluntary Reduction of
Revolving Loan Commitments.  Master Borrower shall have the
right, at any time after the Closing Date, to terminate, upon not less than ten
(10) days’ prior written notice to Agent, or to reduce, upon not less than three
(3) Business Days’ prior written notice to Agent, the Revolving Loan
Commitments, provided that the Revolving Loan Commitments may not be so reduced
by Master Borrower to an amount that is less than the sum of the aggregate
principal balance of all Revolving Loans then outstanding plus 105% of the
aggregate amount of liabilities under all outstanding Letters of Credit and
Tri-Party Agreements.  Any voluntary termination or reduction in the
Revolving Loan Commitments shall permanently reduce the Revolving Loan
Commitments.  If Borrowers desire to reduce the Revolving Loan
Commitments as aforesaid, Borrowers shall execute and deliver to Agent such
documents and instruments as Agent shall reasonably require in connection with
such reduction.  Each such reduction of the Revolving Loan Commitments
shall not result in a reduction of the Letter of Credit Sublimit.  For
the avoidance of doubt, subject to the terms of this Section 2.9(a), the Master
Borrower shall have the right to specifically reduce the Letter of Credit
Sublimit to an amount not less than 105% of the aggregate amount of liabilities
under all outstanding Letters of Credit and Tri-Party Agreements.

     

    (b)           Pro Rata Reductions of
Revolving Loan Commitments.  Any reduction of the Revolving
Loan Commitments pursuant to this Section 2.9 shall be in proportion to each
Revolving Lender’s Pro Rata Share.

     

    
                     
2.10          Prepayments.

    

     

    (a)           Voluntary
Prepayments.  Borrowers may make prepayments (full or partial)
with respect to the Indebtedness from time to time without penalty or premium to
be applied to the Indebtedness in accordance with Section
2.10(b)(vi).  The acceptance by Lenders of any prepayment at a time
when an Event of Default has occurred and is continuing shall not constitute a
waiver, release or accord and satisfaction thereof or of any rights in respect
thereto by the Agent or Lenders.

    
      
         

      

      
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    (b)           Mandatory
Prepayments.

     

    (i)           Drawing under Letter of
Credit or Tri-Party Agreement.  If a Revolving Loan is made or
a drawing is made under any Letter of Credit or Tri-Party Agreement and any
Revolving Lender fails to deliver to Agent, as required by the terms of this
Agreement, such Revolving Lender’s Pro Rata Share of the Revolving Loan, if any,
that results from such a drawing and no other Revolving Lender or Lenders elect
to fund the Defaulting Lender’s share of such Revolving Loan, Borrowers shall,
within one (1) Business Day after notice from Agent, pay to Agent for the
account of Issuer the amount of such Defaulting Lender’s Pro-Rata Share of the
Revolving Loan or drawing, net of any amount in
the Letter of Credit Collateral Account relating to such Defaulting Lender and
the subject Letter of Credit or Tri-Party Agreement.  No
payment by Borrowers of a Defaulting Lender’s Pro Rata Share of a Revolving Loan
shall be deemed to constitute a cure of the default by the Defaulting Lender of
its obligations under this Agreement to fund its Pro Rata Share of each
Revolving Loan.  Any amount payable by
any Borrower pursuant to a drawn Letter of Credit or Tri-Party Agreement shall
be automatically added to the Budget to the extent the performance subject to
such Letter of Credit or Tri-Party Agreement is not already in the Budget and
shall be deemed to be a modification approved by Agent and the applicable
Lenders.

     

    (ii)          Revolving Loans, Letters of
Credit and Tri-Party Agreements in Excess of Revolving Loan Sublimit or
Revolving Loan Commitments.

     

    (1)           At
any time the unpaid principal balance of outstanding Revolving Loans (excluding
Loans resulting from a drawing under a Letter of Credit or Tri-Party Agreement)
exceeds the Revolving Loan Sublimit, Borrowers (without any requirement of
notice from Agent or any Lender) shall promptly (but not later than one (1)
Business Day thereafter) make a principal payment on account of the Revolving
Loans in an amount that reduces the outstanding principal balance of all
Revolving Loans to an amount that is equal to or less than the Revolving Loan
Sublimit.

     

    (2)           At
any time that the unpaid principal balance of outstanding Revolving Loans plus
all liability under Letters of Credit and Tri-Party Agreements exceeds the
Revolving Loan Commitments, Borrowers (without any requirement of notice from
Agent or any Lender) shall promptly (but not later than one (1) Business Day
thereafter) make a principal payment on account of the Revolving Loans in an
amount that reduces the outstanding principal balance of all Revolving Loans
plus all exposure under Letters of Credit and Tri-Party Agreements to an amount
that is equal to or less than the Revolving Loan Commitments.

     

    (iii)         Refund
Collateral.  Within one (1) Business Day after the date of
receipt of any Refund Collateral by Agent or any Borrower, the Borrowers shall
prepay the Loans in an aggregate amount equal to the Refund
Collateral.  Agent shall provide notice of receipt of such Refund
Collateral to Master Borrower.

    
      
         

      

      
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    (iv)         Prepayments from Net
Insurance/Condemnation Proceeds.  Within one (1) Business Day
after the date of receipt by Agent or any Borrower of any Net
Insurance/Condemnation Proceeds that are required to be applied to prepay the
Loans pursuant to the provisions of Section 6.6(m), Borrowers shall prepay
the Loans in such amount.

     

    (v)         Net Asset Sale
Proceeds.  On the date of receipt by Agent or any Borrower of
any Net Asset Sale Proceeds, Borrowers shall prepay the Loans in the amount of
such Net Asset Sale Proceeds.

     

    (vi)        Application of
Proceeds.  Subject to the terms of the Orders, the payments
required to be made pursuant to this Section 2.10 and elsewhere hereunder shall
be applied in the following order:

     

    (1)           with
respect to any Asset Sale outside of the ordinary course, to the outstanding
principal amount of, premium or penalty, if any, and interest on any Debt that
is secured by a Permitted Priority Lien;

     

    (2)           to
the payment of all costs and expenses of such sale, collection or other
realization, all other expenses, liabilities and advances made or incurred by
Agent in connection therewith, and all amounts for which Agent is entitled to
compensation (including the fees described in Section 2.7 and costs of
Appraisals), reimbursement and indemnification under any Loan Document and all
advances made by Agent thereunder for the account of the applicable Borrower,
and to the payment of all costs and expenses paid or incurred by Agent in
connection with the Loan Documents, all in accordance with Sections 11.6 and
12.15 and the other terms of this Agreement and the Loan Documents;

     

    (3)           to
repay accrued and currently due and payable interest on the Revolving
Loans;

     

    (4)           to
repay accrued and currently due and payable interest on the Term Loans (pari passu as between the
Tranche 1 Term Loans and Tranche 2 Term Loans);

     

    (5)           with
respect to the proceeds of any Asset Sale in the ordinary course, to be held by
Agent until no later than 4:00 P.M. of each Friday to fund any Request for
Revolving Loan;

     

    (6)           to
repay principal amounts outstanding under the Revolving Loans;

     

    (7)           to
fund the Carve-Out Collateral Account to provide Cash Collateral for the
Carve-Out until the amount in such account is equal to the
Carve-Out;

    
      
         

      

      
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    (8)           to
fund the Letter of Credit Collateral Account to provide Cash Collateral for
issued but undrawn, or the future issuance of, Letters of Credit and Tri-Party
Agreements until the amount in such account is equal to the aggregate amount of
the Letter of Credit Sublimit;

     

    (9)           to
fund the Revolving Loan Collateral Account to provide Cash Collateral for the
Revolving Loan Commitments (excluding the amount in the Letter of Credit
Collateral Account) until the amount in such account is equal to the Revolving
Loan Commitments (excluding the amount in the Letter of Credit Collateral
Account);

     

    (10)         to
repay principal amounts pari
passu as between Tranche 1 and Tranche 2 outstanding under the Term
Loans;

     

    (11)         to
repay Pre-Petition Debt; and

     

    (12)         to
the payment to or upon the order of such Borrower or to whosoever may be
lawfully entitled to receive the same or as a court of competent jurisdiction
may direct.

     

    
      2.11         General Payment
Provisions.

    

     

    (a)           Manner, Time and Application
of Payment.  All payments of principal, interest and fees
hereunder and under the Notes shall be made when due by Borrowers without
notice, set-off or counterclaim and in immediately available same day funds and
delivered to Agent not later than 1:00 P.M. eastern time on the date due for the
account of Lenders.  Funds received by Agent after that time shall be
deemed to have been paid by Borrowers on the next succeeding Business
Day.  All such payments shall be made by wire transfer to the account
identified in Section 2.4(e)(ii), or to such other account as Agent may from
time to time specify by written notice to Borrowers.  Unless Agent
shall have received notice from Master Borrower prior to the date on which any
payment is due hereunder or under the Notes to the effect that Borrowers will
not make such payment, Agent may assume that Borrowers have made such payment on
the date such payment is due and may, in reliance upon such assumption,
distribute to the Lenders their Pro Rata Share of any such
payment.  If Agent makes such distribution to Lenders and Borrowers
have not in fact made such payment, then each of the Lenders severally agrees to
repay to Agent forthwith on demand the amount so distributed to such Lender,
with interest thereon, at the Federal Funds Rate, for each day from and
including the date such amount is made to it to but excluding the date of
payment to Agent.

     

    (b)           Apportionment of
Payments.  Aggregate principal and interest payments made by
Borrowers in respect of Loans shall be apportioned proportionately to each
Lender in accordance with each Lender’s respective Pro Rata Share of the
applicable type of Loan.  Agent shall, within one (1) Business Day,
distribute to each Lender its Pro Rata Share of all payments received by Agent
for the benefit of Lenders, and if any such payment is not so distributed, Agent
shall pay to the intended recipient thereof interest on the unpaid amount
thereof at the Federal Funds rate until such payment is paid.

    
      
         

      

      
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    (c)           Conditional
Payment.  Borrowers agree that checks and other instruments
received by Agent on behalf of Lenders or by any Lender in payment of or on
account of the Indebtedness constitute only conditional payment until such items
are actually paid to Agent or such Lender.

     

    (d)           Charging
Accounts.  Whenever Borrowers are obligated, pursuant to
Section 2 hereof, or pursuant to the Notes or any other Loan Document, to make
payments of any nature to Agent or Lenders, Agent shall be entitled, and each
Borrower, by its execution of the Notes, authorizes Agent, to withdraw against
any Depository Account, the amount of such fees, expenses, interest or other
amounts due.  Agent shall deliver to the subject Borrower a notice
setting forth, in reasonable detail, the amount of the fees, expenses and/or
payments paid by such withdrawal, and the name or number of the account or
accounts from which the withdrawal was made. Any such charge shall be subject to
the provisions of Section 11.14 hereof relating to the sharing of recoveries
among Lenders.

     

    
      2.12        
 Payment Administration and
Cash Management.

    

     

    (a)           Cash
Management.  The Borrowers shall implement a cash management
system acceptable to the Agent.  The Borrowers shall, among other
things: (i) deposit all Cash and other Cash Equivalents owned by the
Borrowers in one or more depository accounts with the Agent (the “Depository Accounts”); (ii)
indicate to all appropriate parties that funds from any Asset Sale shall be
delivered directly to Agent; (iii) direct all of Borrowers’ account debtors
to deposit any and all proceeds of Collateral into the Depository Accounts; (iv)
irrevocably authorize and direct any banks which currently maintain the
Borrowers’ initial receipt of cash, checks and other items to promptly wire
transfer all available funds to a Depository Accounts and to close all such
accounts other than the Depository Accounts; and (v) promptly cause to be
deposited all proceeds of Collateral received by any of the Borrowers, and remit
all cash and other monies, as and when received, into the Depository
Accounts.

     

    (b)           Revolving Loan Collateral
Account.  Agent is hereby authorized to establish and maintain
a Special Purpose Collateral Account number 2000033159395 designated as
“Greenwood Financial Revolving Loan Collateral Account” (the “Revolving Loan Collateral
Account”).

     

    (c)           Letter of Credit Collateral
Account.  Agent is hereby authorized to establish and maintain
a Special Purpose Collateral Account number 2000033159434 designated as
“Greenwood Financial Letter of Credit Collateral Account” (the “Letter of Credit Collateral
Account”).

     

    (d)           Cash Collateral
Account.  Agent is hereby authorized to establish and maintain
a Special Purpose Collateral Account number 2000033159418 designated as
“Greenwood Financial Cash Collateral Account” (the “Cash Collateral
Account”).

     

    (e)           Carve-Out Collateral
Account.  Agent is hereby authorized to establish and maintain
a Special Purpose Collateral Account number 2000033159405 designated as
“Greenwood Financial Carve-Out Collateral Account” (the “Carve-Out Collateral
Account”).

    
      
         

      

      
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    (f)           Reserved.

     

    (g)           Special Purpose Collateral
Accounts.  Each Special Purpose Collateral Account shall be a
blocked established and maintained by Agent at its office at 201 S. College
Street, 8th Floor,
Charlotte, NC 28288-5708, Attention: Syndicated Agency Services, facsimile
704-383-7989 as under the sole dominion and control of Agent.  All
amounts at any time held in a Special Purpose Collateral Account shall be
beneficially owned by the Borrower named as the owner thereof but shall be held
in the name of Agent hereunder, as a funding source as set forth herein and as
collateral security for the Indebtedness upon the terms and conditions set forth
herein.  The Borrowers shall have no right to withdraw, transfer or,
except as expressly set forth herein, otherwise receive any funds deposited into
any Special Purpose Collateral Account.  Anything contained herein to
the contrary notwithstanding, each Special Purpose Collateral Account shall be
subject to such applicable laws, and such applicable regulations of the Board of
Governors of the Federal Reserve System and of any other appropriate banking or
government authority, as may now or hereafter be in effect.  All
deposits of funds in any Special Purpose Collateral Account shall be made by
wire transfer (or, if applicable, by intra-bank transfer from another account of
Borrowers) of immediately available funds, in each case addressed in accordance
with instructions of Agent.  Borrowers shall, promptly after
initiating a transfer of funds to any Special Purpose Collateral Account, give
notice to Agent by telefacsimile of the date, amount and method of delivery of
such deposit.  Cash held by Agent in any Special Purpose Collateral
Account shall not be invested by Agent but instead shall be maintained as a cash
deposit in such Special Purpose Collateral Account pending application thereof
as elsewhere provided in this Agreement.  To the extent permitted
under Regulation Q of the Board of Governors of the Federal Reserve System, any
Cash held in any Special Purpose Collateral Account shall bear interest at the
standard rate paid by Agent to its customers for deposits of like amounts and
terms.  Subject to Agent’s rights hereunder, any interest earned on
deposits of Cash in any Special Purpose Collateral Account shall be deposited
directly in, and held in, such Special Purpose Collateral Account.

     

    
      2.13         
LIBOR
Provisions.

    

     

    (a)           Inability to Determine
Interest Rate.  If at any time Agent shall have reasonably
determined (which determination shall be conclusive and binding upon Borrowers)
that, by reason of circumstances affecting the relevant market, adequate and
reasonable means do not exist for ascertaining the 1-month LIBOR Rate, Agent
shall give facsimile, telephonic or written notice thereof to Master Borrower
and the Lenders as soon as practicable thereafter. If such notice is given, and
until such notice has been withdrawn by Agent, all Loans shall bear interest at
the Alternate Interest Rate rather than by reference to the LIBOR Market Index
Rate.

     

    (b)           Illegality or
Impracticality.  If any Lender reasonably determines that
maintenance of its Loans on which interest is charged at a rate based on the
LIBOR Market Index Rate at a Lending Office would (i) violate any applicable
law, rule, regulation, or directive, whether or not having the force of law, or
(ii) has become impracticable, or would cause such Lender material hardship, as
a result of contingencies occurring after the date of this Agreement which
materially and adversely affect the London interbank market or the position of
such Lender in that market, then Agent shall give facsimile, telephonic or
written notice thereof to Master Borrower and the Lenders as soon as practicable
thereafter. If such notice is given, and until such notice has been withdrawn by
Agent, all Loans shall bear interest at the Alternate Interest Rate rather than
by reference to the LIBOR Market Index Rate.

    
      
         

      

      
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      2.14         
Notes.  The
obligation of Borrowers to repay all Tranche 1 Term Loans, and all interest and
other charges thereon, may be evidenced by the Tranche 1 Term
Notes.  The obligation of Borrowers to repay all Tranche 2 Term Loans,
and all interest and other charges thereon, may be evidenced by the Tranche 2
Term Notes.  The obligation of Borrowers to repay all Revolving Loans,
and all interest and other charges thereon, may be evidenced by the Revolving
Notes.  If so requested by any Lender by written notice to Master
Borrower (with a copy to Agent) at least two (2) Business Days prior to the
Closing Date or at any time thereafter, Borrowers shall execute and deliver to
each Lender one Tranche 1 Term Note in the principal amount of such Lender’s
Tranche 1 Term Loan Commitment, one Tranche 2 Term Note in the principal amount
of such Lender’s Tranche 2 Term Loan Commitment, and one Revolving Note in the
principal amount of such Lender’s Revolving Loan Commitment.

    

     

    
      	
               
      

            	
              2.15

            	
              Taxes.

            

    

     

    (a)           Any
and all payments by or on account of any obligation of Borrowers hereunder or
under any other Loan Document shall be made free and clear of and without
reduction or withholding for any Indemnified Taxes or Other Taxes, provided that
if Borrowers shall be required by applicable law to deduct any Indemnified Taxes
or Other Taxes from such payments, then (i) the sum payable shall be
increased as necessary so that after making all required deductions (including
deductions applicable to additional sums payable under this Section 2.15), Agent
or the applicable Lender, as the case may be, receives an amount equal to the
sum it would have received had no such deductions been made, (ii) Borrowers
shall make such deductions and (iii) Borrowers shall timely pay the full
amount deducted to the relevant Governmental Authority in accordance with
applicable law.

     

    (b)           In
addition, Borrowers shall timely pay any Other Taxes to the relevant
Governmental Authority in accordance with applicable law.

     

    (c)           Borrowers
shall indemnify Agent and each Lender, within ten (10) days after demand
therefor, for the full amount of any Indemnified Taxes or Other Taxes paid by
Agent or such Lender, as the case may be, on or with respect to any payment by
or on account of any obligation of any Borrower hereunder (including Indemnified
Taxes or Other Taxes imposed or asserted on or attributable to amounts payable
under this Section 2.15) and any penalties, interest and reasonable expenses
arising therefrom or with respect thereto, whether or not such Indemnified Taxes
or Other Taxes were correctly or legally imposed or asserted by the relevant
Governmental Authority.  A certificate as to the amount of such
payment or liability delivered to Master Borrower by a Lender (with a copy to
Agent), or by Agent on its own behalf or on behalf of a Lender, shall be
conclusive absent manifest error.

     

    (d)           As
soon as practicable after any payment of Indemnified Taxes or Other Taxes by
Borrowers to a Governmental Authority, Borrowers shall deliver to Agent the
original or a certified copy of a receipt issued by such Governmental Authority
evidencing such payment, a copy of the return reporting such payment or other
evidence of such payment reasonably satisfactory to Agent.

    
      
         

      

      
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    (e)           Any
Lender that is entitled to an exemption from or reduction of withholding Tax
with respect to payments under this Agreement shall deliver to Master Borrower
(with a copy to Agent), at the time such Lender becomes a party to this
Agreement and at any other time or times reasonably requested by Master
Borrower, such properly completed and executed documentation prescribed by
applicable law or reasonably requested by Master Borrower as will permit such
payments to be made without withholding or at a reduced rate.  Agent
and each Lender that is a “United States person,” as defined in Section
7701(a)(30) of the Code (other than Persons that are corporations or otherwise
exempt from United States backup withholding Tax), shall deliver at the time(s)
and in the manner(s) prescribed by applicable law, to Master Borrower and Agent
(as applicable), a properly completed and duly executed United States Internal
Revenue Service Form W-9, or any successor form, certifying that such Person is
exempt from United States backup withholding Tax on payments made
hereunder.

     

    (f)           If
Agent or a Lender determines, in its sole discretion, that it has received a
refund of any Taxes or Other Taxes as to which it has been indemnified by
Borrowers or with respect to which Borrowers have paid additional amounts
pursuant to this Section 2.15, it shall pay to Master Borrower an amount equal
to such refund (but only to the extent of indemnity payments made, or additional
amounts paid, by Borrowers under this Section 2.15 with respect to the Taxes or
Other Taxes giving rise to such refund), net of all out-of-pocket expenses of
Agent or such Lender, as the case may be, and without interest
(other  than any interest paid by the relevant Governmental Authority
with respect to such refund), provided that Borrowers, upon the request of Agent
or such Lender, agree to repay the amount so paid over to Master Borrower (plus
any penalties, interest or other charges imposed by the relevant Governmental
Authority) to Agent or such Lender in the event Agent or such Lender is required
to repay such refund to such Governmental Authority.  This Section
2.15 shall not be construed to require Agent or any Lender to make available its
Tax returns (or any other information relating to its Taxes that it deems
confidential) to Master Borrower, any Borrower or any other Person.

     

    
      	
               
      

            	
              2.16

            	
              Increased Costs;
      Capital Adequacy.

            

    

     

    (a)           If
any Change in Law shall: (i) impose, modify or deem applicable any reserve,
special deposit, compulsory loan, insurance charge or similar requirement
against assets of, deposits with or for the account of, or credit extended or
participated in by, any Lender (except the Eurocurrency Reserve Requirements);
(ii) subject any Lender to any tax of any kind whatsoever with respect to this
Agreement, any participation in any Loan made by it, or change the basis of
taxation of payments to such Lender in respect thereof (except for Indemnified
Taxes or Other Taxes covered by Section 2.15 and the imposition of, or any
change in the rate of, any Excluded Taxes payable by such Lender); or
(iii) impose on any Lender or the London interbank market any other
condition, cost or expense affecting this Agreement or Loans made by such Lender
or participation therein; and the result of any of the foregoing shall be to
increase the cost to such Lender of making or maintaining any Loan (or of
maintaining its obligation to make any such Loan), or to reduce the amount of
any sum received or receivable by such Lender hereunder (whether of principal,
interest or any other amount) then, upon request of such Lender, Borrowers will
pay to such Lender such additional amount or amounts as will compensate such
Lender for such additional costs incurred or reduction
suffered.

    
      
         

      

      
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    (b)           If
any Lender determines that any Change in Law affecting such Lender or any
Lending Office of such Lender or such Lender’s holding company, if any,
regarding capital requirements has or would have the effect of reducing the rate
of return on such Lender’s capital or on the capital of such Lender’s holding
company, if any, as a consequence of this Agreement, the Commitment of such
Lender or the Loans made by such Lender to a level below that which such Lender
or such Lender’s holding company could have achieved but for such Change in Law
(taking into consideration such Lender’s policies and the policies of such
Lender’s holding company with respect to capital adequacy), then from time to
time Borrowers will pay to such Lender such additional amount or amounts as will
compensate such Lender or such Lender’s holding company for any such reduction
suffered.

     

    (c)           A
certificate of a Lender setting forth the amount or amounts necessary to
compensate such Lender or its holding company, as the case may be, as specified
in Section 2.16(a) or 2.16(b) and delivered to Master Borrower shall be
conclusive absent demonstrable error.  Borrowers shall pay such Lender
the amount shown as due on any such certificate within thirty (30) days
after receipt thereof.

     

    (d)           Failure
or delay on the part of any Lender to demand compensation pursuant to this
Section 2.16 shall not constitute a waiver of such Lender’s right to demand such
compensation; provided
that Borrowers shall not be required to compensate a Lender pursuant to this
Section for any increased costs incurred or reductions suffered more than nine
(9) months prior to the date that such Lender notifies Master Borrower of the
Change in Law giving rise to such increased costs or reductions and of such
Lender’s intention to claim compensation therefor (except that, if the Change in
Law giving rise to such increased costs or reductions is retroactive, then the
nine (9) month period referred to above shall be extended to include the period
of retroactive effect thereof).

     

    
      2.17      
 Survival
of Indemnity.  The
obligations of Borrower under Sections 2.15 and 2.16 shall survive payment
of the Indebtedness and termination of the Agreement.

    

     

    
      2.18      
 Replacement
of Lenders.  If
any Lender requests compensation under Section 2.16, or if Borrowers are
required to pay any additional amount to any Lender or any Governmental
Authority for the account of any Lender pursuant to Section 2.15, then Borrowers
may, at their sole expense and effort, upon notice by Master Borrower to such
Lender and Agent, require such Lender to assign and delegate, without recourse
(in accordance with and subject to the restrictions contained in, and consents
required by, Section 12.9 hereof), all of its interests, rights and obligations
under this Agreement and the related Loan Documents to an Eligible Assignee that
shall assume such obligations (which Eligible Assignee may be another Lender, if
a Lender accepts such assignment); provided
that: (i) Agent shall have received from the assigning Lender or assignee the
assignment fee specified in Section 12.9 of the Agreement; (ii) such Lender
shall have received payment of an amount equal to the outstanding principal of
its Loans, accrued interest thereon, accrued fees and all other amounts payable
to it hereunder and under the other Loan Documents from the assignee (to the
extent of such outstanding principal and accrued interest and fees) or Borrowers
(in the case of all other amounts); (iii) in the case of any such assignment
resulting from a claim for compensation under Section 2.15 or payments required
to be made pursuant to Section 2.16, such assignment will result in a reduction
in such compensation or payments thereafter; and (iv) such assignment does not
conflict with applicable law.  A Lender shall not be required to make
any such assignment or delegation if, prior thereto, as a result of a waiver by
such Lender or otherwise, the circumstances entitling Borrowers to require such
assignment and delegation cease to apply.

    

     

    
      
        
        

      

      
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              2.19

            	
              Lending
      Office.

            

    

     

    (a)           Each
Lender may book its Pro Rata Share of Loans at any Lending Office selected by
such Lender and may change its Lending Office from time to time. All terms of
this Agreement shall apply to any such Lending Office and the Loans and Notes
issued hereunder shall be deemed held by each Lender for the benefit of any such
Lending Office.  Each Lender may, by written notice to Agent and
Master Borrower, designate replacement or additional Lending Offices through
which Loans will be made by it and for whose account Loan payments are to be
made.

     

    (b)           If
any Lender requests compensation under Section 2.16, or requires Borrowers to
pay any additional amount to any Lender or any Governmental Authority for the
account of any Lender pursuant to Section 2.15, then such Lender, unless
directed by Master Borrower not to do so, shall use reasonable efforts to
designate a different Lending Office for funding or booking its Loans hereunder
or to assign its rights and obligations hereunder to another of its offices,
branches or affiliates, if, in the judgment of such Lender, such designation or
assignment (i) would eliminate or reduce amounts payable pursuant to
Section 2.15 or Section 2.16, as the case may be, in the future and
(ii) would not subject such Lender to any unreimbursed cost or expense and
would not otherwise be disadvantageous to such Lender.  Borrowers
hereby agree to pay all reasonable costs and expenses incurred by any Lender in
connection with any such designation or assignment.

     

    
      	
              SECTION
      3.

            	
              MATTERS
      RELATING TO REAL ESTATE

            

    

     

    
      	
               
      

            	
              3.1

            	
              Budget.

            

    

     

    (a)                 Initial
Budget.  The Borrowers’ initial budget regarding its use of
Revolving Loans (as updated pursuant to Section 3.1(c), the “Budget”)
shall be the Budget delivered on the Closing Date and is attached hereto as
Exhibit
E.  Each Budget shall be for the thirteen (13) weeks following
the date of delivery of such Budget.  All updated versions of the
Budget shall be approved by the CRO, satisfactory to Agent and modeled on the
form attached hereto as Exhibit
E.

     

    (b)                 Content
of Budget.  The Budget shall set forth for each week of the
13-week period detail relating to the Business, including the costs and timing
of payment of such costs pertaining to the construction and sale of Real Estate,
Lots and Units.  The associated underlying assumptions for the
Borrowers’ anticipated uses of the Revolving Loans shall be subject to approval
by the Agent.  For the avoidance of doubt, initially and all updates
of the Budget must be satisfactory to Agent in all respects, including the
amount and the proposed recipient of any proposed payment or use of cash
collateral or proceeds of Revolving Loans.  Among other things, the
Budget shall include:

     

    
      
        
        

      

      
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    (i)           anticipated
receipts from the retail sale of Units, from bulk sales of Lots and Units, and
from other Asset Sales;

     

    (ii)          payments
of accounts payable that are Permitted Critical Vendor
Payments;

     

    (iii)         overhead
and administrative expenses to include insurance, utilities, rents, leases,
sales, marketing and other general and administrative
costs;

     

    (iv)         periodic
advances for payroll, commissions and other compensation-related
costs;

     

    (v)     
    real estate taxes, insurances, homeowners association
costs and other recurring community-related costs and other costs that are the
obligation of the Borrowers;

     

    (vi)    
    Cost-to-Complete of Units for which construction is
permitted under Section 7.20;

     

    (vii)   
    costs required for the preservation of entitlements and
platments;

     

    (viii)       limited
amounts for costs associated with sales and marketing of Lots or
Units;

     

    (ix)         amounts
necessary to fund the Carve-Out Collateral Account equal to the amount of the
Carve-Out;

     

    (x)          restructuring
costs to include Borrowers professionals, professionals of the Committee and
other bankruptcy and financing costs;

     

    (xi)         a
best estimate of the forecasted week ending book balance of cash;
and

     

    (xii)        sufficient
information to identify and quantify the cash flow impact of planned cost
savings, a critical vendor program, headcount reductions and other milestones,
to the extent submitted by the CRO pursuant to Section
3.3(b)(iv).

     

    (c)           Modifications
to the Budget.  The Budget shall be updated from time to time
by delivering an updated Budget pursuant to Section 6.1(f).  Revisions
to the Budget may include provisions for customer changes and upgrades, updated
Cost-to-Complete, bulk sales of Lots or Units or
condemnations.  Revisions to the Budget must be approved by the Agent
in every respect.

     

    
      
        
        

      

      
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              3.2

            	
              Appraisals.

            

    

     

    (a)           New
Appraisals.  Agent shall order (with the Borrowers’
cooperation) updated appraisals for all Projects and the Borrowers shall (i)
respond and cooperate with any information or document requests made by any
appraiser completing an Appraisal on behalf of the Agent within five (5)
Business Days of such request and (ii) to pay any and all appraisal costs of
Agent.  Each new Appraisal shall be ordered and reviewed by the
Agent.  The final Appraisal amount shall be determined by the Agent in
accordance with Section 3.2(c).  The time period for compliance with
this Section 3.2(a) as provided in the first sentence hereof is in lieu of any
notice or grace periods contained in this Agreement or in any other Loan
Documents.

     

    (b)           Re-Appraisals.  Notwithstanding
the foregoing, Agent, at its discretion, shall have the right to obtain new
Appraisals of all or any portion of the Projects (a) whenever an Event of
Default has occurred and is continuing, (b) as required by the then current
regulatory requirements generally applicable to real estate loans of the
categories made under this Agreement, as reasonably interpreted by the Agent,
(c) at any time following a condemnation of more than an immaterial portion
of a Project, as determined in good faith by the Agent and (d) upon any
material adverse change with respect to a Project, as determined in good faith
by the Agent.

     

    (c)           Generally.  Borrowers
acknowledge that the Agent may make changes or adjustments to the values set
forth in any Appraisal as may be required by the Agent’s appraisal department in
the exercise of its good faith business judgment, and that the Agent is not
bound by the value set forth in any Appraisal performed pursuant to this
Agreement and does not concur with or make any representations or warranties
with respect to any Appraisal.  Borrowers further agree that Lenders
shall have no liability as a result of or in connection with any such Appraisal
for statements contained in such Appraisal, including without limitation, the
accuracy and completeness of information, estimates, conclusions and opinions
contained in such Appraisal, or variance of such Appraisal from the fair
value.  All Appraisal costs shall be paid for by Borrowers as
incurred.

     

    
      	
               
      

            	
              3.3

            	
              Sale
      of Assets.

            

    

     

    (a)           Generally.  All
sales of Real Estate, Lots or Units shall be made through a title company or
closing agent or attorney and the Net Asset Sale Proceeds shall be paid directly
to Agent for application pursuant to Section 2.10(b).

     

    (b)           Requirements.
Borrowers shall comply with the following requirements relating to the general
sale process for assets:

     

    (i)           Engage
in weekly meetings and/or teleconferences (each a “Weekly
Status Meeting”) on Tuesday of each week with Agent, Advisory Agent, the
Revolving Lenders who wish to participate, and their respective representatives,
commencing on April 20, 2010 in which Agent and Advisory Agent are provided with
a status report on the assets, the Sale process, the Budget and other matters
reasonably requested by the Agent and other Lenders.

     

    (ii)          Deliver
to Agent, weekly in advance of each Weekly Status Meeting, all expressions of
interest (whether verbal or in writing), commitments or contractual documents
from any party interested in purchasing any of the Borrowers assets outside of
the ordinary course of business.

     

    
      
        
        

      

      
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    (iii)         Make
available to Agent and its Advisory Agent, on the Interlinks datasite related to
the Sale process, due diligence materials made available to potential buyers for
assets, in each case received through such date and excluding individual retail
sales of Units.

     

    (iv)         Not
later than April 30, 2010 the CRO shall furnished to Agent each in form and
substance satisfactory to Agent: (A) its recommendation with respect to
operating systems, internal controls, staff reductions and senior management of
the Borrowers and their subsidiaries which shall be satisfactory to the Agent in
the good faith exercise of its judgment; and the Borrowers shall, to the extent
acceptable to the Borrowers, diligently effect such recommendations; and (B) a
long-term “wind down” budget for all operations.

     

    (v)         At
least one (1) Business Day (or such shorter time period approved by Agent) prior
to any sale commitment deadline for any particular sale of assets in the
ordinary course of business, Parent shall cause the CRO to deliver to the Agent
and its Advisory Agent a draft HUD closing statement with Borrowers’ best
estimate of closing costs and net sale proceeds evidencing that the Borrowers
are in compliance with Section 3.4(b).

     

    (vi)         Not
later than three (3) Business Days after a sale Borrowers shall, or shall cause,
a final executed HUD to be delivered to Agent evidencing that the Borrowers are
in compliance with Section 3.4(b) together with confirmation of the wire payment
of any sale proceeds.

     

    
      	
               
      

            	
              3.4

            	
              Marketing
      and Sale of Assets

            

    

     

    (a)           Marketing
of Assets.

     

    (i)           Parent
shall cause the CRO to manage the sale of all assets of the Borrowers and shall,
in his or her discretion as set forth in the wind-down plan (if she or he
believes it is economically beneficial), engage unrelated, third-party real
estate brokers acceptable to the Agent to sell the Projects.  The
Agent shall have reasonable access to Borrowers’ management who will be
responsible for the sales process as well as any real estate brokers that are
engaged.  The CRO shall make its commercially reasonable best efforts
to sell all the assets as soon as practical on commercially reasonable terms and
prices.

     

    (b)           Sale
of Assets. Borrowers may sell Lots or Units in Projects in the ordinary
course of business pursuant to agreements of sale.  Sales of Lots and
Units shall meet the following criteria:

     

    (i)           Any
single Lot or Unit shall not be sold without the Agent’s prior written consent
if (x) Borrowers have not delivered information required pursuant to Section
3.3(b)(v) and (y) the gross sale price on the HUD Statement would be less than
seventy percent (70%) of the greater of (A) the list price based on Borrower’s
guidelines price set forth on Schedule
3.4 as of the Closing Date or (B) contracted sale price in the current
agreement of sale for such Lot or Unit as of the Closing
Date.

     

    
      
        
        

      

      
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    (ii)          Closing
and settlement costs, including but not limited to ordinary course brokerage
costs (if any), legal, property transfer taxes and other professional fees,
shall not exceed ten percent (10%) of the gross sale price without the consent
of Agent (not to be unreasonably withheld).

     

    (iii)         Net
Asset Sale Proceeds shall be applied to the Revolving Loans pursuant to Section
2.10(b).

     

    
      3.5         
 Advisors.  The
Borrowers will continue to engage a mergers and acquisitions advisor and a
restructuring advisor acceptable to the Agent unless Majority Revolving Lenders
provide written notice to Borrowers that such engagement is no longer needed,
with the estimated costs funded under the Budget.

    

     

    
      	
              SECTION
      4.

            	
              CONDITIONS
      OF LENDING

            

    

     

    4.1           Agreement
to Make Available the Commitments,
Loans, Letters of Credit and Tri-Party
Agreements.  The
effectiveness of this Agreement is subject to the conditions precedent that
Agent and Lenders shall have received on or before the date
hereof  all of the following collateral documents, each in form and
substance satisfactory to the Agent:

     

    (a)           Delivery
of the following documents, dated as of the Closing Date unless otherwise
noted:

     

    (i)           If
requested pursuant to Section 2.14, the Notes, duly executed by the Master
Borrower and by each other Borrower;

     

    (ii)          The
Security Agreement, duly executed by each Borrower in favor of Agent for the
ratable benefit of the Lenders;

     

    (iii)         Certified
copies of all corporate, limited partnership and limited liability company
action (as appropriate) taken by the Borrowers, including resolutions of their
respective Boards of Directors, authorizing the execution, delivery and
performance of the Loan Documents to which each is a
party;

     

    (iv)         An
incumbency and signature certificate (dated as the date of this Agreement) of
the Secretaries, general partners, managers or members (as appropriate) of each
Borrowers, certifying the names and true signatures of the officers or other
authorized Persons of such Borrowers authorized to sign the Loan Documents to
which it is a party;

     

    (v)          A
copy of the Organizational Documents of each Borrowers, certified as true and
correct by its respective Secretary, general partner, manager or members;
and

     

    
      
        
        

      

      
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    (vi)        A
Subsistence Certificate for each Borrowers, issued as of a recent date, from the
state of such entity’s formation and all jurisdictions in which such Borrowers
is required to register as a foreign corporation, limited partnership or limited
liability company;

     

    (b)           To
the extent not addressed in the Final Order, an Opinion directed to Agent and
the Lenders and issued by the counsel to the Borrowers (who must be an
independent attorney-at-law licensed to practice in Pennsylvania) that (i) the
Borrowers are duly organized, validly existing, and in good standing in the
state of such entity’s formation, (ii) each Borrowers has the power to enter
into the transactions contemplated by this Agreement and by the Loan Documents;
(iii) the transactions contemplated by this Agreement and the Loan Documents
specified in the opinion do not violate any provision of any Organizational
Document; (iv) the Loan Documents have been executed and delivered by, and
constitute the valid and binding obligations of, each Borrowers (to the extent
executed thereby), enforceable in accordance with their terms, except as limited
by applicable bankruptcy or other laws affecting creditor’s rights generally;
and (v) such other matters relating to the transactions contemplated herein
as Agent or Agent’s counsel may reasonably request;

     

    (c)           On
or before the Closing Date, Agent and Lenders shall have
received:

     

    (i)           Draft
annual financial statements for the Fiscal Year ended June 30, 2009, Company
Certified that they fairly present, in all material respects, the financial
condition of the Borrowers as at the dates indicated and the results of their
operations and their cash flows for the periods indicated (other than
impairments for each of the periods), subject to changes resulting from audit
and normal year-end adjustments, together with schedules detailing impairments
by community (i.e., Project) on a book value and borrowing base value for such
periods; provided,
however,
that such schedules will not be Company Certified;

     

    (ii)          Draft
unaudited quarterly financial statements for the Fiscal Quarter ended September
30, 2009 and December 31, 2009 (other than impairments for each of the periods),
Company Certified that, in all material respects present the financial condition
of the Borrowers as at the dates indicated and the results of their operations
and their cash flows for the periods indicated, subject to changes resulting
from audit and normal year-end adjustments, together with schedules detailing
impairments by community (i.e., Project) on a book value and borrowing base
value for such periods; provided,
however,
that such schedules will not be Company Certified;

     

    (iii)         Monthly
financial statements for the month ended December 31, 2009, January 31, 2010 and
February 28, 2010, Company Certified that, in all material respects present the
financial condition of the Borrowers as at the dates indicated and the results
of their operations and their cash flows for the periods indicated, subject to
changes resulting from audit and normal year-end
adjustments;

     

    (iv)         A
Company Certified detailed report, as of the last day of the previous month,
listing all (A) unsold Lots, (B) Units for under construction (spec, model,
& sold units) as permitted under the terms of this Agreement, (C) a count
and listing of new agreements of sale and cancellations of agreements of sale
during such month, (D) a count and listing of closings of any sale of Lots or
Units (including spec, models and sold Lots, Units and values), (E) Backlog,
spec and model inventory by division (North, South, Midwest, Florida), and (F)
Costs-to-Complete detail by Project;

     

    
      
        
        

      

      
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    (v)          Payables
detail and aging (including any disputed payables) as of December 31, 2009, the
Petition Date and March 31, 2010, Company Certified;

     

    (vi)         Weekly
report of Cash and Cash Equivalents as of the Closing Date, including all days
since the most recently delivered report, Company
Certified;

     

    (vii)        Budget
approved by the CRO and in form and substance satisfactory to Agent and
Revolving Lenders, certified by the CRO that it is based upon good faith
estimates and assumptions believed by Parent to be reasonable at the time made,
it being recognized by Revolving Lenders that such projections as to future
events are not to be viewed as facts and that actual results during the period
or periods covered by any such projections may differ from the projected
results; and

     

    (viii)       The
Borrowing Base Certificate delivered pursuant to the terms the Pre-Petition
Credit Agreement on March 15, 2010, Company
Certified.

     

    (d)           On
or before the Closing Date, with respect to each Project (other than Real Estate
subject to a purchase money mortgage constituting a Permitted Priority Lien),
Borrowers shall have delivered or cause to be delivered to Agent (or, if
required by any applicable rule or regulation by which Lenders are governed,
Agent shall have obtained) each of the following:

     

    (i)           If
requested by Agent, a Mortgage, or an amendment thereto, for the ratable benefit
of the Lenders, for such Project, executed and acknowledged by the Borrower that
is the owner thereof, which shall be a first lien (subject only to Permitted
Liens) on the Project in an amount not less than the aggregate Commitments, plus
any interest and other charges due thereon; provided
that if the Project is located in Florida, New York, Virginia or another
jurisdiction that imposes taxes upon the recording of, or requires documentary
stamps to be affixed to, Mortgages, the amount of the Mortgages in such
jurisdictions may be limited in amount as from time to time designated by Master
Borrower and approved by Agent, and such Mortgages may be effected by the
subject Borrower and Agent executing a mortgage modification, spreader and
reaffirmation agreement, in form acceptable to Agent, whereby the lien of an
existing Mortgage is spread to encumber such Project;

     

    (ii)          If
requested by Agent, a collateral assignment to Agent, for the ratable benefit of
the Lenders, of all Governmental Approvals (to the extent assignable), contracts
and agreements to which such Project is subject, in form acceptable to Agent in
good faith, executed by the Borrower that is the owner of such
Project;

     

    (iii)         If
requested by Agent, evidence as required by applicable banking regulations that
no part of the Project on which any Unit is to be constructed is located in a
flood plain or, if such evidence is not provided, a policy and certificate of
flood insurance covering the Project, naming the Agent as
insured;

     

    
      
        
        

      

      
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    (iv)         The
standard form of mortgagee title insurance policy issued by First American Title
Insurance Company or another title insurance company satisfactory to the Agent
or appropriate endorsements to any existing title policy, issued in favor of the
Agent, for the ratable benefit of the Lenders, but at the Borrower’s expense
insuring the Mortgage on such Project, in an amount determined by Borrowers and
Agent in good faith, as a first lien on the Real Estate included in such
Project, free and clear of all prior Liens and encumbrances (other than Liens
and encumbrances in favor of the Agent), subject only to such title conditions
and Permitted Liens as may have been approved by the Agent.  The
policy of title insurance shall include such endorsements or additional coverage
as determined by Agent to be necessary (which may include (if available)
Pennsylvania Endorsements 100, 300, 710, 1010 and 1110 or their equivalents from
other jurisdictions);

     

    (v)          If
requested by Agent, copies of any subdivision or land development plans
applicable to such Project and evidence of the final approval and recordation of
such plans;

     

    (vi)         Evidence
that the Borrower has procured insurance policies as required by the terms of
Section 6.6 and copies of all such insurance
policies;

     

    (vii)        If
requested by Agent, a survey or other plan reasonably acceptable to Agent of the
Real Estate included in such Project, showing any encroachments by or on the
Real Estate and the location of all easements and rights-of-way affecting such
Real Estate, all present and proposed utility lines, encroachments and building
set-back lines;

     

    (viii)       An
environmental indemnity agreement with respect to such Project, executed by the
Borrower and Parent, in form reasonably acceptable to
Agent;

     

    (ix)         A
Phase I environmental site assessment for such Project which (i) is dated not
earlier than twelve (12) months before the date that the Project was acquired by
the Borrower; (ii) meets the ASTM International Standard for a Phase I
environmental site assessment in effect as of the date of the environmental site
assessment and, in the case of any Phase I environmental site assessment
prepared after November 1, 2005, meets the standards and practices for all
appropriate inquires set forth at 40 C.F.R. Part 312; (iii) indicates that the
Real Estate is not subject to any Environmental Conditions; (iv) does not reveal
any violation of any applicable Environmental Law; and (v) does not show the
presence of any used, in use or closed underground storage tanks in the Real
Estate;

     

    (x)           If
requested by Agent, (i) copies of all Governmental Approvals theretofore issued
with respect to such Project, including permits, use registrations and approvals
required under any law (including, without limitation thereto, planning, zoning,
subdivision and building laws) for construction of the Units and Improvements
and use thereof by the Borrower or by the purchasers thereof, and such other
evidence as the Agent may require that the Units and use thereof contemplated by
the Borrower, are permitted by and comply with all applicable laws including,
without limitation thereto, zoning ordinances, and (ii) a certification by the
appropriate Borrower that all Governmental Approvals required for the lawful
commencement of construction of Units thereon (other than building permits for
such Units) have been issued and continue to be in full force and effect and
available to the appropriate Borrower; and

     

    
      
        
        

      

      
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    (xi)          Such
other information and documents that the Agent may reasonably
request.  The failure of the Agent to demand a certain type of
information or document in regard to a Project will not constitute a waiver by
the Agent of its right to demand that type of information or document in the
future.

     

    (e)           On
or before the Closing Date, one or more promissory notes, in form and substance
satisfactory to Agent, evidencing each item of Debt arising out of any loan owed
by any Borrower to another Borrower and all such security agreements, documents
and instruments that may be necessary or, as reasonably determined by the Agent,
desirable in order to create in favor of Agent, for the benefit of Lenders, a
valid and (upon the delivery to Agent of each such promissory note) perfected
first priority security interest in such promissory note, subject only to
Permitted Priority Liens;

     

    (f)      
     On or before the Closing Date, Borrowers shall
have delivered to the Agent:

     

    (i)           Certificates
(which certificates shall be accompanied by irrevocable undated stock powers,
duly endorsed in blank and otherwise satisfactory in form and substance to
Agent) representing all Capital Stock pledged pursuant to the Security
Agreement;

     

    (ii)          Duly
completed UCC financing statements and fixture filings, or amendments thereto,
with respect to all personal and mixed property Collateral of the Borrowers, for
filing in all jurisdictions as may be necessary or, in the opinion of Agent,
desirable to perfect the security interests created in such Collateral
pursuant to the Collateral Documents;

     

    (iii)         Duly
completed UCC termination statements, and authorization of the filing thereof
from the applicable secured party, as may be necessary to terminate any
effective UCC financing statements or fixture filings disclosed in such search
(other than any such financing statements or fixture filings in respect of Liens
permitted to remain outstanding pursuant to the terms of this
Agreement;

     

    (iv)         If
requested by Agent, Control Agreements with financial institutions and other
Persons in order to perfect Liens in respect of Deposit Accounts, Securities
Accounts and other Collateral pursuant to the Collateral
Documents;

     

    (v)         Original
Pineland Development certificates, duly signed by the Applicable Borrower in
blank;

     

    (vi)         Assignment
of life insurance proceeds;

     

    
      
        
        

      

      
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    (vii)        All
such security agreements, documents and instruments, and duly completed UCC
financing statements and such federal and state forms that may be necessary or,
as reasonably determined by the Agent, desirable in order to create in favor of
Agent, for the benefit of Lenders, a valid and (upon such filing and recording
or filing) perfected first priority security interest in all income tax refunds
and proceeds thereof received by, or payable to, any Borrower after the Closing
Date, subject only to Permitted Priority Liens;

     

    (viii)       This
Agreement, duly executed by each Borrower, Agent, and each Revolving Lender;
provided, however, that Term Lenders shall be bound by and deemed a party to
this Agreement upon the receipt by the Agent of such Term Lender’s signature
page to this Agreement so long as such signature page is received on or before
5:00 P.M. Friday, April 23, 2010; provided, further, that delivery of, or
failure to deliver, signature pages by any Term Lender shall not otherwise
affect the effectiveness of this Agreement with respect to any other party who
has delivered a signature page; and

     

    (ix)          Such
other and further documents as may be required reasonably by the Agent or
Lenders in order to consummate the transactions contemplated
hereunder.

     

    (g)           Implementation
of the cash management system pursuant to Section 2.12 to the satisfaction of
Agent;

     

    (h)           On
or before the Closing Date, Borrowers shall have paid to Agent, for distribution
(as appropriate) to Agent and Lenders, the fees payable on or before the Closing
Date referred to in Section 2.7;

     

    (i)        
   On
the Closing Date, Borrowers shall have paid (i) to Agent, all of Agent’s
outstanding expenses under the Loan Documents, including inspection and
appraisal costs, (ii) to Reed Smith LLP and Schnader Harrison Segal and Lewis
LLP, counsel to Agent, all fees and expenses invoiced through the Closing Date;
and (iii) to Capstone Advisory Group LLC, financial advisor to the Agent, all
fees and expenses invoiced through the Closing
Date;

     

    (j)      
     Other than the filing of the Bankruptcy Cases, no
material adverse change in Borrowers’ assets, liabilities, business, financial
condition, business prospects, or results of operations (when taken as a whole)
since the Petition Date;

     

    (k)           Other
than the filing of the Bankruptcy Cases, as to Borrowers, there shall exist no
action, suit, investigation, litigation, or proceeding pending or threatened in
any court or before any arbitrator or governmental instrumentality that is not
subject to the automatic stay and in Agent’s judgment (a) would be expected to
have a Material Adverse Effect on Borrower and its Subsidiaries (when taken as a
whole), or (b) would be expected to materially and adversely affect the Loan
Documents or the transactions contemplated thereby;

     

    (l)   
        The Board of Directors of Parent
shall have appointed a CRO acceptable to the Agent and Majority Revolving
Lenders who shall be given executive decision making authority with no
requirement that such officer report to any person other than the Board of
Directors; and

     

    
      
        
        

      

      
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    (m)           The
Bankruptcy Court shall have entered the Final Order authorizing the financing of
Borrowers as set forth in Loan Documents, which shall be Final and in full force
and effect.

     

    
      4.2        
 Availability
of Letters of Credit and Tri-Party Agreements.  The
agreement of the Lenders to cause Agent to issue any Letter of Credit or
Tri-Party Agreement is subject to the following conditions precedent, any of
which may be waived by the Agent, at its sole discretion:

    

     

    (a)           The
requesting Borrower shall have delivered to Agent executed (and, if necessary,
notarized) copies of the following (all of which shall be in a form and contain
such terms as shall be acceptable to the Agent, in its sole
discretion):

     

    (i)           A
Letter of Credit Application, if required;

     

    (ii)           Copies
of all financial security agreements, development agreements or similar
documents, under which the obligations of the requesting Borrower are to be
secured by the requested Letter of Credit or Tri-Party
Agreement.  Such documents must be in a form satisfactory to the
Agent; and

     

    (iii)          Such
other information and documents that Agent may reasonably request.  It
is understood that the failure of Agent to demand a certain type of information
or document in regard to the issuance of a Letter of Credit or Tri-Party
Agreement will not constitute a waiver by Agent of its right to demand that type
of information or document in the future.

     

    (b)           The
Project for which the Letter of Credit or Tri-Party Agreement has been requested
is in an Approved Jurisdiction.

     

    (c)           On
the date of issuance of such Letter of Credit or Tri-Party Agreement, all
conditions precedent described in Section 4.3 shall be satisfied to the
same extent as if the issuance of such Letter of Credit or Tri-Party Agreement
were the making of a Loan and the date of issuance of such Letter of Credit or
Tri-Party Agreement were a Funding Date.

     

    
      4.3         
 Conditions
Precedent to Revolving
Loans.  The
obligation any Revolving Lender to make any Revolving Loan shall be subject to
the further conditions precedent that, on the applicable Funding
Date:

    

     

    (a)           All
of the conditions, agreements and covenants set forth in this Agreement to be
satisfied on or before the Funding Date by any Borrower have been
satisfied;

     

    (b)           No
event shall have occurred and be continuing or would result from the
consummation of the borrowing contemplated by such Request for Revolving Loan
that would constitute an Event of Default or a Potential Event of
Default;

     

    
      
        
        

      

      
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    (c)           The
representations and warranties of the Borrowers herein or in any of the Loan
Documents shall be true, correct and complete in all material respects on and as
of the Funding Date with the same force and effect as if made on and as of such
date, except for those that relate to a specific date which shall be true,
correct and complete as of such date; provided
that, if a representation and warranty is qualified as to materiality, the
materiality qualifier set forth above shall be disregarded with respect to such
representation and warranty for purposes of this
condition;

     

    (d)           Other
than the filing of the Bankruptcy Cases, as to Borrowers, there shall exist no
action, suit, investigation, litigation, or proceeding pending or threatened in
any court or before any arbitrator or governmental instrumentality that is not
subject to the automatic stay and in Agent’s judgment (a) would be expected to
have a material adverse effect on Borrowers assets, liabilities, business,
financial condition, business prospects, or results of operations or which could
impair Borrowers ability to perform satisfactorily under the Loan Documents, or
(b) would be expected to materially and adversely affect the Loan Documents or
the transactions contemplated thereby;

     

    (e)           Immediately
prior to such Revolving Loan the Borrowers shall not have Investments in Cash
and Cash Equivalents in excess of $5,000,000 in the aggregate on a consolidated
basis, and after giving effect to such Revolving Loan (including the amount of
such Revolving Loan), in each case exclusive of Cash or Cash Equivalents in any
Special Purpose Collateral Accounts (other than the Cash Collateral Account in
which such $5,000,000 is maintained);

     

    (f)           The
requesting Borrower shall have delivered a Request for Revolving Loan pursuant
to Section 2.4(c) including a certification, in form and substance acceptable to
the Agent, executed by the CRO confirming the statements made in paragraphs (a)
through (e) above to be true, complete and accurate and that the conditions set
forth therein have been satisfied; and

     

    (g)           Agent
shall have received such other approvals, opinions, or documents as the Agent
may in good faith request.

     

    
      	
              SECTION
      5.

            	
              REPRESENTATIONS
      AND WARRANTIES

            

    

     

    In
addition to the representations and warranties contained in any other Loan
Documents, Borrowers hereby make the following representations and warranties to
Agent and the Lenders:

     

    
      5.1         
Use
of Proceeds.  The
proceeds of Revolving Loans have been used for the purposes in Sections
2.3(a).

    

     

    
      5.2          Incorporation,
Good Standing, and Due Qualification.  Each
Borrower is either a corporation, limited partnership or limited liability
company, duly incorporated or organized, validly existing, and in good standing
under the laws of the state of its formation, has the power and authority to own
its assets and to transact the business in which it is now engaged or proposed
to be engaged in, and is duly qualified as a foreign corporation, limited
partnership or limited liability company and in good standing under the laws of
each other jurisdiction in which such qualification is
required.  Schedule 5.2 correctly sets forth the ownership interest of
each Borrower and each of its Joint Ventures and Subsidiaries and the
jurisdiction of organization of each Borrower and each of its Joint Ventures and
Subsidiaries.

    

     

    
      
        
        

      

      
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      5.3        
 Power
and Authority;
No Conflict.  The
execution, delivery, and performance by the Borrowers of the Loan Documents to
which they are parties have been duly authorized by all necessary corporate,
partnership or limited liability company action, as appropriate, and do not and
will not (i) require any consent or approval of the shareholders, partners or
members of any such entity; (ii) contravene such entity’s Organizational
Documents; (iii) violate any provision of or cause or result in a breach of or
constitute a default under any law, rule, regulation (including, without
limitation, Regulation U of the Board of Governors of the Federal Reserve
System), order, writ, judgment, injunction, decree, determination, or award
presently in effect having applicability to such entity; (iv) cause or result in
a breach of or constitute a default under any indenture or loan or credit
agreement or any other agreement, lease, or instrument to which such entity is a
party or by which it or its properties may be bound or affected or; (v) cause or
result in or require the creation or imposition of any Lien upon or with respect
to any of the properties now owned or hereafter acquired by such Borrower except
as contemplated by this Agreement.

    

     

    
      5.4        
 Legally
Enforceable Agreement.  This
Agreement is, and each of the other Loan Documents executed by the Borrowers
when delivered under this Agreement will be, legal, valid, and binding
obligations of the Borrowers, enforceable against it or them in accordance with
the respective terms thereof, except to the extent that such enforcement may be
limited by applicable bankruptcy, insolvency, and other similar laws affecting
creditors’ rights generally.

    

     

    
      5.5        
 Financial
Statements; Accuracy of Information.

    

     

    (a)           The
Financial Statements of the Borrowers for the period ending June 30, 2009,
September 30, 2009 and December 31, 2009 delivered to Agent and Lenders are true
and correct and represent fairly their financial positions as of the date
thereof  (other than impairments for each of the periods as well as
future impairments) and the results of their operations or affairs for the
period indicated, and show (including the footnotes) all known liabilities,
direct or contingent, of the Borrowers as of the date thereof, all in accordance
with GAAP consistently applied. Since the date of such Financial Statements, no
event or change (other than in connection with the maturing of the Pre-Petition
Credit Facility and the commencement of the Bankruptcy Cases) has occurred that
has resulted in or evidences a Material Adverse Effect and, since such date, no
Borrower has incurred, other than in the ordinary course of business, any
indebtedness, liabilities, obligations or commitments, contingent or otherwise.
No information, exhibit, or report furnished by any Borrower to Agent or the
Lenders in connection with the negotiation of this Agreement contained any
material misstatement of fact or omitted to state a material fact or any fact
necessary to make the statement contained therein not materially misleading. All
projections delivered by Borrowers to Agent were made on a reasonable basis and
in good faith.  Except as disclosed to Agent in writing, no Borrower
has any material contingent liabilities (including liabilities for taxes),
unusual forward or long-term commitments or unrealized or anticipated losses
from unfavorable commitments.

     

    
      
        
        

      

      
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    (b)          No
representation or warranty made by any Borrower under this Agreement or any
other Loan Document is false or misleading in any material respect (including by
omission of material information necessary to make such representation, warranty
of statement not misleading).  The Borrowers have disclosed to Agent
in writing every fact which could reasonably be expected to have a Material
Adverse Effect on the Borrowers taken as a whole, or which so far as any
Borrower can now foresee is reasonably possible in the future and would have a
Material Adverse Effect, on the business, operations or financial condition of
the Borrowers taken as a whole or the ability of the Borrowers taken as a whole
to perform their respective obligations under this Agreement or any other Loan
Document.

     

    (c)           All
information, financial statements, exhibits, and reports furnished by any
Borrower to Agent or the Lenders in connection with this Agreement and the
borrowings contemplated hereby are, and all such information, financial
statements, exhibits and reports hereafter furnished by any Borrower to Agent or
the Lenders will be, true and correct in every material respect on the date so
furnished for the periods covered thereby, and no such information, financial
statements, exhibit or report contains or will contain, with respect to
Borrowers taken as a whole, any material misstatement of fact or omits or will
omit to state a material fact or any fact necessary to make the statement
contained therein not materially misleading.

     

    
      5.6          Conflicts.  The
execution, delivery and performance of this Agreement and the Loan Documents
will not violate any provision of any indenture, agreement, or other instrument
to which any Borrower, or any of their respective properties or assets are
bound, and will not be in conflict with, result in a breach of, or constitute
(with due notice and/or lapse of time) a default under any such indenture,
agreement, or other instrument, or result in the creation or imposition of any
lien, charge, or encumbrance of any nature whatsoever upon any of said
properties or assets.

    

     

    
      5.7        
 Consents.  No
authorization, consent, approval, license or exemption of, and no registration,
qualification, designation, declaration or a filing with any court or
governmental department, commission, board, bureau, agency or instrumentality,
domestic or foreign is necessary to the valid execution and delivery by any
Borrower of this Agreement and the other Loan Documents to which each is a party
including without limitation, approval of the Bankruptcy Court pursuant to the
Orders which are in full force and effect as of the Closing Date (copies of
which have been delivered to the Lenders on or before the Closing
Date).

    

     

    
      5.8        
 Litigation.  Other
than the filing of the Bankruptcy Cases, as to Borrowers, there shall exist no
action, suit, investigation, litigation, or proceeding pending or threatened in
any court or before any arbitrator or governmental instrumentality that is not
subject to the automatic stay and in Agent’s judgment (a) would be expected to
have a Material Adverse Effect on any Borrower, or (b) would be expected to
materially and adversely affect the Loan Documents or the transactions
contemplated thereby.

    

     

    
      5.9         
 Other
Agreements.  No
Borrower is a party to any indenture, loan, or credit agreement, or to any lease
or other agreement or instrument, or subject to any charter or corporate
restriction which could reasonably be expected to have a Material Adverse
Effect.  No Borrower is in default in any respect in the performance,
observance, or fulfillment of any of the obligations, covenants, or conditions
contained in any agreement or instrument material to its business to which it is
a party and which default could reasonably be expected to have a Material
Adverse Effect.

    

     

    
      
        
        

      

      
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      5.10      
 No
Defaults and Outstanding Judgments or Orders.  Each
Borrower has satisfied, and none is in default with respect to, any final,
unappealed and unstayed judgment, writ, injunction or decree of any court or
arbitrator, and none of them is in default of any rule or regulation (if such
default could reasonably be expected to have a Material Adverse Effect) of any
federal, state, municipal, or other governmental authority, commission, board,
bureau, agency or instrumentality, domestic or foreign by which it is
bound.

    

     

    
      5.11       
 Taxes.  Each
Borrower has filed or caused to be filed all federal, state, and local Tax
returns and reports required to have been filed and has paid or has caused to be
paid all Taxes (including interest and penalties imposed thereon) required to
have been paid by it, except (i) Taxes that are being contested in good
faith by appropriate proceedings and for which such Borrower has set aside on
its books adequate reserves in conformity with GAAP or (ii) to the extent
that the failure to do so could not reasonably be expected to have a Material
Adverse Effect.

    

     

    
      5.12      
 Debt.  No
Borrower has any Debt, except Permitted Debt that is (i) disclosed in the
Financial Statements or (ii) which arose or accrued after the date of the most
recent Financial Statements and has been disclosed in writing to
Agent.

    

     

    
      5.13      
 ERISA.  Each
Borrower is in compliance in all material respects with all applicable
provisions of ERISA, the Code, all other applicable requirements of
law.  Neither a Reportable Event nor a Prohibited Transaction has
occurred and is continuing with respect to any Plan; no notice of intent to
terminate a Plan has been filed nor has any Plan been terminated; to the best of
any Borrower’s knowledge after due inquiry, no circumstances exist which
constitute grounds under Section 4042 of ERISA entitling the PBGC to institute
proceedings to terminate, or appoint a trustee to administer, a Plan, nor has
the PBGC instituted any such proceedings; no Borrower or any ERISA Affiliate has
completely or partially withdrawn under Sections 4201 or 4204 of ERISA from a
Multiemployer Plan; each Borrower and each ERISA Affiliate have met their
minimum funding requirements under ERISA with respect to all of their Plans and
the present fair market value of all Plan assets exceeds the present value of
all vested benefits under each Plan, as determined on the most recent valuation
date of the Plan and in accordance with the provisions of ERISA and the
regulations thereunder for calculating the potential liability of any Borrower
or any ERISA Affiliate to the PBGC or the Plan under Title IV of ERISA; and no
Borrower or ERISA Affiliate has incurred any liability to the PBGC under
ERISA.

    

     

    
      5.14       
Ownership
and Liens.  The
Borrowers have (i) good, sufficient and legal title to (in the case of fee
interests in real property), (ii) valid leasehold interests in (in the case
of leasehold interests in real or personal property), or (iii) good title
to (in the case of all other personal property), all of their respective
properties and assets reflected in the financial statements referred to in
Section 5.5 or in the most recent financial statements delivered pursuant
to Section 6.1, in each case except for assets disposed of since the date
of such financial statements as permitted under
Section 7.4.  Each such property is free and clear of all liens
other than Permitted Liens and liens the enforcement of which are stayed in
connection with the Bankruptcy Cases.  A list of all Real Estate owned
by any Borrower is set forth on Schedule
5.14 hereto, as updated pursuant to Section 6.1(d) and any purchases and
sales since the most recent update pursuant to Section
6.1(d).

    

     

    
      
        
        

      

      
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      5.15      
 Representations
and Warranties as to Real Estate.  As
to Real Estate:

    

     

    (a)           No
Violations Relating to the Real Estate.  No Borrower has
knowledge of any violation, nor is there any notice or other record of violation
of any zoning, subdivision, environmental, building or other statute, ordinance,
regulation, restrictive covenant or other restriction applicable to the Real
Estate, except for violations, if any, which Borrowers have disclosed in writing
to Agent and are proceeding in good faith to remove or correct or which is
subject to contest by applicable proceedings timely commenced and diligently
pursued to conclusion and which non-compliance could not reasonably be expected
to have a Material Adverse Effect on the Borrowers.

     

    (b)           Liens.  There
exist no liens, encumbrances or other charges against the Real Estate, or any
portion thereof, or any property relating thereto, including statutory and other
liens of mechanics, workmen, contractors, subcontractors, suppliers, taxing
authorities and others, except for Permitted Liens and liens the enforcement of
which are stayed in connection with the Bankruptcy
Cases.

     

    (c)           Compliance
with Laws.  The Real Estate is being and (to the knowledge of
any Borrower with respect to dates prior to ownership by a Borrower) has been
operated in all material respects, in compliance with applicable federal and
state laws and regulations (including but not limited to environmental laws and
regulations) and with local ordinances, and all permits required thereunder have
been obtained and complied with in all material
respects.

     

    (d)           Environment.  The
Borrowers have duly complied with, and their businesses, operations, assets,
equipment, property, leaseholds, or other facilities (including, but not limited
to, the Real Estate) are in material compliance with, the provisions of all
federal, state, and local Environmental Laws, and all health, and safety laws,
codes and ordinances, and all rules and regulations applicable to Projects
promulgated thereunder.  Except as set forth in the Environmental
Reports heretofore delivered to Agent, no Borrower has received notice of, or
knows of, or suspects the existence of any Environmental Condition which is or
may be a violation of, any Environmental Law or any other federal, state, or
local health or safety laws, codes or ordinances, and any rules or regulations
promulgated thereunder with respect to its businesses, operations, assets,
equipment, property, leaseholds, or other facilities (including, but not limited
to, the Real Estate) with which it has not complied (subject to the prosecution
of a good faith contest of any such notice that has not heretofore been
determined adversely to such Borrower).  Except as set forth in Schedule
5.15 annexed hereto, none of the Borrowers own, lease, occupy or have any
legally cognizable interest in any Real Estate which is located in New Jersey
and which is, pursuant to N.J.S.A. 58:10B-1.3(a), subject to any obligation to
remediate the discharge of a Hazardous Substance.

     

    (e)           Security
Requirements.  Borrowers have delivered all documents and met
all conditions required under Section 4.1(d).

     

    
      
        
        

      

      
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              5.16

            	
              Representation
      and Warranties as to other
  Collateral.

            

    

     

    (a)           Intellectual
Property.  As of the Closing Date, the Borrowers own or have
the right to use, all Intellectual Property used in the conduct of their
business, except where the failure to own or have such right to use in the
aggregate could not reasonably be expected to have a Material Adverse
Effect.  No claim has been asserted against any Borrower and is
pending by any Person challenging or questioning the use of any such
Intellectual Property or the validity or effectiveness of any such Intellectual
Property, nor do Borrowers know of any valid basis for any such claim, except
for such claims that in the aggregate could not reasonably be expected to have a
Material Adverse Effect.  The use of such Intellectual Property by the
Borrowers does not infringe on the rights of any Person, except for such claims
and infringements that, in the aggregate, could not reasonably be expected to
have a Material Adverse Effect.  All federal, state and foreign
registrations of and applications for Intellectual Property, and all
unregistered Intellectual Property, that are owned or licensed by any Borrower
on the Closing Date are described on Schedule
5.16 annexed hereto.

     

    (b)           Governmental
Authorizations.  No authorization, approval or other action by,
and no notice to or filing with, any Government Authority is required for either
(i) the pledge or grant by any Borrower of the Liens purported to be
created in favor of Agent pursuant to any of the Collateral Documents or
(ii) the exercise by Agent of any rights or remedies in respect of any
Collateral (whether specifically granted or created pursuant to any of the
Collateral Documents or created or provided for by applicable law), except for
filings or recordings contemplated by the Collateral Documents, approvals,
permits and other authorizations that may be required to develop, construct,
market and sell Units, and except as may be required, in connection with the
disposition of any Capital Stock pledged as Collateral, by laws generally
affecting the offering and sale of securities or in connection with a judicial
foreclosure.

     

    (c)           Absence
of Third-Party Filings.  Except such as may have been filed in
favor of Agent as contemplated by the Collateral Documents and to evidence
Permitted Liens, (i) no effective UCC financing statement, fixture filing
or other instrument similar in effect covering all or any part of the Collateral
is on file in any filing or recording office and (ii) no effective filing
covering all or any part of the IP Collateral is on file in any IP Filing
Office.

     

    (d)           Margin
Regulations.  The pledge of the Collateral pursuant to the
Collateral Documents does not violate Regulation T, U or X of the Board of
Governors of the Federal Reserve System.

     

    (e)           Information
Regarding Collateral.  All information supplied to Agent by or
on behalf of any Borrower with respect to any of the Collateral (in each case
taken as a whole with respect to any particular Collateral) is accurate and
complete in all material respects.

     

    
      5.17      
 No
Violation of
Law.  No
Borrower has engaged in any conduct or taken or omitted any act in violation of
RICO or of any Prescribed Law.

    

     

    
      5.18      
 Compliance
with Covenants.  As
of the date this representation is made or deemed made, each Borrower is in
compliance with applicable covenants contained in Section 8
hereof.

    

     

    
      
        
        

      

      
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              5.19

            	
              Securities
      Activities.

            

    

     

    (a)           No
Borrower is engaged principally, or as one of its important activities, in the
business of extending credit for the purpose of purchasing or carrying any
Margin Stock.

     

    (b)           Following
application of the proceeds of each Loan, not more than 25% of the value of the
assets (either of any Borrower alone or of the Borrowers on a consolidated
basis) subject to the provisions of Sections 7.2 or 7.11 or subject to any
restriction contained in any agreement or instrument, between any Borrower and
any Lender or any Affiliate of any Lender, relating to Indebtedness, will be
Margin Stock.

     

    
      5.20      
 DIP
Representations.

    

     

    (a)           The
Final Order continues to remain effective.

     

    (b)           The
CRO has disclosed any material assumptions with respect to the
Budget.

     

    The
delivery to Agent of each Request for Revolving Loan and request for the
issuance of a Letter of Credit or Tri-Party Agreement shall constitute the
representation and warranty of Borrowers that the conditions contained in
Sections 4.1, 4.2 and 4.3 are satisfied as of such date, except for those that
relate to a specific date which shall be true and correct as of such earlier
date.

     

    
      5.21      
 CRO.  The
Board of Directors of Parent has duly appointed the CRO and the CRO has been
given executive decision making authority with no requirement that the CRO
report to any Person other than the Board of Directors.

    

     

    
      	
              SECTION
      6.

            	
              AFFIRMATIVE
      COVENANTS

            

    

     

    In
addition to the covenants contained in the Loan Documents, Borrowers hereby
covenant and agree that, so long as Lenders have any obligation to make
Revolving Loans or issue Letters of Credit or Tri-Party Agreements hereunder, or
any Loan is outstanding, Borrowers shall perform all covenants in this Section
6:

     

    
      6.1        
 Reporting
Requirements.  Each
Borrower shall furnish, or cause to be furnished, to Agent and Agent shall
furnish to Lenders:

    

     

    (a)           For
each Fiscal Year, as soon as available, and in any event within ninety (90) days
after the end of each Fiscal Year, unaudited Financial Statements of Parent
(which shall include a consolidated balance sheet and a consolidated statement
of operations) through the end of such Fiscal Year, and a consolidated statement
of cash flow for such Fiscal Year, all in reasonable detail and stating in
comparative form the respective figures for the corresponding date and period in
the prior Fiscal year and all prepared in accordance with GAAP consistently
applied and Company Certified that they fairly present, in all material
respects, the financial condition of the Borrowers as at the dates indicated and
the results of their operations and their cash flows for the periods indicated,
subject to changes resulting from audit and normal year-end
adjustments.

     

    
      
        
        

      

      
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    (b)          For
each Fiscal Quarter commencing with the Fiscal Quarter ending March 31, 2010, as
soon as available, and in any event within sixty (60) days after the close of
each of the first three Fiscal Quarters and ninety (90) days after the close of
each fourth Fiscal Quarter (or within five (5) Business Days after Parent files
its Annual Report on Form 10-K for such Fiscal Year, commencing for the Fiscal
Year ending June 30, 2010, if earlier), unaudited management-prepared quarterly
Financial Statements of Parent (which shall include a Consolidated Balance Sheet
and a Consolidated Statement of Operations) as of the end of each Fiscal
Quarter, all in reasonable detail and prepared in conformity with GAAP, applied
on a basis consistent with that of the preceding Fiscal Year. Such statements
shall be Company Certified that they fairly present, in all material respects,
the financial condition of the Borrowers as at the dates indicated and the
results of their operations and their cash flows for the periods indicated,
subject to changes resulting from audit and normal year-end adjustments as well
as any change in held for use/sale methodology.

     

    (c)           As
soon as available, and in any event within twenty (20) days after the close of
each month, unaudited management-prepared monthly and year-to-date consolidated
financial statements of Parent (which shall include a consolidated balance sheet
and a consolidated statement of operations) as of the end of each month, all in
reasonable detail and prepared in conformity with the Parent’s prior internal
monthly reporting practices, Company Certified that they fairly present, in all
material respects, the financial condition of the Borrowers as at the dates
indicated and the results of their operations and their cash flows for the
periods indicated, subject to changes resulting from audit and normal year-end
adjustments.

     

    (d)          Within
twenty (20) days of the end of each month, an updated Schedule
5.14 and a current, detailed report listing all (A) unsold Lots, (B)
Units for under construction (spec, model, & sold units) as permitted under
the terms of this Agreement, (C) new agreements of sale and cancellations of
agreements of sale during such month, (D) closings of any sale of Lots or Units
(including spec, models and sold Lots, Units and values), (E) Backlog, spec and
model inventory by division (North, South, Midwest, Florida), and (F)
Costs-to-Complete detail by Project, Company
Certified.

     

    (e)           Within
twenty (20) days after the end of each month, a consolidated list of all
accounts payable of any Borrower, and an aging report of such accounts payable,
Company Certified as to its correctness.

     

    (f)           Not
later than six weeks from the Closing Date and at the end of each six-week
period thereafter on the Tuesday of each such week (or more frequently as
reasonably requested by Agent), an updated Budget, certified by the CRO that is
based upon good faith estimates and assumptions believed by Parent to be
reasonable at the time made and reconciliation of weekly variances from the
previous Budget, certified as to its correctness by the
CRO.

     

    (g)           Weekly,
on each Tuesday after the Closing Date, a report reflecting the balances of Cash
and Cash Equivalents in all accounts of the Borrowers for each day of the
previous week, certified as to its correctness by the
CRO.

     

    
      
        
        

      

      
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    (h)          As
soon as practicable in advance of filing with the Bankruptcy Court all material
motions, proposed orders and other pleadings related to the Bankruptcy Cases
generally, the Loans or which could impact the Budget or a sale of the
Borrowers’ assets outside of the ordinary course of business (which must in all
respects be in form and substance reasonably satisfactory to the Agent,
including any proposed “stalking horse” which must also be reasonably
satisfactory to the Majority Revolving Lenders), any Reorganization Plan, and/or
any disclosure statement related to such plan.

     

    (i)           Promptly
upon the occurrence thereof, notification of (i) the institution of any material
litigation or the commencement of any material administrative proceedings
against a Borrower, (ii) the entry of any judgment against any Borrower in an
amount in excess of $250,000, (iii) any notices and copies thereof of any and
all motions, claims, hearings or other proceedings filed with or scheduled to be
heard by the Bankruptcy Court, or (iv) the happening of any other event which
could reasonably be expected to have a Material Adverse Effect upon the
Borrowers.

     

    (j)           Upon
the occurrence of an Event of Default, a written notice setting forth the
details of such Event of Default and the action which is proposed to be taken by
the Borrowers with respect thereto.

     

    (k)           As
soon as possible and in any event within five (5) days after any Borrower knows
that any Reportable Event or Prohibited Transaction has occurred with respect to
any Plan or that the PBGC, any Borrower has instituted or will institute
proceedings under Title IV of ERISA to terminate any Plan, Borrowers will
deliver to Agent a certificate of the CRO setting forth details as to such
Reportable Event or Prohibited Transaction or Plan termination and the action
such Borrower proposes to take with respect thereto.

     

    (l)           Together
with each delivery of Financial Statements pursuant to Section 6.1(c), Borrowers
shall submit to Agent a Compliance Certificate, in the form attached hereto as
Exhibit
F and executed by the CRO, confirming whether the Borrowers are in
compliance with the financial covenants of Section 8 as of the dates provided
herein for compliance.

     

    (m)          Such
other information respecting the condition or operations, financial or
otherwise, of Borrowers as the Agent (or any Lender acting through Agent) may
from time to time reasonably request.

     

    
      6.2        
 Payment
of Taxes.  Subject
to Bankruptcy Code limitations, each Borrower shall (i) duly pay and discharge
or cause to be paid and discharged, before the same shall become delinquent, all
Taxes, assessments, levies and other governmental charges, imposed upon such
Borrower or its properties, sale and activities, or any part thereof, or upon
the income or profits therefrom, and (ii) within thirty (30) days after any
request therefor by Agent, deliver to Agent a receipt from the applicable
Governmental Authority evidencing said payment, provided, however, that any such
Tax, assessment, levy and other governmental charge need not be paid if the
validity or amount thereof is being properly contested in good faith by
appropriate proceedings and if such Borrower has set aside on its books adequate
reserves in conformity with GAAP, and provided, further, that such Borrower will
pay all such Taxes, assessments, levies or other governmental charges forthwith
upon the commencement of proceedings to foreclose any Lien which may have
attached as security therefor.

    

     

    
      
        
        

      

      
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      6.3        
 Access
to Properties, Books and Records;
Inspections.

    

     

    (a)           Borrowers
shall (i) permit any of the officers, employees or representatives of Agent
or  of any Lender (if accompanied by an officer, employee or
representative of Agent) to visit and inspect any of the properties of Borrowers
and (ii) permit any officers, employees or representatives of Agent to examine
Borrowers’ books and records and make extracts therefrom and discuss the
affairs, finances, and accounts of Borrowers with representatives thereof,
during normal business hours, and as often as Agent may reasonably request upon
prior telephone notice or at any time from time to time after an Event of
Default.

     

    (b)          The
CRO shall provide Agent and Lenders access to information (including historical
information) and personnel, including, without limitation, regularly scheduled
meetings (at times as mutually agreed) with senior management and other company
advisors and the Agent and consultants to the Agent (including Advisory Agent
and counsel to Agent), and such consultants shall be provided with access to all
information and to other internal meetings regarding strategic planning, cash
and liquidity management, operational and restructuring activities, in each
case, as it may reasonably request.

     

    (c)           Inspection
of Projects.  Borrowers shall cooperate with or allow for
Agent, by its employees and independent contractors, to conduct monthly (or more
frequently if requested by the Agent) appraisals and collateral examinations
(and the Borrowers agree to cooperate fully with any such collateral
examinations).  The reasonable costs and expenses of such appraisals
and collateral examinations shall be Borrowers’
expense.

     

    
      6.4        
 Maintenance
of Records.  Borrowers
shall keep adequate records and books of account, in which complete entries were
made in accordance with generally accepted accounting principals consistently
applied, reflecting all financial transactions of Borrowers.

    

     

    
      6.5        
 Maintenance
of Existence.  Each
Borrower shall preserve and maintain its existence and good standing in the
jurisdiction of its formation, and qualify and remain qualified as a foreign
entity in each jurisdiction in which such qualification is
required.

    

     

    
      6.6        
 Insurance.  Each
Borrower shall take out, maintain and keep in force,  policies of
insurance on the following terms:

    

     

    (a)           Insurance
against loss to each Project on a “Special Perils” policy form, covering
insurance risks no less broad than those covered under a Standard Multi Peril
(SMP) policy form, which contains the most recent Commercial ISO “Causes of
Loss-Special Form,” in commercially reasonable amounts and with endorsements as
heretofore customarily maintained by subsidiaries of Parent, issued by insurers
licensed in the jurisdiction in which each Project is located and that satisfy
Agent’s then-current standards for property insurers and complying with the
requirements of the Mortgages.

     

    
      
        
        

      

      
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    (b)          Commercial
general liability insurance against death, bodily injury and property damage
arising on, about or in connection with each Project, with limits not less than
those heretofore maintained by subsidiaries of Parent and written on the most
recent Standard “ISO” occurrence basis form or equivalent form, excess umbrella
liability coverage with limits not less than those heretofore maintained by
subsidiaries of Parent and completed operations coverage for a period of one
year after construction of Units, issued by insurers licensed in the
jurisdiction in which each Project is located and that satisfy Agent’s
then-current standards for liability insurers.

     

    (c)           Worker’s
compensation insurance in an amount not less than those that are statutorily
required in each jurisdiction in which the Borrowers
operate.

     

    (d)           During
the making of any alterations or improvements to any Project, insurance covering
claims based on the owner’s or employer’s contingent liability not covered by
the insurance provided in Section 6.6(b) above.

     

    (e)           Insurance
against loss or damage by flood or mud slide in compliance with the Flood
Disaster Protection Act of 1973, as amended from time to time, covering each
Project that is now, or at any time while the Indebtedness remains outstanding
shall be, situated in any area which an appropriate governmental authority
designates as a special flood hazard area, in amounts equal to the full
replacement value of all above grade structures located or to be constructed in
such special flood hazard area.

     

    (f)           Warranty
insurance for all homes to be sold after the Petition
Date.

     

    (g)           Such
other insurance relating to the Projects and the uses and operation thereof as
Agent may, from time to time, reasonably require, including, but not limited to
products liability and workers’ compensation
insurance.

     

    (h)           Directors’
and officers’ liability insurance in the forms, and in amounts not less than
that which is now carried by the Borrowers.

     

    (i)           All
insurance shall:  (i) be carried in companies with a Rating of A- or
better and a Financial Size Category of Class IX or higher, as set forth in the
most recently published Best’s Key Rating Guide, or otherwise acceptable to
Agent; (ii) in form and content acceptable to Agent; and (iii) provide thirty
(30) days’ (ten (10) days’ for non-payment of any premium) advance written
notice to Agent before any cancellation, material modification or notice of
non-renewal.  All physical damage policies and renewals shall contain
a mortgage clause acceptable to Agent, naming Agent as mortgagee, which clause
shall expressly state that any breach of any condition or warranty by any
Borrower shall not prejudice the rights of Agent under such insurance, and a
loss payable clause in favor of Agent for personal property, contents,
inventory, equipment, loss of rents and business interruption.  All
liability policies and renewals shall name Agent and each Lender as an
additional insured.  No additional parties shall appear in the
mortgage or loss payable clause without Agent’s prior written
consent.  All deductibles shall be in amounts acceptable to
Agent.  In the event of the foreclosure of any Mortgage or any other
transfer of title to any Borrower in full or partial satisfaction of the
Indebtedness, all right, title and interest of each Borrower in and to all
insurance policies and renewals thereof then in force shall pass to such
purchaser or grantee.  If the insurance, or any part thereof, shall
expire, or be withdrawn, or become void or unsafe by reason of any Borrower’s
breach of any condition thereof, or become void or unsafe by reason of the value
or impairment of the capital of any company in which the insurance may then be
carried, or if for any reason whatever the insurance shall be unsatisfactory to
Agent, Borrowers shall place new insurance that satisfies the requirements of
this Section 6.6.

     

    
      
        
        

      

      
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    (j)           Any
notice pertaining to insurance and required pursuant to this Section 6.6 shall
be given in the manner provided in this Agreement at the address from time to
time directed by Agent by notice to Master Borrower.  The insurance
shall be evidenced by, at the option of Agent, the original policy or a true and
certified copy of the original policy, or in the case of liability insurance, a
Certificate of Liability Insurance.  Borrowers shall use their best
efforts to deliver originals of all policies and renewals (or certificates
evidencing the same), marked “paid,” to Agent at least thirty (30) days before
the expiration of existing policies and, in any event, Borrowers shall deliver
originals of such policies or certificates to Agent at least fifteen (15) days
before the expiration of existing policies.  If Agent has not received
satisfactory evidence of such renewal or substitute insurance in the time frame
specified herein, Agent shall have the right, but not the obligation, to
purchase such insurance for Lender’s interest only.  Any amounts so
disbursed pursuant to this Section 6.6(j) shall be paid by
Borrowers.  Nothing contained in this Section 6.6 shall require Agent
or any Lender to incur any expense or take any action hereunder, and inaction by
Agent and Lenders shall never be considered a waiver of any right accruing to
Mortgagee on account of this Section 6.6.

     

    (k)           No
Borrower shall carry any separate insurance on any Project concurrent in kind or
form with any insurance required hereunder or contributing in the event of loss
without Agent’s prior written consent and any such policy shall have attached a
standard non-contributing mortgagee clause, with loss payable to Agent, and
shall meet all other requirements set forth herein.

     

    (l)           The
evidence of insurance shall contain the agreement of the insurer to give not
less than thirty (30) days’ notice to the Agent prior to cancellation of such
policies or material change in the coverage thereof or ten (10) days’ notice for
non-payment of premium and shall be on a form ACORD 27 (with respect to property
insurance), ACORD 25 (with respect to liability insurance), or such similar form
as is acceptable to Agent.

     

    (m)           Upon
receipt by any Borrower of any Net Insurance/Condemnation Proceeds, Borrowers
shall apply an amount equal to such Net Insurance/Condemnation Proceeds to
prepay the Loans as provided in Section 2.10(b)(iv).

     

    
      
        
        

      

      
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      6.7         
ERISA.  Each
Borrower shall comply in all material respects with the requirements of ERISA
applicable to any employee benefit plan (within the meaning of Section 3(2) of
ERISA), sponsored by any Borrower.  Each Borrower shall to furnish to
the Agent (a) as soon as possible, and in any event within thirty (30) days
after any executive officer of a Borrower has knowledge that (i) any Reportable
Event with respect to any Plan has occurred, a statement of an executive officer
of the Borrower, setting forth on behalf of such Borrower details as to such
Reportable Event and the action which it proposes to take with respect thereto,
together with a copy of the notice, if any, required to be filed of such
Reportable Event given to the PBGC, or (ii) an accumulated funding deficiency
has been incurred or an application has been made to the Secretary of the
Treasury for a waiver or modification of the minimum funding standard or an
extension of any amortization period under Section 412 of the Code with respect
to a Plan, a Plan or Multiemployer Plan has been or is proposed to be
terminated, reorganized, partitioned or declared insolvent under Title IV of
ERISA, proceedings have been instituted to terminate a Plan, a proceeding has
been instituted pursuant to Section 515 of ERISA to collect a delinquent
contribution to a Multiemployer Plan, or any such Borrower or ERISA Affiliate
will incur any material liability (including any contingent or secondary
liability) to or on account of the termination of or withdrawal from a Plan or
Multiemployer Plan under Sections 4062, 4063, 4201 or 4204 of ERISA, a statement
of an executive officer of the Borrower, setting forth details as to such event
and the action the applicable Borrower proposes to take with respect thereto,
(b) promptly upon reasonable request of the Agent, copies of each annual and
other report with respect to each Plan subject to Title IV of ERISA and (c)
promptly after receipt thereof, a copy of any notice any Borrower or ERISA
Affiliate may receive from the PBGC relating to the PBGC’s intention to
terminate any Plan or to appoint a trustee to administer any
Plan.

    

     

    
      6.8        
 Accounts.  The
Borrowers shall maintain one or more demand Deposit Accounts with Agent into
which the proceeds of each Revolving Loan shall be deposited.

    

     

    
      6.9        
 Compliance
with Laws.  Each
Borrower shall comply with all applicable laws (including but not limited to any
applicable Tax law, product safety law, occupational safety or health law,
Environmental Law, and Prescribed Laws) in all respects.

    

     

    
      6.10      
 Payment
of Debt.  Subject
to Bankruptcy Code limitations and the Budget, each Borrower shall promptly pay
and discharge (i) all of its Debt incurred after the Petition Date in accordance
with the terms thereof and in accordance with the Budget; and (ii) all lawful
claims for labor, materials and supplies or otherwise incurred after the
Petition Date, which, if unpaid, might become a lien or charge upon any Real
Estate (except for Permitted Liens) or, if the same could reasonably be expected
to have a Material Adverse Effect, against any other property or any part
thereof; provided
that so long as Borrowers notify Agent in writing of their intention to do so,
no Borrower shall be required to pay and discharge any such Debt or claim so
long as the failure to so pay or discharge does not constitute or result in an
Event of Default and so long as the validity thereof shall be contested in good
faith by appropriate proceedings diligently pursued and it shall have set aside
on its books adequate reserves with respect thereto.

    

     

    
      6.11      
 Maintenance
of Properties.  Each
Borrower shall maintain or cause to be maintained in good repair, working order
and condition, ordinary wear and tear excepted, all their material properties
used or useful in the business of the Borrowers (including all Intellectual
Property) and from time to time will make or cause to be made all appropriate
repairs, renewals and replacements thereof.

    

     

    
      6.12       
 Deposit
Accounts, Securities Accounts and Cash Management
Systems.  Each
Borrower shall use and maintain its Deposit Accounts, Securities Accounts, and
cash management systems in a manner reasonably satisfactory to
Agent.  Borrowers shall not permit any of such Deposit Accounts and
Securities Accounts at any time to be located other than with
Agent.

    

     

    
      
        
        

      

      
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        6.13         
Tax
Refunds.  Within
five (5) Business Days of the Closing Date, the Borrowers shall file an
amendment to their federal Tax return claiming an additional Tax refund with
respect to the current net operating loss carryback law.  If any
Borrower files any state or federal tax return or an amendment thereto claiming
a tax refund (including without limitation with respect to the current net
operating loss carryback law) such Borrower shall (x) concurrently file any and
all forms required by Agent, so that the proceeds of any such refund to which
such Borrower may be entitled is delivered directly to Agent on behalf of the
Lenders (in connection with its security interest in such Tax refund) and made
payable to Agent for the ratable benefit of Lenders, and (y) obtain prior
written approval of Agent of such filing and forms.

      

       

      
        6.14         
Monitoring of
Expenses.  Notwithstanding
any Bankruptcy Court authorization to pay “critical vendors”, prior to making
such payments, the Borrowers shall implement procedures, which shall be
acceptable to the Revolving Lenders in their sole discretion, for monitoring and
controlling the Borrowers’ compliance with the Budget, which shall include,
without limitation, implementation of protocols by the Borrowers’ financial
advisors, which protocols shall include training and implementation of standards
for paying expenses in accordance with the Budget.

      

       

      
        6.15         
Budget
Compliance.

      

       

      (a)           Expenses.

       

      (i)           At
the end of each calendar week, the aggregate actual disbursements made by the
Borrowers on items in the Budget other than Permitted Critical Vendor Payments,
shall not exceed 115% of the aggregate amount of projected disbursements for
that week other than Permitted Critical Vendor Payments plus the Excess Variance
Amount from the prior week, as set forth in the Budget (“Excess Variance Amount” being
115% of the cumulative budgeted disbursements through such period less aggregate
cumulative actual disbursements other than Permitted Critical Vendor Payments);
provided that the Excess Variance Amount shall (i) at no time exceed $2,000,000,
and (ii) be reduced to $0 upon the earlier to occur of (A) delivery, approval
and implementation of each updated Budget, or (B) six weeks after the delivery
of the previously delivered Budget.

       

      (ii)           Further,
notwithstanding the foregoing, at no time may the outstanding principal amount
of outstanding Revolving Loans (excluding Revolving Loans resulting from any
draw of a Letter of Credit or Tri-Party Agreement) exceed Revolving Loans
projected under the Budget by more than $2,000,000 for more than five (5)
Business Days.

       

      (b)           Measurement. The
Budget compliance covenants set forth in this Section shall be measured by the
Agent upon the Agent’s receipt of the weekly budget to actual report required to
be delivered by the Borrower pursuant to Section 6.1(g) of this
Agreement.

      
        
           

        

        
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        6.16         
Other
Actions.  Borrowers
shall take the following actions as soon as reasonably possible, but not later
than the following dates, either:  (i) (a) file their joint disclosure
statement and joint plan of reorganization with the Bankruptcy Court not later
than May 15, 2010, (b) obtain court approval of their joint disclosure statement
not later than June 30, 2010, and (c) obtain confirmation of their plan of
reorganization no later than July 30, 2010; or (ii) (a) file its motion under
Bankruptcy Code Section 363(b) to sell substantially all assets and bidding
procedures no later than April 30, 2010, (b) obtain court approval of bidding
procedures for such sale not later than May 20, 2010, (c) conduct an auction of
all or substantially all of the Borrowers’ assets not later than June 23, 2010;
(d) obtain court approval of such sale to the successful bidder not later than
June 24, 2010; and (e) close sales transaction and receipt of Lenders of sale
proceeds not later than July 5, 2010.  Notwithstanding the foregoing,
the aforementioned dates may be extended by thirty (30) days at the discretion
of the Agent.

      

       

      
        6.17         
Reduction of Letters of
Credit.  Borrowers
shall use commercially reasonable best efforts to work with municipalities to
reduce any supporting letters of credit required by such
municipalities.

      

       

      
        6.18         
Further
Assurances.  Each
Borrower shall do such further acts and things and to execute and deliver to
Agent such additional assignments, agreements, powers and instruments, as Agent
may reasonably require or reasonably deem advisable to carry into effect the
purposes of this Agreement or to better assure and confirm unto Agent and the
Lenders their respective rights, powers and remedies
hereunder.

      

       

      
        6.19         
Landlord
Waivers.  Borrowers
agree to use commercially reasonable efforts to deliver to Agent Landlord
Waivers for leased premises located at 3333 Street Road, Bensalem, Pennsylvania
and all other locations where the value of Collateral is greater than $100,000
or where books and records for a division are maintained.

      

       

      6.21           Super-Priority Lien and
Administrative Claim.  Except for the Carve-Out and Permitted
Priority Liens, the Borrowers hereby covenant, agree, represent and warrant that
(a) all Indebtedness constitutes allowed administrative expenses in the
Bankruptcy Cases with priority under Section 364(c)(1) of the Bankruptcy Code
over any and all other administrative expenses of the kind specified or ordered
pursuant to any provision of the Bankruptcy Code, including, but not limited to,
Sections 105, 326, 328, 503(b), 506(c), 507(a), 507(b) and 726 of the Bankruptcy
Code and shall be payable from the Collateral, and (b) pursuant to Section
364(d) of the Bankruptcy Code, the Indebtedness is secured by a priming, first
priority, security interest in and Lien on all now owned or hereafter acquired
assets and property of the estate (as defined in the Bankruptcy Code), real and
personal, of the Borrowers, including without limitation the Collateral and
proceeds of all of the foregoing, wherever located.

       

      6.22           Final
Order.  The Borrowers shall comply with all terms and
conditions of the Orders in all respects and shall not take any action seeking
to vacate, stay, reverse, modify or amend the Final Order without the prior
consent of Agent and Majority Revolving Lenders.

       

      6.23           Sale of
Assets.  The Borrowers shall consult with the Agent in all
respects relating to any sale outside of the ordinary course of business,
including, without limitation, the approval of any winning bid and the rejection
of any potential bid for such assets.

      
        
           

        

        
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        SECTION
7.            NEGATIVE
COVENANTS

      

       

      In
addition to the covenants contained in the Loan Documents, Borrowers hereby
covenant and agree that, so long as the Lenders have any obligation to make
Loans or issue Letters of Credit hereunder, or any Loan is outstanding,
Borrowers shall not:

       

      
        7.1           Creation of
Debt.  Create,
incur, assume or suffer to exist any Debt except Permitted
Debt.

      

       

      
        7.2           Grant of Liens; Equitable
Lien; Negative Pledge; Restrictions.

      

       

      (a)           Grant,
or permit to exist, any lien on any Project or on any other asset (whether real
or personal) of any Borrower, other than Permitted Liens and liens the
enforcement of which are stayed in connection with the Bankruptcy
Cases.

       

      (b)           create
or assume any Lien upon any of its properties or assets, whether now owned or
hereafter acquired, other than Liens excepted by the provisions of Section
7.2(a), unless it shall make or cause to be made an effective provision whereby
the Indebtedness will be secured by such Lien equally and ratably with any and
all other Indebtedness secured thereby as long as any such Indebtedness shall be
so secured; provided that,
notwithstanding the foregoing, this covenant shall not be construed as a consent
by any Lenders to the creation or assumption of any such Lien not permitted by
the provisions of Section 7.2(a).

       

      (c)           enter
into any agreement prohibiting the creation or assumption of any Lien (excluding
any Critical Vendor settlement) upon any of its properties or assets, whether
now owned or hereafter acquired other than any agreement evidencing an asset
sale, as to the assets being sold or stock sale as to the assets or stock being
sold, or customary provisions in leases and other contracts restricting the
assignment thereof.

       

      (d)           create
or otherwise cause or suffer to exist or become effective any consensual
encumbrance or restriction of any kind on the ability of any such Subsidiary to
(i) pay dividends or make any other distributions on any of such Subsidiary’s
Capital Stock owned by any Borrower, (ii) repay or prepay any Indebtedness owed
by such Subsidiary to any Borrower, (iii) make loans or advances to any
Borrower, or (iv) transfer any of its property or assets to any Borrower, except
(a) as provided in this Agreement and (b), as to transfers of assets, as may be
provided in an agreement with respect to a sale of such assets.

       

      7.3           Mergers.  Other
than as required or permitted hereby, alter the corporate, capital or legal
structure of any Borrower, or enter into any transaction of merger or
consolidation, or liquidate, wind-up or dissolve itself (or suffer any
liquidation or dissolution), except in connection with a Reorganization Plan
approved by the Bankruptcy Court.

       

      
        7.4           Asset
Sales.  Convey,
sell, lease or sub-lease (as lessor or sublessor), transfer or otherwise
dispose of, in one transaction or a series of transactions (including, without
limitation, any sale and leaseback transaction and any disposition under
Bankruptcy Code section 363), all or any part of its business, property or
assets (including its notes or receivables and Capital Stock of a Borrower,
whether newly issued or outstanding), whether now owned or hereafter acquired,
except for sales approved by the Bankruptcy Court and consented to by the Agent
and the Lenders or the retail sale of Units in the ordinary
course.

      

       

      
        
          
          

        

        
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        7.5           Transactions With
Affiliates.  Enter
into any transaction, or cause any Borrower to enter into any transaction,
including, without limitation, the purchase, sale, or exchange of property or
the rendering of any service, with any Affiliate that is not a Borrower,
including, without limitation, the purchase, sale, or exchange of property or
the rendering of any service, except if (a) such transaction is in the ordinary
course of or pursuant to the reasonable requirements of Borrowers’ Business on
terms that are no less favorable to such Borrower, as the case may be, than
those that might be obtained at the time from persons who are not such an
Affiliate, and (b) after giving effect to such transaction, Borrowers remain in
compliance with all covenants in this Agreement.

      

       

      
        7.6           Use of
Proceeds.  Directly
or indirectly, use any part of such proceeds for the purpose of purchasing or
carrying any margin stock within the meaning of Regulation U of the Board of
Governors of the Federal Reserve System or to extend credit to any person for
the purpose of purchasing or carrying any such margin stock, or for any purpose
which violates, or is inconsistent with, Regulation X of the Board of Governors
of the Federal Reserve System.

      

       

      
        7.7           Restricted
Payments.  Permit
any Borrower, or any Affiliate of a Borrower with respect to clause (iv), to,
directly or indirectly, declare, order, pay, make or set apart any sum for (i)
any dividend or other distribution, direct or indirect, on account of any shares
of any class of Capital Stock of any Borrower now or hereafter outstanding, (ii)
any redemption, retirement, sinking fund or similar payment, purchase or other
acquisition for value, direct or indirect, of any shares of any class of Capital
Stock of any Borrower now or hereafter outstanding, (iii) any payment made to
retire, or to obtain the surrender of, any outstanding warrants, options or
other rights to acquire shares of any class of Capital Stock of any Borrower now
or hereafter outstanding, and (iv) providing the funds for or the making of any
payment or prepayment of principal of, premium, if any, interest on, fees
related to, or redemption, purchase, retirement, defeasance (including
in-substance or legal defeasance), sinking fund or similar payment with respect
to, any purchase money mortgages or Subordinated Debt, other than, in each case,
payments, distributions, purchases, acquisitions, providing of funds,
pre-payments, redemptions, retirements of sinking funds or similar payments or
any other actions to the extent taking place among Borrowers.

      

       

      
        7.8           Amendments of Documents
Relating to Subordinated Debt.  Amend
or otherwise change, or permit or consent to any amendment or change to, the
terms of any Subordinated Debt, or any extension, refinancing, renewal,
repayment, replacement, defeasance or refund of any Subordinated Debt, or make
any payment consistent with such an amendment thereof or change thereto, or any
extension, refinancing, renewal, repayment, replacement, defeasance or refund
thereof.

      

       

      
        7.9         
 Nature of
Business.  (i)
Modify or alter in any material manner the nature and type of its business, the
manner in which such business is conducted or (ii) Modify or alter its
organizational documents or (iii) issue any Capital Stock or accept any
contributions from holders of its Capital Stock, except as required by the
Bankruptcy Code.

      

      
        
           

        

        
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        7.10           Subrogation.  Assert
any right of subrogation or contribution against any other Debtor until all
Indebtedness is indefeasibly paid in full.

      

       

      
        7.11           Investments;
Acquisitions.   Directly
or indirectly, make or own any Investment in any Person, including any Joint
Venture, or acquire, by purchase or otherwise, all or substantially all the
business, property or fixed assets of, or Capital Stock of any Person, or any
division or line of business of any Person except in accordance with the
Budget.

      

       

      
        7.12           ERISA and Other Compensation
Arrangements.

      

       

      (a)           Prohibited
Transactions.  Engage in a “prohibited transaction”, as defined
in Section 406 of ERISA or Section 4975 of the Code, with respect to any Plan or
Multiemployer Plan or knowingly consent to any other “party in interest” or any
“disqualified person”, as such terms are defined in Section 3(14) of ERISA and
Section 4975(e)(2) of the Code, respectively, engaging in any “prohibited
transaction”, with respect to any Plan or Multiemployer Plan; or permit any Plan
to incur any “accumulated funding deficiency”, as defined in Section 302 of
ERISA or Section 412 of the Code, unless such incurrence shall have been waived
in advance by the Internal Revenue Service; or terminate any Plan in a manner
which could result in the imposition of a Lien on any property of any Borrower
pursuant to Section 4068 of ERISA; or breach or knowingly permit any employee or
officer or any trustee or administrator of any Plan to breach any fiduciary
responsibility imposed under Title I of ERISA with respect to any Plan; engage
in any transaction which would result in the incurrence of a liability under
Section 4069 of ERISA; or fail to make contributions to a Plan or Multiemployer
Plan which could result in the imposition of a Lien on any property of any
Borrower pursuant to Section 303(k) of ERISA or Section 430(k) of the Code, if
the occurrence of any of the foregoing events (alone or in the aggregate) would
result in a liability which could reasonably be expected to have a Material
Adverse Effect.

       

      (b)           Plans. Modify or
amend any Plan in effect as of the Closing Date such that such modification or
amendment has the effect of (i) increasing payments to Plan participants or
beneficiaries, (ii) increasing the obligations of any Borrower under the Plan or
(iii) accelerating a Plan participant’s the right to payment except, in each
case, as approved by the Agent, or as required under the Code, ERISA, or other
applicable law.  Further no Borrower shall establish or create a Plan,
except as approved by the Agent, or as  required under the Code,
ERISA, or other applicable law.

       

      
        7.13           Compensation.  Permit any
Borrower to, directly or indirectly, declare, order, pay, make or
set apart any sum for commission, payroll, Business-related expenses and similar
advances to officers and employees, except for commission, payroll,
Business-related expenses and similar advances to officers and employees in
accordance with the Budget; provided that Parent
or its Affiliates may make bonus payments, incentive payments or any other
similar payment by to any Person (regardless of whether such recipient is an
employee of a Borrower or not) if (i) such bonus payments (not to include normal
course commission payments relating to the sale of real estate assets and
construction bonuses) are expressly provided for in a employee bonus program
approved by the Agent and Majority Revolving Lenders, which will be subject to
notice and hearing and approval by the Bankruptcy Court, or (ii) such bonus
payments that are normal course commission payments relating to the sale of real
estate assets and construction bonuses (regardless of whether such recipient is
an employee of a Borrower or not) are not in a percentage greater than the
average percentage on a per home basis of commissions paid prior to the Petition
Date.

      

       

      
        
          
          

        

        
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        7.14           DIP
Financing.  Incur
or apply to the Bankruptcy Court for authority to incur, or suffer to exist, any
indebtedness having the priority afforded by Section 364(c) or (d) of the
Bankruptcy Code (including any Superpriority Claims) other than the financing
provided for under this Agreement unless such financing would pay in full the
Indebtedness and the Pre-Petition Indebtedness.

      

       

      
        7.15           Alteration of Rights of
Lenders.  Limit,
affect or modify, or apply to the Bankruptcy Court to limit, affect or modify
any of the Lenders’ rights with respect to the Indebtedness, including rights
with respect to Pre-Petition Collateral and Post-Petition Collateral (each as
defined in the Orders) and the priority thereof and payment of various amounts,
pursuant to any Reorganization Plan or otherwise.

      

       

      
        7.16           Chapter 11
Claims.  Except
for the Carve-Out and the Permitted Priority Liens, apply to the Bankruptcy
Court for the authority or allow to be incurred, created, assumed, suffered or
permitted any Lien against any Borrower, or any of their assets in the
Bankruptcy Cases to be pari
passu with, or senior to, the liens, Encumbrances and claims of the
Lenders granted and arising hereunder and under the Orders.

      

       

      
        7.17           Reclamation Claims;
Bankruptcy Code § 546(c) Agreements.

      

       

      (a)           Make
any payments or transfer any property on account of claims asserted by the
Borrowers’ vendors for reclamation in accordance with UCC Section 2 702 and
Bankruptcy Code Section 546(c) in excess of an amount to be agreed upon, in each
case, by the Borrowers and the Majority Revolving Lenders.

       

      (b)           Enter
into any agreements or file any motion seeking a Bankruptcy Court order for the
return of inventory or supplies to any vendor pursuant to Bankruptcy Code
Section 546(c) without the written consent of the Lenders.

       

      
        7.18           506(c)
Claims.  Make
or impose any claim of any kind upon or against any Lender, the Agent or the
Collateral pursuant to Section 506(c) of the Bankruptcy Code or
otherwise.  Each Borrower hereby irrevocably waives all such claims
and agrees that it shall not assert such claims at any time.  In
addition the Borrowers shall cause the priority of all liens of the Lenders and
the Agent on the Collateral to be maintained in full force and effect and in
accordance with this Agreement, the other Loan Documents and the
Order.  The Borrowers will ensure that except as otherwise provided in
this Agreement, no person or entity shall be permitted to exercise any rights or
remedies with respect to the Collateral unless and until all amounts due under
this Agreement and the other Loan Documents have been paid in
full.

      

       

      
        7.19           Other
Payments.

      

       

      (a)           Prepay
pre-petition Debt, except as expressly provided for in the Loan Documents or
pursuant to “first day” or other orders entered upon pleadings in form and
substance satisfactory to the Agent and Majority Revolving
Lenders.

      
        
           

        

        
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      (b)           Make
payments from Cash or otherwise with respect to post-petition liabilities other
than (i) for items provided for in the Budget, in the amount for such item
provided for in the Budget plus the Excess Variance Amount, or (ii) as otherwise
approved by agent and Majority Revolving Lenders.

       

      (c)           Make
payments with respect to pre-petition accounts payable except for such payments
that: (i) comply with the Order approving Debtors’ Motion for Entry of Orders
Authorizing Debtors to Pay Pre-Petition Obligations to Certain Critical Vendors,
(ii) are provided for in the Budget, (iii) are not in excess of $100,000 except
as approved by Agent, and (iv) do not exceed an aggregate amount of $7,500,000
except if Agent and Majority Revolving Lenders agree to increase such amount to
$10,000,000 (each payment made in compliance with this Section 7.19(c), an
“Permitted Critical Vendor
Payment”).

       

      
        7.20           Construction.  The
Borrowers shall not initiate, begin or continue construction of any Lots or
Units (including attached Units) that, as of the Petition Date, the Borrowers
have not made significant progress in the construction of such Lot or Unit
beyond the completion of stage 2 (foundation and footing
complete).  The Lots and Units upon which construction may occur are
set forth on Schedule 7.20.  The Borrowers shall take whatever action
is required to return such Units or Lots to “finished Lot
status”.

      

       

      
        SECTION
8.           FINANCIAL
COVENANTS

      

       

      So long
as the Indebtedness shall remain unpaid or Lenders have any obligation to make
Loans or issue Letters of Credit hereunder, Borrowers shall comply with all
covenants in this Section 8.  Compliance with the covenants contained
in this Section 8 shall, as appropriate, be determined on the consolidated
Financial Statements of Parent (which shall include all Borrowers and all
consolidated subsidiaries of any Borrower).

       

      
        8.1           Real Estate
Acquisitions.  No
Borrower shall purchase any Real Estate, Lots or Units after the Closing
Date.

      

       

      
        8.2           Minimum Collateral Value
Ratio.  The
Borrowers shall not permit the Collateral Value Ratio as of the last day of the
most recently ended calendar month, commencing with the month ending April 30,
2010, to be less than 2.00:1.00.

      

       

      
        8.3           Limitation on Holdings of
Cash and Cash Equivalents.  Borrowers
may not have Investments, Cash and Cash Equivalents in an aggregate amount not
to exceed $5,000,000 (including the amount of any proceeds of any Revolving Loan
or other amounts in the Cash Collateral Account, but excluding all other Special
Purpose Accounts) for a period of more than two (2) Business
Days.

      

       

      
        SECTION
9.            EVENTS OF
DEFAULT

      

       

      The
occurrence of any of the following shall constitute an “Event of Default”
hereunder:

       

      9.1           The
failure of Agent to receive from Borrowers payment of any sum as required
pursuant to this Agreement or any other Loan Document when due;
or

      
        
           

        

        
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      9.2           The
failure of any Borrower to observe or perform any promise, covenant, warranty,
obligation, representation or agreement in this Agreement or in any other Loan
Document, or in any other document evidencing or securing any of the
Indebtedness or the repayment thereof (and not specifically addressed in the
other Sections of this Section 9), within five (5) days after the earlier of
(i) a senior officer of any Borrower becoming aware of such default or (ii)
receipt by Master Borrower or such Borrower of written notice from Agent or any
Lender of such default; provided that the
notice and cure period contained in this Section 9.2 shall not apply to the
breach of any covenant or obligation contained in Section 6.1, 6.15, 6.16,
Section 7, Section 8 or to any other failure that, by its nature, is not
susceptible to being cured by any Borrower; or

       

      9.3           Any
assignment for the benefit of the creditors of any Borrower, the filing of any
other proceedings by any Borrower or by any other person or entity rendering any
Borrower or any of the Collateral subject to a proceeding in insolvency or in
bankruptcy, either for liquidation or for reorganization (and in the case of an
involuntary proceeding under the Bankruptcy Code, the failure to have same
dismissed prior to the entry of an Order for Relief), or if the Borrowers taken
as a whole shall become insolvent or unable to pay debts as they mature;
or

       

      9.4           The
dissolution or reorganization of any Borrower or a Change of Control shall
occur; or

       

      9.5           The
(i) entry of a judgment or judgments against any Borrower at any time (a) in an
aggregate amount that is at least $500,000 in excess of insurance proceeds
available to such Borrower with respect to such judgment or judgments, if such
judgment or judgments are not dismissed or bonded within thirty (30) days or (b)
that prevents Borrower from conveying Lots and Units in the ordinary course of
business if such judgment or judgments are not dismissed or bonded within thirty
(30) days, (ii) issuance of any writs of attachment, execution or garnishment
against any Borrower, or (iii) one or more non-monetary judgments or decrees
with respect to a post-petition event against the against the Borrowers or any
other material subsidiaries which would reasonably be expected to cause a
material adverse change or a material adverse effect on the ability of the
Borrowers or any other material subsidiaries taken as a whole to perform their
obligations under the Loan Documents or the value of the Collateral or the
interests of any Lender in the Collateral; or

       

      9.6           The
furnishing to Agent or any Lender, heretofore or hereafter, by or on behalf of
any Borrower of materially false information, or the refusal by any Borrower to
hereafter provide material information to Agent upon request; or

       

      9.7           If
any signature, certificate, opinion, financial statement or other information
heretofore or hereafter furnished or made by any Borrower to Agent or the
Lenders shall prove to be false, incorrect, incomplete or misleading in any
material respect on or as of the date furnished, made or deemed made;
or

       

      9.8           The
occurrence of any Material Adverse Effect; or

       

      9.9           Any
warranty or representation by any Borrower contained in this Agreement or in any
other Loan Document is now or hereafter materially false or incorrect when made
or deemed made; or

      
        
           

        

        
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      9.10           Subject
to any applicable grace or cure period therein contained, the occurrence of any
“Event of Default” as defined in or occurring under any Loan Document;
or

       

      9.11           The
occurrence of any default under the terms of any note or other instrument that
evidences Debt of any Borrower, which default continues beyond any applicable
cure period contained therein; or

       

      9.12           At
any time after the execution and delivery thereof, (i) any Loan Document or
any provision thereof, for any reason other than the satisfaction in full of all
Indebtedness, shall cease to be in full force and effect (other than in
accordance with its terms) or shall be declared to be null and void,
(ii) Agent or any Lender shall not have or shall cease to have a valid and
perfected first priority Lien in any Collateral, subject only to Permitted
Priority Liens, to the extent such Lien is required under this Agreement, in
each case for any reason other than the failure of Agent or any Lender to take
any action within its control, or (iii) any Borrower shall contest the
validity or enforceability of any Loan Document or any provision thereof in
writing or deny in writing that it has any further liability, including with
respect to future advances by Lenders, under any Loan Document or any provision
thereof to which it is a party; or

       

      9.13           Subject
to the entry of the Final Order, the occurrence of any insolvency or bankruptcy
proceeding with respect to any significant subsidiary of Parent that is not a
Debtor in the Bankruptcy Cases; or

       

      9.14           The
Bankruptcy Court shall enter an order with respect to any Borrower dismissing
its Bankruptcy Case or converting it to a case under chapter 7 of the Bankruptcy
Code, or appointing a trustee, receiver, interim receiver or receiver and
manager in its Bankruptcy Case (other than at the request of the Lenders) or
appointing a responsible officer or an examiner with enlarged powers shall be
appointed in any of the Bankruptcy Cases (having powers beyond those set forth
in Bankruptcy Code sections 1106(a)(3) and (4)) (other than at the request of
the Lenders); or

       

      9.15           any
other superpriority administrative expense claim or lien (other than Permitted
Priority Liens and the Carve-Out) which is pari passu with or senior to the
claims or Liens of the Lenders under the Loan Documents or the Pre-Petition
Lenders in connection with their Adequate Protection claim shall be granted in
any of the Bankruptcy Cases without the consent of the Lenders; or

       

      9.16           The
Bankruptcy Court shall enter an order granting relief from the automatic stay
applicable under Section 362 of the Bankruptcy Code to any creditor or party in
interest (other than the Lenders or the Pre-Petition Lenders) (i) subject to the
entry of the Final Order, to permit foreclosure (or the granting of a deed in
lieu of foreclosure or the like) on any assets of the Borrowers which have an
aggregate value in excess of an amount to be agreed or (ii) to permit other
actions that would have a material adverse effect on the Borrowers or their
estates or the value of the Collateral or the interests of the Lenders in the
Collateral; or

       

      9.17           An
order of the Bankruptcy Court shall be entered in the Bankruptcy Cases
reversing, amending, supplementing, staying for a period of five (5) days or
more, vacating or otherwise modifying any of the Orders, or the any Borrower
shall apply for authority to do so without the prior written consent of the
Agent and Majority Revolving Lenders; provided that no
Event of Default shall occur under this clause to the extent that any such
amendment, supplement or other modification is made in compliance with this
Agreement and is not adverse, in the sole and absolute judgment of the Majority
Revolving Lenders, to the rights and interests of the Lenders under this
Agreement and the Loan Documents; or

      
        
           

        

        
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      9.18           Any
Borrower shall support (in any such case by way of any motion or other pleading
filed with the Bankruptcy Court or any other writing to another
party-in-interest executed by or on behalf of a Borrower or by way of other
written or unwritten statements to the Bankruptcy Court) any other Person’s
opposition of any motion made in the Bankruptcy Court by the Lenders seeking
confirmation of the amount of the Lenders’ claim or the validity and
enforceability of the Liens in favor of the Lenders and/or the Agent for the
benefit of the Lenders; or

       

      9.19           From
and after the date of entry thereof, the Final Order shall cease to be in full
force and effect (or shall have been vacated, stayed, reversed, modified or
amended), in each case without the consent of the Majority Revolving Lenders;
or

       

      9.20           Other
than as required by the Bankruptcy Code, or as may be permitted in the Loan
Documents or herein as permitted by the Bankruptcy Court, the Borrowers shall
make any payment (whether by way of adequate protection or otherwise) of
principal or interest or otherwise on account of any pre-petition Debt or
payables; or

       

      9.21           Any
of the Borrowers or their Affiliates shall fail to comply with the terms of the
Orders in any material respect; or

       

      9.22           A
plan shall be confirmed in any of the Bankruptcy Cases that does not either
provide for termination of the Revolving Loan Commitments and payment in full in
cash of the Indebtedness and the Pre-Petition Balance on or shortly after the
effective date of such plan of reorganization or liquidation or is not otherwise
acceptable to the Agent and the Majority Revolving Lenders or any order shall be
entered which dismisses any of the Bankruptcy Cases and which order does not
provide for termination of the Revolving Loan Commitments and payment in full in
cash of the Indebtedness and the Pre-Petition Balance or which is not otherwise
acceptable to the Agent and the Majority Revolving Lenders, or any of the
Borrowers shall seek, support, or fail to contest in good faith the filing or
confirmation of such a plan or the entry of such an order; or

       

      9.23           Any
material provision of the Loan Documents shall cease to be effective or shall be
contested by any Borrower or any of their Affiliates; or

       

      9.24           The
filing of a motion, pleading or proceeding by any Borrowers or their Affiliates
which could reasonably be expected to result in a material impairment of the
rights or interests of the Lenders or Pre-Petition Lenders or a final
non-appealable determination by a court with respect to any motion, pleading or
proceeding brought by another party which results in a material impairment;
or

       

      9.25           Any
of the Collateral is attached, seized, or repossessed or transferred, actually
or constructively, to the possession of a trustee, receiver, custodian or
similar party; or

      
        
           

        

        
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      9.26           Any
order shall be entered by the Bankruptcy approving a motion or permitting a
claim against the Collateral under Section 506(c) or 552 of the Bankruptcy Code;
or

       

      9.27           Any
objections and other challenges shall be approved or granted by the Bankruptcy
Court with respect to the validity, priority, secured status or amount of any of
Lenders’ or Agent’s liens or claims (whether pre or post petition) as provided
for herein; other than with respect to a claim or cause of action the Committee
may bring relating to the Debt owed under the Pre-Petition Loan Documents as
permitted under the Final Order; or

       

      9.28           Any
Borrower shall file a motion seeking the relief described in Sections 9.26 or
9.27.

       

      
        SECTION
10.           
REMEDIES

      

       

      
        10.1           Remedies of
Lenders.  Upon
the occurrence of an Event of Default hereunder and the completion of any
applicable grace or cure period, and during continuance of such Event of
Default, (i) Agent may and (ii) upon the request of Majority Revolving Lenders
Agent shall, and without further order of the Bankruptcy Court by notice to
Master Borrower on behalf of the Lenders, and with respect to Section 10.1(c)
each individual Lender may, exercise all or any of the following remedies, all
of which rights and remedies shall be cumulative:

      

       

      (a)           Demand
immediate payment in full of all Indebtedness, whereupon the same shall be
immediately due and payable.

       

      (b)           Immediately
terminate Revolving Lenders’ obligations to make any Loans or to issue any
Letters of Credit or Tri-Party Agreements hereunder.

       

      (c)           Set
off and apply any and all deposits (general or special, time or demand,
provisional or final) at any time held by any Lender to or for the credit or the
account of any Borrower, irrespective of whether Agent or Lenders shall have
made any demand under this Agreement, the Term Notes, the Revolving Notes or any
other Loan Document and although such obligations may be unmatured (which rights
of the Lenders are in addition to other rights and remedies, including, without
limitation, other rights of setoff, which the Lenders may have).  All
net funds recovered under the rights provided in this Section 10.1(c) shall be
recovered by Lenders as agent for the other Lenders and shall be distributed
among Lenders according to their Pro Rata Share.  Each Lender shall be
an agent of all other Lenders for purposes of rights of set-off.

       

      (d)           Credit
bid some or all of the Indebtedness and the Debt under the Pre-Petition Loan
Documents at a sale of some or all of the Collateral outside of a sale in the
ordinary course of business.

       

      (e)           Exercise
its rights or remedies granted herein, or under applicable law, or which it may
otherwise have under any other Loan Document, against any Borrower.

       

      (f)           Notwithstanding
anything to the contrary contained in this Section 10.1, upon the occurrence
with respect to Parent of any event described in Sections 9.13, 9.14, 9.15,
9.17, or 9.19, the entire Indebtedness shall be immediately due and payable and
Lenders’ obligations to make Loans or to issue Letters of Credit or Tri-Party
Agreements, shall automatically and immediately terminate, without notice from
Agent or any Lender.

      
        
           

        

        
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      (g)           Apply
the available funds contained in the Cash Collateral Account to reduce the
Indebtedness in the manner deemed appropriate by the Agent in the Agent’s sole
and absolute discretion.

       

      
        10.2           Effect of
Delay.  Neither
failure nor delay on the part of Agent or the Lenders to exercise any right,
power or privilege hereunder shall operate as a waiver thereof, nor shall any
single or partial exercise of any right, power or privilege hereunder preclude
any other or further exercise thereof or the exercise of any other right, power
or privilege.

      

       

      
        10.3           Acceptance of Partial
Payment.  The
acceptance by the Lenders of any partial payments of Loans made by any Borrower
after the occurrence of an Event of Default hereunder, or the advance of any
additional funds or the issuance of a Letter of Credit or execution of a
Tri-Party Agreement at any such time, shall not be deemed a waiver by the
Lenders of such Event of Default unless expressly agreed in writing by the
Agent.

      

       

      
        10.4           Application of
Proceeds.  Upon
the occurrence and during the continuation of an Event of Default, if requested
by Majority Revolving Lenders, or upon acceleration of the Indebtedness pursuant
to Section 9, (a) all payments received by Agent, whether from Borrowers or
otherwise, and (b) all proceeds received by Agent in respect of any sale
of, collection from, or other realization upon all or any part of the Collateral
under any Collateral Document may, in the discretion of Agent, be held by Agent
as Collateral for, and/or (then or at any time thereafter) applied in full or in
part by Agent, in each case in accordance with Section
2.10(b)(vi).

      

       

      
        10.5           Other Available
Remedies.  The
enumeration of the rights and remedies of the Agent and the Lenders set forth in
this Agreement is not intended to be exhaustive and the exercise by the Agent
and the Lenders of any right or remedy shall not preclude the exercise of any
other rights or remedies, all of which shall be cumulative, and shall be in
addition to any other right or remedy given hereunder or under any other Loan
Documents or that may now or hereafter exist in law or in equity or by suit or
otherwise.

      

       

      
        10.6           Waiver of Marshalling of
Assets.  To
the fullest extent permitted by law, each Borrower,
for itself and its successors and assigns, waives all rights to a marshalling of
the assets of Borrowers and others with interests in any Borrower, and of the
Projects, or to a sale in inverse order of alienation in the event of
foreclosure of all or any of the Mortgages, and agrees not to assert any right
under any laws pertaining to the marshalling of assets, the sale in inverse
order of alienation, homestead exemption, the administration of estates of
decedents, or any other matters whatsoever to defeat, reduce or affect the right
of Agent or Lenders under the Loan Documents to a sale of the Projects for the
collection of the Indebtedness without any prior or different resort for
collection or of the right of Lenders to the payment of the Indebtedness out of
the net proceeds of the Projects in preference to every other claimant
whatsoever.  In addition (but subject to any applicable statute or law
governing deficiencies remaining after the sale of any collateral), each
Borrower, for itself and its successors and assigns, waives in the event of
foreclosure of any or all of the Mortgages, any equitable right otherwise
available to any Borrower which would require the separate sale of the Projects
or require Agent to exhaust its remedies against any individual or any
combination of the Projects before proceeding against any other Project or
combination of Projects; and further in the event of such foreclosure each
Borrower hereby expressly consents to and authorizes, at the option of Agent,
the foreclosure and sale either separately or together of any combination of the
Projects, to the extent permitted by any applicable statute or
law.

      

       

      
        
          
          

        

        
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        10.7           Waiver of
Counterclaim.  Each
Borrower hereby waives the right to assert a counterclaim, other than a
mandatory or compulsory counterclaim, in any action or proceeding brought
against it by Agent or Lenders.

      

       

      10.8           Relief from
Stay.           Five
(5) days after written notice to the Borrowers by the Agent of the occurrence of
any one or more Events of Default and without further permission of the
Bankruptcy Court, the Agent, on behalf of the Lenders, shall be deemed to have
been granted relief from the automatic stay imposed by Section 362 of the
Bankruptcy Code in order to enforce the rights and remedies available to them
under this Agreement and the other Loan Documents.

       

      10.9           Further
Remedies. Five
(5) days after written notice to the Borrowers by the Agent of the occurrence of
any one or more Events of Default and without further permission of the
Bankruptcy Court, the Lenders may proceed to protect and enforce its rights
under this Agreement and the other Loan Documents by exercising such remedies as
are available to the Lenders in respect thereof under applicable law, either by
suit in equity or by action at law, or both, whether for specific performance of
any provision contained in this Agreement or any of the other Loan Documents or
in aid of the exercise of any power granted in this Agreement or any of the
other Loan Documents.

       

      
        10.10        
Credit
Bidding.  In
the event that there shall occur a sale of the Collateral outside of a sale in
the ordinary course of business (regardless of whether an Event of Default has
occurred), whether the sale shall occur within the Bankruptcy Cases pursuant to
the Bankruptcy Code or under Article 9 of the Uniform Commercial Code or
otherwise, each Borrower and Lender hereby agrees that the Agent, on behalf of
all Lenders and Pre-Petition Lenders, shall be the only party that is entitled
to credit bid the Indebtedness and the Pre-Petition Balance, on behalf of all
Lenders and Pre-Petition Lenders, or any portion thereof and to determine, in
its sole discretion, the amount of any such initial credit bid or bid
increments; provided, however, that
Requisite Revolving Lenders shall approve in advance the maximum dollar amount
of any such credit bid.  Notwithstanding anything contained in the
Pre-Petition Loan Documents, the Lenders who constitute Pre-Petition Lenders
hereby consent and agree that to the extent the Agent needs the consent of
Lenders under the Pre-Petition Loan Documents in order to be able to credit bid
some or all of the Pre-Petition Balance, such approval shall only require
approval by any combination of Pre-Petition Lenders whose Pro Rata Shares
aggregate more than sixty six and two thirds percent (66 2/3%) of the aggregate
Pre-Petition Balance of all Pre-Petition Lenders; provided, further, that for the
avoidance of doubt, nothing contained in this Section 10.10 is intended to nor
shall it take away any individual Lender’s or Pre-Petition Lender’s right to
credit bid its Pro Rata Share of the Indebtedness or the Pre-Petition Balance
pursuant to Section 363(k) of the Bankruptcy Code.

      

      
        
           

        

        
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        SECTION
11.          THE
AGENT

      

       

      
        11.1        
Appointment.  Each
of the Lenders hereby irrevocably designates and appoints Agent as agent of such
Lender under this Agreement and the other Loan Documents for the term hereof and
each such Lender irrevocably authorizes Agent, as agent for such Lender, to take
such action on its behalf under the provisions of this Agreement and the other
Loan Documents and to exercise such powers and perform such duties as are
expressly delegated to the Agent by the terms of this Agreement and such other
Loan Documents, together with such other powers as are reasonably incidental
thereto.  Notwithstanding any provision to the contrary elsewhere in
this Agreement or such other Loan Documents, the Agent shall not have any duties
or responsibilities, except those expressly set forth herein and therein, or any
fiduciary relationship with any Lender, and no implied covenants, functions,
responsibilities, duties, obligations or liabilities shall be read into this
Agreement or the other Loan Documents or otherwise exist against the
Agent.  Any reference to the Agent in this Section 11 shall be deemed
to refer to the Agent solely in its capacity as Agent and not in its capacity as
a Lender.

      

       

      
        11.2        
Delegation of
Duties.  Agent
may execute any of its respective duties under this Agreement and the other Loan
Documents by or through agents or attorneys-in-fact and shall be entitled to
rely on advice of counsel concerning all matters pertaining to such
duties.  Agent shall not be responsible for the negligence or
misconduct of any agents or attorneys-in-fact selected by Agent with reasonable
care.

      

       

      
        11.3        
Exculpatory
Provisions.  Neither
Agent nor any of its officers, directors, employees, agents, attorneys-in-fact,
subsidiaries or affiliates shall be (i) liable for any action taken or omitted
to be taken by it or such Person under or in connection with this Agreement or
the other Loan Documents (except for actions occasioned solely by its or such
Person’s own gross negligence or willful misconduct), or (ii) responsible in any
manner to any of the Lenders for (a) any recitals, statements, representations
or warranties made by any Borrower or any officer thereof contained in this
Agreement or the other Loan Documents or in any certificate, report, statement
or other document referred to or provided for in, or received by Agent under or
in connection with, this Agreement or the other Loan Documents or, (b) the
satisfaction of any condition specified herein, other than receipt of items
required to be delivered to Agent, or (c) for the value, validity,
effectiveness, genuineness, enforceability or sufficiency of this Agreement or
the other Loan Documents, or (d) for any failure of any Borrower to perform
their obligations hereunder or thereunder.  Agent shall not be under
any obligation to any Lender to ascertain or to inquire as to the observance or
performance of any of the agreements contained in, or conditions of, this
Agreement, or to inspect the properties, books or records of any
Borrower.  Agent shall have no duty to disclose to Lenders information
that is not required to be furnished by any Borrower to Agent at such time, but
is voluntarily furnished by any Borrower to Agent in its individual
capacity.

      

      
        
           

        

        
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        11.4        
Reliance by
Agent.  Agent
shall be entitled to rely, and shall be fully protected in relying, upon any
note, writing, resolution, notice, consent, certificate, affidavit, letter,
cablegram, telegram, telecopy, telex or teletype message, statement, order or
other document or conversation believed by it to be genuine and correct and to
have been signed, sent or made by the proper Person or Persons and upon advice
and statements of legal counsel (including, without limitation, counsel to the
Borrowers), independent accountants and other experts selected by
Agent.  Agent may deem and treat the payee of any Note as the owner
thereof for all purposes unless such Note shall have been transferred in
accordance with Section 13.9 hereof.  Agent shall be fully justified
in failing or refusing to take any action under this Agreement and the other
Loan Documents unless it shall first receive such advice or concurrence of the
Majority Revolving Lenders (or, when expressly required hereby or by the
relevant other Loan Document, all the Lenders) as it deems appropriate or it
shall first be indemnified to its satisfaction by the Lenders against any and
all liability and expense which may be incurred by it by reason of taking or
continuing to take any such action except for its own gross negligence or
willful misconduct.  Agent shall in all cases be fully protected in
acting, or in refraining from acting, under this Agreement and the Notes in
accordance with a request of the Majority Revolving Lenders (or, when expressly
required hereby, all the Lenders), and such request and any action taken or
failure to act pursuant thereto shall be binding upon all the Lenders and all
future holders of the Notes.

      

       

      
        11.5        
Non-Reliance on Agent and
Other Lenders.  Each
Lender expressly acknowledges that neither Agent nor any of its respective
officers, directors, employees, agents, attorneys-in-fact, subsidiaries or
affiliates has made any representations or warranties to it and that no act by
Agent hereinafter taken, including any review of the affairs of the Borrowers or
any of their respective Affiliates, shall be deemed to constitute any
representation or warranty by Agent to any Lender.  Each Lender
represents to Agent that it has, independently and without reliance upon Agent
or any other Lender, and based on such documents and information as it has
deemed appropriate, made its own appraisal of and investigation into the
business, operations, property, financial and other condition and
creditworthiness of any Borrower and their respective Affiliates and made its
own decision to make Loans and to enter into this Agreement.  Each
Lender also represents that it will, independently and without reliance upon
Agent or any other Lender, and based on such documents and information as it
shall deem appropriate at the time, continue to make its own credit analysis,
appraisals and decisions in taking or not taking action under this Agreement and
the other Loan Documents, and to make such investigation as it deems necessary
to inform itself as to the business, operations, property, financial and other
condition and creditworthiness of any Borrower and their respective
Affiliates.  Except for notices, reports and other documents expressly
required to be furnished to the Lenders by Agent hereunder or by the other Loan
Documents, Agent shall not have any duty or responsibility to provide any Lender
with any credit or other information concerning the business, operations,
property, financial and other condition or creditworthiness of any Borrower or
any of their respective Affiliates which may come into the possession of Agent
or any of its respective officers, directors, employees, agents,
attorneys-in-fact, subsidiaries or affiliates.

      

      
        
           

        

        
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        11.6        
Indemnification.  Lenders
agree to reimburse and indemnify Agent (in its capacity as Agent but not as a
Lender) ratably in proportion to their respective Commitments (i) for any
amounts (but excluding syndication expenses) not reimbursed by any Borrower for
which Agent is entitled to reimbursement by such Borrower under the Loan
Documents (and without limiting the obligation of such Borrower to pay such
reimbursement), including costs and expenses required to be reimbursed by any
Borrower under Section 12.15(a), (ii) for any other reasonable out-of-pocket
expenses incurred by Agent, on behalf of Lenders, in connection with the
administration and enforcement of the Loan Documents and (iii) for any
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements of any kind and nature whatsoever which may at
any time (including, without limitation, at any time following the payment of
the Notes) be imposed on, incurred by or asserted against Agent in any way
relating to or arising out of this Agreement or the other Loan Documents, or any
documents contemplated by or referred to herein or therein or the transactions
contemplated hereby or thereby or any action taken or omitted by Agent under or
in connection with any of the foregoing, including without limitation any
indemnified amount not paid by the Borrowers that is required to be paid under
Section 12.15(b); provided that no
Lender shall be liable for any of the foregoing to the extent they arise from
(a) the gross negligence or willful misconduct of Agent as determined by a court
of competent jurisdiction by final and nonappealable judgment or (b) a dispute
which is solely between Agent and one or more Lenders in which the other Lender
prevails as determined by a court of competent jurisdiction by final and
nonappealable judgment.  The obligations of Lenders under this Section
11.6 shall survive payment of the Indebtedness and termination of this
Agreement.  Each Lender shall, within ten (10) Business Days after a
written demand therefor accompanied with a description of the amounts payable,
contribute its respective Pro-Rata Share of the out-of-pocket costs and expenses
incurred by Agent in accordance with the terms of this Agreement, including, but
not limited to, fees of receivers or trustees, court costs, title company
charges, filing and recording fees, appraisers’ fees and reasonable fees and
expenses of attorneys.

      

       

      
        11.7        
Consequential
Damages.  NOTWITHSTANDING
ANYTHING TO THE CONTRARY HEREIN OR IN ANY OF THE LOAN DOCUMENTS, NEITHER AGENT
NOR ANY LENDER SHALL BE RESPONSIBLE OR LIABLE TO ANY LENDER OR TO AGENT FOR ANY
PUNITIVE, EXEMPLARY OR CONSEQUENTIAL DAMAGES WHICH MAY BE ALLEGED AS A RESULT OF
THIS AGREEMENT, THE OTHER LOAN DOCUMENTS OR ANY OF THE TRANSACTIONS CONTEMPLATED
HEREBY OR THEREBY.

      

       

      
        11.8        
Agent in Its Individual
Capacity.  Agent
and its respective subsidiaries and affiliates may make loans to, accept
deposits from and generally engage in any kind of business with Borrowers as
though Agent were not an Agent hereunder.  With respect to any Loans
made or renewed by it and any Term Note or Revolving Note issued to it, the
Agent shall have the same rights and powers under this Agreement and the other
Loan Documents as any Lender and may exercise the same as though it were not an
Agent, and the terms “Lender” and “Lenders” shall include Agent in its
individual capacity.

      

       

      
        11.9        
Resignation or Removal of
Agent as Agent.  Subject
to the appointment and acceptance
of a successor administrative agent as provided below, (i) Agent may resign at
any time by giving sixty (60) days’ written notice thereof to Lenders and Master
Borrower, and (ii) Agent may be removed at any time by Majority Revolving
Lenders with cause, if it is reasonably determined by Majority Revolving Lenders
that Agent has failed, and continues to fail, in the administration of this
Agreement and the other Loan Documents in accordance with customary practices
for similar credit facilities.  Upon any such resignation or removal,
Majority Revolving Lenders shall have the right to appoint a successor Agent,
subject to the approval of Borrowers, which approval shall not be unreasonably
withheld or delayed; provided, that no
such approval of Borrowers shall be required if an Event of Default is in
existence.  If no successor administrative agent shall have been so
appointed by Majority Revolving Lenders and shall have accepted such appointment
within sixty (60) days after the retiring Agent’s notice of resignation or the
Majority Revolving Lenders’ removal of the retiring Agent, then the retiring
Agent may, on behalf of Lenders, appoint a successor administrative agent,
subject to the approval of Borrowers, which approval shall not be unreasonably
withheld or delayed; provided, that no
such approval of Borrowers shall be required if an Event of Default is in
existence.  Any successor administrative agent shall be a Lender which
has a combined capital and surplus of at least
$1,000,000,000.00.  Upon the acceptance of any appointment as Agent
hereunder by a successor administrative agent, such successor administrative
agent shall thereupon succeed to and become vested with all the rights, powers,
privileges and duties of the retiring Agent, and the retiring Agent shall be
discharged from its duties and obligations hereunder.  After any
retiring Agent’s resignation or removal hereunder as Agent, the provisions of
this Section 11 shall continue in effect for its benefit in respect of any
actions taken or omitted to be taken by it while it was acting as Agent
hereunder.

      

       

      
        
          
          

        

        
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        11.10  
Authority.

      

       

      (a)           Agent,
as described herein, shall have all rights with respect to collection and
administration of the Indebtedness, the security therefor and the exercise of
remedies with respect thereto, except, to the extent otherwise expressly set
forth herein.  Lenders agree that Agent shall make all determinations
as to whether to grant or withhold approvals or consents under the Loan
Documents and as to compliance with the terms and conditions of the Loan
Documents, except to the extent otherwise expressly set forth therein or
herein.  Agent will simultaneously deliver to Lenders copies of any
default notice sent to Borrowers under the terms of the Loan Documents and will
promptly provide to Lenders copies of any other material notices.

       

      (b)           As
to any matters which are subject to the consent of any or all of Lenders, as set
forth in this Agreement, Agent shall not be permitted or required to exercise
any discretion or to take any action except upon the receipt of the written
consent to such action by Lenders holding the required Pro Rata Shares, which
written instructions shall be binding upon Lenders.  Notwithstanding
anything contained herein to the contrary, it is understood and agreed that
Lenders’ right to consent to or disapprove any particular matter shall be
limited to the extent that Lenders’ or Agent’s rights to consent to or
disapprove of such matter are limited in the Loan Documents.  Subject
to the foregoing limitations, each Lender hereby appoints and constitutes Agent
as its agent with full power and authority to exercise on behalf of such Lender
any and all rights and remedies which such Lender may have with respect to, and
to the extent necessary under applicable law for, the enforcement of the Loan
Documents, including the right to exercise, or to refrain from exercising, any
and all remedies afforded to such Lender by the Loan Documents or which such
Lender may have as a matter of law.

       

      
        11.11  
Borrower
Default.  Agent
shall not be deemed to have knowledge of the occurrence
of a default or an Event of Default (other than the nonpayment of principal of
or interest on the Loans) unless Agent has received notice from a Lender or a
Borrower specifying such default or Event of Default and stating that such
notice is a “Notice of Default”.  In the event that Agent receives
such a notice of the occurrence of a default or an Event of Default, Agent shall
give prompt notice thereof to Lenders.  Agent shall give each Lender
prompt notice of each nonpayment of principal of or interest on the Loans,
whether or not Agent has received any notice of the occurrence of such
nonpayment.  Agent shall (subject to Section 11.10) take such action
hereunder with respect to such default or Event of Default as shall be directed
by Majority Revolving Lenders, provided that, unless and until Agent shall have
received such directions, Agent may (but shall not be obligated to) take such
action, or refrain from taking such action, with respect to such default or
Event of Default as it shall deem advisable in the best interests of Lenders,
including, without limitation, continuing to make Loans.

      

       

      
        
          
          

        

        
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        11.12    
Lender
Default.

      

       

      (a)           Definition.  If
any Lender (a “Defaulting
Lender”) (i) fails to fund its Pro Rata Share of any Loan on or before
the time required pursuant to this Agreement, (ii) fails to pay Agent,
within ten (10) days of demand (which demand shall be accompanied by invoices or
other reasonable back up information demonstrating the amount owed) for such
Lender’s Pro Rata Share of any out-of-pocket costs, expenses or disbursements
incurred or made by Agent pursuant to the terms of this Agreement (the aggregate
amount described in the foregoing clauses (i) and (ii) which the Defaulting
Lender fails to pay or fund is referred to as the “Defaulted Amount”), (iii) has
given notice to Agent or any Borrower that it will not make, or that it has
disaffirmed or repudiated any obligation to make, any Loan hereunder (unless
such notice is given by all Lenders), (iv) has been deemed insolvent or become
the subject of a bankruptcy or insolvency proceeding, or (v) has been placed
under a receivership or conservatorship by the Federal Deposit Insurance
Corporation (“FDIC”) and
the FDIC or an Eligible Assignee has not assumed the obligations of such Lender
under the Loan Documents and affirmed to Agent its intent to fully comply with
its obligations under the Loan Documents, in each case in writing in form and
substance satisfactory to Agent, then, in addition to the rights and remedies
that may be available to the other Lenders and the Borrowers (the “Non-Defaulting Lenders”) at
law and in equity, the provisions of this Section 11.12 shall
apply.

       

      (b)           Voting.  The
Defaulting Lender’s right to participate in the administration of the Loans and
the Loan Documents, including without limitation, any rights to vote upon,
consent to or direct any action of Agent or Lenders shall be suspended and such
rights shall not be reinstated unless and until such default is cured and all
decisions (except the decision to remove Agent), which are subject to receiving
a vote of a required percentage of Lenders shall be approved if voted in favor
of by the required percentage of the Non-Defaulting Lenders; provided that if
Agent is a Defaulting Lender, Agent shall continue to have all rights provided
for in this Agreement with respect to the administration of the Loan, unless
Majority Revolving Lenders vote to remove and replace such Agent as provided in
Section 11.9. Notwithstanding
the foregoing, if a Lender (i) was a Defaulting Lender pursuant to clause (v) of
this Section 11.12, and (ii) such Lender is no longer a Defaulting Lender but is
still under an FDIC receivership or conservatorship (a “Special Lender”), then such
Special Lender shall be deemed to have acted with respect to a specific matter
in the same manner as Majority Revolving Lenders (other than the Defaulting
Lenders) that have expressly voted, consented or withheld consent, or directed
any action of Agent or Lenders if such Special Lender does not expressly respond
to any request for such vote consent or direction by the date and time by which
a response was requested.

       

      (c)           Reserved.

      
        
           

        

        
          - 86
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      (d)           Purchase of Defaulting
Lender’s Commitment.  Agent or any Lender shall have the right,
with Agent’s consent and in Agent’s sole discretion (but shall have no
obligation) to purchase from any Defaulting Lender, and such Defaulting Lender
agrees that it shall, upon Agent’s request, sell and assign to Agent or such
Lender or Lenders, all of the Commitment of such Defaulting Lender for an amount
equal to the principal balance of the Note held by the Defaulting Lender and all
accrued interest and fees, less any amounts due from the Defaulting Lender with
respect thereto through the date of sale, such purchase and sale to be
consummated pursuant to  an executed Assignment and Assumption
Agreement.

       

      (e)           Distribution of Interest and
Principal Payments.    Notwithstanding anything in
Section 2.12 to the contrary, so long as any Lender is a Defaulting Lender, such
Defaulting Lender’s Pro Rata Share of any interest payments, principal payments
and Loan Fees received by Agent for the account of Lenders shall be deposited by
Agent in a Special Purpose Collateral Account.  Agent may use the
funds in the Special Purpose Collateral Accounts as it deems appropriate to fund
Loans of such Defaulting Lender.

       

      (f)           Other.  Nothing
contained in this Section 11.12 shall be deemed or construed to waive, diminish
or limit, or prevent or stop any Lender from exercising or enforcing, any rights
or remedies which may be available at law or in equity as a result of or in
connection with any default under this Agreement by a Lender.  In
addition, no Lender shall be deemed to be a Defaulting Lender if such Lender
refuses to fund its Pro Rata Share of any Loan being made after any bankruptcy
related Event of Default hereof due to the lack of bankruptcy court approval for
such Revolving Loan.

       

      
        11.13  
Ratable
Sharing.  The
Lenders, by acceptance of a Note, agree among themselves that with respect to
all amounts received by them which are applicable to the payment of or reduction
of a proportion of the aggregate amount of principal and interest due with
respect to the Notes held by any Lender (whether as a result of the enforcement
of any Loan Document or on foreclosure of any banker’s or other lien or any
setoff or other claim on or against any deposit or other balance of any Borrower
held by any Lender) which is greater than the proportion received by any other
holder of a Note in respect to the aggregate amount of principal and interest
due with respect to the Notes held by it, or any other amount payable hereunder,
such Lender or such holder of a Note receiving such proportionately greater
payments shall notify each other Lender and Agent of such receipt and remit to
them such amounts as are necessary so that all such recoveries of principal and
interest with respect to the Notes shall be proportionate to the Lenders’
respective Pro Rata Shares.  If any Lender or holder of a Note
receiving such proportionately greater payments is required to return such
proportionately greater payment to any trustee, receiver or other representative
of or for any Borrower upon or by reason of the bankruptcy, insolvency,
reorganization or dissolution of such Borrower, then such other Lender(s) which
received its or their Pro Rata Share of such proportionately greater payment
must also return such amounts to the appropriate Borrower as if such payment or
payments from the Lender receiving such proportionately greater payments had not
been made.

      

       

      
        11.14  
Documentation.  Agent
shall deliver to any Lender, in addition to the information required to be
delivered by Agent to Lenders pursuant to this Agreement, copies of such Loan
Documents now or hereafter executed by Borrowers and other documents delivered
by Borrowers to Agent, promptly after receipt of a written request
therefor.

      

       

      
        
          
          

        

        
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        SECTION
12.         
MISCELLANEOUS

      

       

      
        12.1   
 Modifications; Amendments,
Waivers and Consents.

      

       

      (a)           Modifications,
waivers or amendments of or to the provisions of this Agreement or any other
Loan Document shall be effective only if set forth in a written instrument
signed by each of the parties required by this Section 12.

       

      (b)           Except
as set forth below, any term, covenant, agreement or condition of this Agreement
or any of the other Loan Documents may be amended or waived by the Lenders, and
any consent given by the Lenders, if, but only if, such amendment, waiver or
consent is in writing signed by the Majority Revolving Lenders (or by Agent with
the consent of the Majority Revolving Lenders) and delivered to Agent and, in
the case of an amendment, signed by the Borrowers; provided that (x)
without consent of each Term Lender, no amendment, waiver or consent shall
increase the Term Loan Commitments, (y) without the prior written consent of
each Borrower or Revolving Lender no amendment, waiver or consent shall: (i)
Increase the Revolving Loan Commitment or the Letter of Credit Sublimit, (ii)
postpone the date or reduce the amount of any scheduled reduction of the
Revolving Loan Commitment Amount, (iii) postpone the due date of any amount
payable in respect of any Letter of Credit or Tri-Party Agreement, (iv) extend
the expiration date of any Letter of Credit or Tri-Party Agreement beyond the
Maturity Date, (v) change in any manner the obligations of Revolving Lenders
relating to the purchase of participations in Letters of Credit or Tri-Party
Agreements, (vi) amend the definition of Majority Revolving Lenders and (z)
without the prior written consent of each Lender (i) postpone the Maturity Date
or postpone the date or reduce the amount of any scheduled payment (but not
prepayment) of principal of any Loan, (ii) postpone the date on which any
payment of interest or any fee is due; (iii) reduce the principal amount of any
Loan, (iv) reduce the Interest Rate payable on any Loan (other than any waiver
of any increase in the interest rate applicable to any of the Loans pursuant to
Section 2.5) or the amount of any Loan Fee; (viii) permit any assignment
(other than as specifically permitted or contemplated in this Agreement) of any
of the Borrowers’ rights and obligations hereunder; (ix) release any guarantor;
(x) release any Collateral or consent to the transfer, pledge, mortgage or
assignment of any Collateral, other than as specifically provided in this
Agreement; or (xi) amend the provisions of this Section 12.1, (xii) amend the
definition of Pro Rata Share or Majority Lenders (except for any changes
resulting solely from an increase in the aggregate amount of the Revolving Loan
Commitments approved by Majority Revolving Lenders), (xiii) amend any other
provision of this Agreement specifying the number or percentage of Lenders
required to (a) amend, waive or otherwise modify any rights of Lenders
hereunder, (b) make any determination that is to be made by Lenders or (c) grant
any consent that is required to be obtained from Lenders.  In
addition, no amendment or waiver of the provisions of this Section 11 shall be
made without the written consent of Agent and no Lender’s Commitment may be
increased without such Lender’s consent with respect to any amendment or consent
hereunder, each Loan held by the same Legal entity shall provide its consent in
the same manner.

       

      
        12.2    
Binding
Nature.  The
rights and privileges of Agent and Lenders contained in this Agreement shall
inure to the benefit of their respective successors and permitted assigns, and
the duties of the Borrowers shall bind all successors and permitted
assigns.  All agreements, representations, warranties and covenants
made by the Borrowers herein or in any of the other Loan Documents shall survive
the execution and delivery of this Agreement and all other documents referred to
herein and shall be continuing as long as any portion of any Indebtedness owed
to Lenders hereunder shall remain outstanding and unpaid.

      

      
        
           

        

        
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        12.3    
Governing
Law.  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.

      

       

      
        12.4    
Time of
Performance.  Time
of performance hereunder is of the essence of this Agreement.

      

       

      
        12.5    
Severability.  If
any provision hereof shall for any reason be held invalid or unenforceable, no
other provision shall be affected thereby, and this Agreement shall be construed
as if the invalid or unenforceable provision had never been a part of
it.

      

       

      
        12.6    
Captions.  The
descriptive headings hereof are for convenience only and shall not in any way
affect the meaning or construction of any provision hereof.

      

       

      
        12.7    
Computations.  Except
as otherwise expressly stated herein, all computations required herein shall be
made by the application of generally accepted accounting principles and
practices applied on a consistent basis.

      

       

      
        12.8    
Continuing
Obligation.  If
any claim is ever made upon any Lender for the repayment or return of any money
or property received by such Lender from any Borrower in payment of the Loan or
any other Obligation and such Lender repays or returns all or part of said money
or property by reason of (i) any judgment, decree or order of any court or
administrative body having jurisdiction over such Lender or any of its property
or (ii) any settlement or compromise of any such claim accomplished by such
Lender with such claimant, then in such event Borrowers agree that any such
judgment, decree, settlement or compromise shall be binding upon Borrowers,
notwithstanding any termination hereof or the cancellation of any note or other
instrument evidencing any liability to such Lender, and the Borrowers shall be
and shall remain liable to such Lender hereunder for the amount so repaid or the
value of the property returned to the same extent as if such had never
originally been received by such Lender.  Borrowers agree that no
Lender shall have any duty or affirmative obligation to defend against such
claim and may object to or pay such claim in its sole discretion without
impairing or relinquishing the obligations of Borrowers
hereunder.  This Section 13.8 shall survive the termination of this
Agreement.

      

       

      
        12.9    
Assignment and
Participation.

      

       

      (a)           Successors and Assigns
Generally.  The provisions of this Agreement shall be binding
upon and inure to the benefit of the parties hereto and their respective
successors and assigns permitted hereby, except that no Borrower may assign or
otherwise transfer any of its rights or obligations hereunder without the prior
written consent of the Agent and each Lender and no Lender may assign or
otherwise transfer any of its rights or obligations hereunder except (i) to an
assignee in accordance with the provisions of Section 12.9(b), (ii) by way of
participation in accordance with the provisions of Section 12.9(d) or (iii) by
way of pledge or assignment of a security interest subject to the restrictions
of Section 12.9(e) (and any other attempted assignment or transfer by any party
hereto shall be null and void).  Nothing in this Agreement, expressed
or implied, shall be construed to confer upon any Person (other than the parties
hereto, their respective successors and assigns permitted hereby, Participants
to the extent provided in Section 12.9(d) and, to the extent expressly
contemplated hereby, the Related Parties of each of the Agent and the Lenders)
any legal or equitable right, remedy or claim under or by reason of this
Agreement.

      
        
           

        

        
          - 89
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      (b)           Assignments by
Lenders.  Any Lender may at any time assign to one or more
assignees all or a portion of its rights and obligations under this Agreement
(including all or a portion of its Commitment and the Loans at the time owing to
it); provided
that any such assignment shall be subject to the following
conditions:

       

      (i)      Minimum
Amounts.

       

      (1)      in
the case of an assignment of the entire remaining amount of the assigning
Lender’s Commitment and the Loans at the time owing to it or in the case of an
assignment to a Lender, an Affiliate of a Lender or an Approved Fund, no minimum
amount need be assigned; and

       

      (2)      in
any case not described in Section 12.9(b)(i)(1), the aggregate amount of the
Commitment (which for this purpose includes Loans outstanding thereunder) or, if
the applicable Commitment is not then in effect, the principal outstanding
balance of the Loans of the assigning Lender subject to each such assignment
(determined as of the date the Assignment and Assumption with respect to such
assignment is delivered to the Agent or, if “Trade Date” is specified in the
Assignment and Assumption, as of the Trade Date) shall not be less than
$2,500,000, unless the Agent consents (such consent not to be unreasonably
withheld or delayed).

       

      (ii)      Common Interest and
Confidentiality Agreement.  Upon the effective date of any
assignment, such assignee shall be deemed to be a party to the Common Interest
and Confidentiality Agreement and agrees to be bound thereto as if it was a
signing party on the Closing Date.

       

      (iii)      Required
Consents.  No consent shall be required for any assignment
except to the extent required by Section 12.9(b)(ii) or this Section 12.9(b)(iv)
and, in addition:

       

      (1)      the
consent of the Agent (such consent not to be unreasonably withheld or delayed)
shall be required for assignments in respect of a Loan or Commitment if such
assignment is to a Person that is not a Lender with a Commitment, an Affiliate
of such Lender or an Approved Fund with respect to such Lender; and

       

      (2)      the
consent of the Issuer (such consent not to be unreasonably withheld or delayed)
shall be required for any assignment that increases the obligation of the
assignee to participate in exposure under one or more Letters of Credit (whether
or not then outstanding).

       

      (iv)      Assignment and
Assumption.  The parties to each assignment shall execute and
deliver to the Agent an Assignment and Assumption, together with a processing
and recordation fee of $3,500, and the assignee, if it is not a Lender, shall
deliver to the Agent an Administrative Questionnaire.

      
        
           

        

        
          - 90
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      (v)      Electronic Execution of
Assignments.  The
words “execution,” “signed,” “signature,” and words of like import in any
Assignment and Assumption shall be deemed to include electronic signatures or
the keeping of records in electronic form, each of which shall be of the same
legal effect, validity or enforceability as a manually executed signature or the
use of a paper-based recordkeeping system, as the case may be, to the extent and
as provided for in any applicable law, including the Federal Electronic
Signatures in Global and National Commerce Act, the New York State Electronic
Signatures and Records Act, or any other similar state laws based on the Uniform
Electronic Transactions Act.

       

      Subject
to acceptance and recording thereof by Agent pursuant to Section 12.9(c), from
and after the effective date specified in each Assignment and Assumption, the
assignee thereunder shall be a party to this Agreement and, to the extent of the
interest assigned by such Assignment and Assumption, have the rights and
obligations of a Lender under this Agreement, and the assigning Lender
thereunder shall, to the extent of the interest assigned by such Assignment and
Assumption, be released from its obligations under this Agreement (and, in the
case of an Assignment and Assumption covering all of the assigning Lender’s
rights and obligations under this Agreement, such Lender shall cease to be a
party hereto) but shall continue to be entitled to the benefits of Sections
2.16, 2.17 and 12.15 hereof with respect to facts and circumstances occurring
prior to the effective date of such assignment.  Any assignment or
transfer by a Lender of rights or obligations under this Agreement that does not
comply with this paragraph shall be treated for purposes of this Agreement as a
sale by such Lender of a participation in such rights and obligations in
accordance with Section 12.9(d).

       

      (c)      Register.  Agent,
acting solely for this purpose as an agent of Borrowers, shall maintain at its
office in Charlotte, North Carolina, a copy of each Assignment and Assumption
delivered to it and a register for the recordation of the names and addresses of
the Lenders, and the Commitments of, and principal amounts of the Loans owing
to, each Lender pursuant to the terms hereof from time to time (the “Register”).  The
entries in the Register shall be conclusive, and Borrowers, Agent and the
Lenders may treat each Person whose name is recorded in the Register pursuant to
the terms hereof as a Lender hereunder for all purposes of this Agreement,
notwithstanding notice to the contrary.  The Register shall be
available for inspection by the Borrower and any Lender, at any reasonable time
and from time to time upon reasonable prior notice.

       

      (d)      Participations.

       

      (i)      Any
Lender may at any time, without the consent of, or notice to, Borrowers or
Agent, sell participations to any Eligible Assignee (each, a “Participant”) in all or a
portion of such Lender’s rights and/or obligations under this Agreement
(including all or a portion of its Commitment and/or the Loans owing to it);
provided that (i) such Lender’s obligations under this Agreement shall
remain unchanged, (ii) such Lender shall remain solely responsible to the
other parties hereto for the performance of such obligations and
(iii) Borrowers, Agent and the Lenders shall continue to deal solely and
directly with such Lender in connection with such Lender’s rights and
obligations under this Agreement.

      
        
           

        

        
          - 91
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      (ii)      Any
agreement or instrument pursuant to which a Lender sells such a participation
shall provide that such Lender shall retain the sole right to enforce this
Agreement and to approve any amendment, modification or waiver of
any  provision of this Agreement; provided that such
agreement or instrument may provide that such Lender will not, without the
consent of Participant, agree to any amendment, modification or waiver described
in Section 12.1 that requires the consent of all Lenders, that affects such
Participant.  Subject to Section 12.9(d)(ii), Borrower agrees that
each Participant shall be entitled to the benefits of Sections 2.16, 2.17 and
12.15 hereof  to the same extent as if it were a Lender and had
acquired its interest by assignment pursuant to
Section 12.9(a).  To the extent permitted by law, each
Participant also shall be entitled to the benefits of Section 11.14 as
though it were a Lender, provided such Participant agrees to be subject to
Section 11.14 as though it were a Lender.

       

      (iii)      A
Participant shall not be entitled to receive any greater payment under
Sections 2.16 or 2.17 than the applicable Lender would have been entitled
to receive with respect to the participation sold to such Participant, unless
the sale of the participation to such Participant is made with Master Borrower’s
prior written consent.  A Participant that would be a Foreign Lender
if it were a Lender shall not be entitled to the benefits of Section 2.16
unless Master Borrower is notified of the participation sold to such Participant
and such Participant agrees, for the benefit of Borrowers, to comply with
Section 2.16 as though it were a Lender.

       

      (e)      Any
Lender may at any time pledge or assign a security interest in all or any
portion of its rights under this Agreement to secure obligations of such Lender,
including any pledge or assignment to secure obligations to a Federal Reserve
Bank; provided that no such pledge or assignment shall release such Lender from
any of its obligations hereunder or substitute any such assignee for such Lender
as a party hereto.

       

      
        12.10    
Notices.

      

       

      (a)      Except
in the case of notices and other communications expressly permitted to be given
by telephone (and except as provided in Section 12.10(d)), all notices and other
communications provided for herein shall be in writing and shall be delivered by
hand or overnight courier service, mailed by certified or registered mail or
sent by telecopier to the addresses set forth below:

       

      
        
          	
                  If
      to Master Borrower, any other

                	 
      
	
                  Borrower
      or Parent:

                	
                  c/o
      Orleans Homebuilders, Inc.

                
	 
      	
                  3333
      Street Road

                
	 
      	
                  Bensalem,
      Pennsylvania 19020

                
	 
      	
                  Attention:  Garry
      P. Herdler

                
	 
      	
                  Fax:
      (215) 633-2352

                
	 
      	
                  E-mail:
      gherdler@orleanshomes.com

                
	 
      	 
      
	
                  with
      copies to:

                	
                  Lawrence
      J. Dugan, Esquire

                
	 
      	
                  c/o
      Orleans Homebuilders, Inc.

                
	 
      	
                  3333
      Street Road

                
	 
      	
                  Bensalem,
      Pennsylvania 19020

                

        

      

      
        
           

        

        
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                            Fax:
      215-633-3019

                          
	 
      	
                            E-mail:
      ldugan@orleanshomes.com

                          
	 
      	 
      
	 
      	
                            and

                          
	 	 
	 
      	
                            Mitchell
      B. Arden, CTP

                          
	 
      	
                            Managing
      Director and Shareholder

                          
	 
      	
                            Phoenix
      Management Services, Inc.

                          
	 
      	
                            110
      Chadds Ford Commons

                          
	 
      	
                            Chadds
      Ford, PA 19317

                          
	 
      	
                            Fax:
      610-358-9377

                          
	 
      	
                            E-mail: marden@phoenixmanagement.com

                          
	 
      	 
      
	 
      	
                            and

                          
	 
      	 
      
	 
      	
                            William
      M. Hartnett, Esquire

                          
	 
      	
                            Cahill
      Gordon & Reindel LLP

                          
	 
      	
                            Eighty
      Pine Street

                          
	 
      	
                            New
      York, NY 10005-1702

                          
	 
      	
                            Fax:
      212-378-2198

                          
	 
      	
                            E-mail:
      whartnett@cahill.com

                          
	 	 
	 
      	
                            Joel
      H. Levitin, Esquire

                          
	 
      	
                            Cahill
      Gordon & Reindel LLP

                          
	 
      	
                            Eighty
      Pine Street

                          
	 
      	
                            New
      York, NY 10005-1702

                          
	 
      	
                            Fax:
      212-378-2198

                          
	 
      	
                            E-mail:
      Jlevitin@cahill.com

                          
	 	 
	 
      	
                            and

                          
	 	 
	 
      	
                            Michael
      E. Plunkett, Esquire

                          
	 
      	
                            Blank
      Rome LLP

                          
	 
      	
                            One
      Logan Square 130 North 18th Street

                          
	 
      	
                            Philadelphia,
      PA  19103

                          
	 
      	
                            Fax:  215-832-5471

                          
	 
      	
                            E-Mail:  plunkett@blankrome.com

                          
	
                            If
      to Agent (other than

                          	 
      
	
                            regarding
      fundings):

                          	
                            Wells
      Fargo Bank, National Association

                          
	 
      	
                            301
      South College Street, 4th
      Floor

                          
	 
      	
                            Mail
      Code D1053-04R

                          
	 
      	
                            Charlotte,
      NC  28202

                          
	 
      	
                            Attention:  Nathan
      Rantala, Director

                          
	 
      	
                            Fax:  (704)
      383-2647

                          
	 
      	
                            Email:  Nathan.rantala@wachovia.com

                          

                  

                

              

            

          

        

      

      
        
           

        

        
          - 93
-

          
            

          

        

        
           

        

      

       

      
        
          
            
              
                
                  
                    
                      
                        
                          	
                                  with
      copies to:

                                	
                                  Wells
      Fargo Bank, National Association

                                
	 
      	
                                  Mail
      Code VA 7391

                                
	 
      	
                                  P.O.
      Box 13327

                                
	 
      	
                                  Roanoke,
      VA  24040

                                
	 	 
	 
      	
                                  or

                                
	 	 
	 
      	
                                  10
      South Jefferson Street

                                
	 
      	
                                  Roanoke,
      VA  24011

                                
	 	 
	 
      	
                                  and

                                
	 	 
	 
      	
                                  Claudia
      Z. Springer, Esquire

                                
	 
      	
                                  Reed
      Smith LLP

                                
	 
      	
                                  2500
      One Liberty Place

                                
	 
      	
                                  Philadelphia,
      PA  19103

                                
	 
      	
                                  Fax:  215-851-8100

                                
	 
      	
                                  E-mail:  cspringer@reedsmith.com

                                
	 	 
	 
      	
                                  and

                                
	 	 
	 
      	
                                  Scott
      M. Esterbrook, Esquire

                                
	 
      	
                                  Reed
      Smith LLP

                                
	 
      	
                                  2500
      One Liberty Place

                                
	 
      	
                                  Philadelphia,
      PA  19103

                                
	 
      	
                                  Fax:  215-851-8100

                                
	 
      	
                                  E-mail:  sesterbrook@reedsmith.com

                                
	 
      	 
      
	
                                  If
      to Agent regarding fundings:

                                	
                                  To
      Agent as provided in Section 2.12.2

                                
	 
      	 
      
	
                                  If
      to Lenders:

                                	
                                  At
      the address provided on the

                                
	 
      	
                                  Signature
      Page of such Lender

                                
	 
      	 
      
	
                                  If
      to the Committee:

                                	
                                  Richard
      W. Riley, Esq.

                                
	 
      	
                                  Duane
      Morris LLP

                                
	 
      	
                                  1100
      North Market Street

                                
	 
      	
                                  Suite
      1200

                                
	 
      	
                                  Wilmington,
      Delaware 19801

                                
	 
      	
                                  Fax:  302-397-0801

                                
	 
      	
                                  E-mail:  RWRiley@duanemorris.com

                                
	 	 
	 
      	
                                  and

                                
	 	 
	 
      	
                                  Gerard
      S. Catalanello, Esq. and

                                
	 
      	
                                  James
      J. Vincequerra, Esq.

                                
	 
      	
                                  Duane
      Morris LLP

                                
	 
      	
                                  1540
      Broadway

                                
	 
      	
                                  New
      York, New York
10036-4086

                                

                        

                      

                    

                  

                

              

            

          

        

      

      
        
           

        

        
          - 94
-

          
            

          

        

        
           

        

      

       

      
        
          
            	 
      	
                    Fax:  212-692-1037
      and 212-672-1178

                  
	 
      	
                    E-mail:  gcatalanello@duanemorris.com
      and

                    jvincequerra@duanemorris.com

                  
	 	 
	 
      	
                    and

                  
	 
      	 
      
	 
      	
                    Lawrence
      J. Kotler, Esq.

                  
	 
      	
                    Duane
      Morris LLP

                  
	 
      	
                    30
      South 17th Street

                  
	 
      	
                    Philadelphia,
      Pennsylvania 19103-4196

                  
	 
      	
                    Fax:  215-979-1514

                  
	 
      	
                    E-mail:  LJKotler@duanemorris.com

                  

          

        

      

       

      (b)           Notices
given to Master Borrower shall be deemed to have been given to all of the
Borrowers, notwithstanding that any such notice is addressed only to Master
Borrower.

       

      (c)           Notices
sent by hand or overnight courier service, or mailed by certified or registered
mail, shall be deemed to have been given when received; notices sent by
telecopier shall be deemed to have been given when sent (except that, if not
given during normal business hours for the recipient, shall be deemed to have
been given at the opening of business on the next business day for the
recipient).  Notices delivered through electronic communications to
the extent provided in Section 12.10(d), shall be effective as provided in
Section 12.10(d).

       

      (d)           Notices
and other communications to the Lenders hereunder may be delivered or furnished
by electronic communication (including e mail and Internet or intranet websites)
pursuant to procedures approved by Agent, provided that the foregoing shall not
apply to notices to any Lender pursuant to Section 2 if such Lender has notified
Agent that it is incapable of receiving notices under such Article by electronic
communication.  Agent or Borrowers may, in its or their discretion,
agree to accept notices and other communications to it hereunder by electronic
communications pursuant to procedures approved by it, provided that approval of
such procedures may be limited to particular notices or
communications.  Unless Agent otherwise prescribes, (i) notices and
other communications sent to an e-mail address shall be deemed received upon the
sender’s receipt of an acknowledgement from the intended recipient (such as by
the “return receipt requested” function, as available, return e-mail or other
written acknowledgement), provided that if such notice or other communication is
not sent during the normal business hours of the recipient, such notice or
communication shall be deemed to have been sent at the opening of business on
the next business day for the recipient, and (ii) notices or communications
posted to an Internet or intranet website shall be deemed received upon the
deemed receipt by the intended recipient at its e-mail address as described in
the foregoing clause (i) of notification that such notice or communication is
available and identifying the website address therefor.

       

      (e)           Any
party hereto may change its address or facsimile number for notices and other
communications hereunder by notice to the other parties hereto.

      
        
           

        

        
          - 95
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    (f)           Notice
given to any party by the attorney for another party shall constitute notice
from such party (and the attorneys for each party are hereby permitted to give
such notice to each other party on behalf of their client).  Failure
to provide copies of any notice to counsel as provided above shall not
invalidate or limit the effect of such notice.

     

    
      12.11     Cumulative
Remedies.  The
rights and remedies provided hereunder are cumulative and not exclusive of any
rights or remedies (including without limitation, the right of specific
performance) which Agent or Lenders would otherwise have.  Any waiver,
consent or approval of any kind or character on the part of Agent or Lenders of
any Event of Default or breach of this Agreement or any Loan Document or any
such waiver of any provision or condition hereof or thereof must be in writing,
signed by Agent, and shall be effective only to the extent in such writing
specifically set forth.  Borrowers acknowledge that, with respect to
this Agreement and its terms, Borrowers are neither authorized nor entitled to
rely on any representations, course of dealing, modifications or assurances in
any form as to any subject from any officer of Agent unless and until such
representations, modifications, course of dealing, or assurances are set forth
in writing and signed by such officer of Agent.

    

     

    
      12.12    
Third Party
Beneficiaries.  The
parties do not intend the benefits of this Agreement to inure to any third
party.  Notwithstanding anything contained herein or in the Notes or
any other Loan Document executed in connection with this transaction, or any
conduct or course of conduct by either or both of the parties hereto, or their
respective Affiliates, agents, or employees, before or after the signing of this
Agreement or any of the other aforesaid Loan Documents, this Agreement shall not
be construed as creating any rights, claims, or causes of action against Agent
or any Lender, or any of their respective officers, directors, agents, or
employees, in favor of any person or entity other than the
Borrowers.  Under no circumstances shall any party referred to in
Section 2.11(c) be deemed a third-party beneficiary of this
Agreement.

    

     

    
      12.13    
Entire
Agreement.  This
Agreement, the other Loan Documents contain the entire agreement and
understanding among Borrowers, Lenders and Agent regarding the transactions
contemplated by the Loan Documents.  All prior negotiations and
discussions between or among any of the parties hereto regarding the
transactions contemplated by the Loan Documents and the terms and conditions
thereof are superseded by this Agreement and the other Loan
Documents.

    

     

    
      12.14    
Counterparts.  This
Agreement may be executed in any number of counterparts and by different parties
hereto in separate counterparts, each of which when so executed shall be deemed
to be an original and shall be binding upon all parties, their successors and
assigns, and all of which taken together shall constitute one and the same
agreement.

    

    
      
         

      

      
        - 96
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      12.15    
Expenses and
Indemnification.

    

     

    (a)           Costs and
Expenses.

     

    (i)           The
Borrowers shall pay (i) all reasonable out of pocket expenses incurred by the
Agent and its Affiliates (including the reasonable fees, charges and
disbursements of counsel for the Agent), and shall pay all fees and time charges
and disbursements for attorneys who may be employees of the Agent, in connection
with the syndication of the credit facilities provided for herein, the
preparation, negotiation, execution, delivery and administration of this
Agreement and the other Loan Documents or any amendments, modifications or
waivers of the provisions hereof or thereof (whether or not the transactions
contemplated hereby or thereby shall be consummated), (ii) all reasonable out of
pocket expenses incurred by the Issuer in connection with the issuance,
amendment, renewal or extension of any Letter of Credit or Tri-Party Agreement
or any demand for payment thereunder and (iii) all out of pocket expenses
incurred by the Agent, any Lender or the Issuer (including the fees, charges and
disbursements of any counsel for the Agent, any Lender or the Issuer), and shall
pay all fees and time charges for attorneys who may be employees of the Agent,
any Lender or the Issuer, in connection with the enforcement or protection of
its rights (A) in connection with this Agreement and the other Loan Documents,
including its rights under this Section, or (B) in connection with the Loans
made or Letters of Credit or Tri-Party Agreements issued hereunder, including
all such out of pocket expenses incurred during any workout, restructuring or
negotiations in respect of such Loans or Letters of Credit.

     

    (ii)          Borrowers
shall be solely responsible for the cost of preparing any Environmental Report
or of obtaining a reliance letter in form acceptable to Agent in good faith and
addressed to Agent as agent for the Lenders for any Phase I or Phase II
environmental site assessment which Borrowers did not cause to be
prepared.

     

    (b)           Indemnification by
Borrowers.

     

    (i)           The
Borrowers shall indemnify the Agent (and any sub-agent thereof), each Lender and
the Issuer, and each of their Affiliates and the partners, directors, officers,
employees, agents and advisors of Agent (and any sub-agent thereof), each Lender
and the Issuer and of their Affiliates (each such Person being called an “Indemnitee”) against, and hold
each Indemnitee harmless from, and shall pay or reimburse any such Indemnitee
for, any and all losses, claims (including, without limitation, any
Environmental Claims or civil penalties or fines assessed by U.S. Department of
the Treasury’s Office of Foreign Assets Control), damages, liabilities and
related expenses (including the fees, charges and disbursements of any counsel
for any Indemnitee), and shall indemnify and hold harmless, each Indemnitee
from, and shall pay or reimburse any such Indemnitee for, all fees and time
charges and disbursements for attorneys who may be employees of any Indemnitee,
incurred by any Indemnitee or asserted against any Indemnitee by any third party
or by the Borrower or any other Borrower arising out of, in connection with, or
as a result of (i) the execution or delivery of this Agreement, any other
Loan Document or any agreement or instrument contemplated hereby or thereby, the
performance by the parties hereto of their respective obligations hereunder or
thereunder or the consummation of the transactions contemplated hereby or
thereby, (ii) any Revolving Loan, Loan, Letter of Credit or Tri-Party
Agreement or the use or proposed use of the proceeds therefrom (including any
refusal by the Issuer to honor a demand for payment under a Letter of Credit or
Tri-Party Agreement if the documents presented in connection with such demand do
not strictly comply with the terms of such Letter of Credit), (iii) any
actual or alleged presence or Release of Hazardous Substances on or from any
property owned or operated by any Borrower or any Subsidiary thereof, or any
Environmental Claim related in any way to any Borrower or any Subsidiary
thereof, (iv) any actual or prospective claim, litigation, investigation or
proceeding relating to any of the foregoing, whether based on contract, tort or
any other theory, whether brought by a third party or by any Borrower or any
Subsidiary thereof, and regardless of whether any Indemnitee is a party thereto,
or (v) any claim (including, without limitation, any Environmental Claims
or civil penalties or fines assessed by the U.S. Department of the Treasury’s
Office of Foreign Assets Control), investigation, litigation or other proceeding
(whether or not the Agent or any Lender is a party thereto) and the prosecution
and defense thereof, arising out of or in any way connected with the Loans, this
Agreement, any other Loan Document, or any documents contemplated by or referred
to herein or therein or the transactions contemplated hereby or thereby,
including without limitation, reasonable attorneys and consultant’s fees, provided that such
indemnity shall not, as to any Indemnitee, be available to the extent that such
losses, claims, damages, liabilities or related expenses (x) are determined
by a court of competent jurisdiction by final and nonappealable judgment to have
resulted from the gross negligence or willful misconduct of such Indemnitee or
(y) result from a claim brought by any Borrower or any Subsidiary thereof
against an Indemnitee for breach in bad faith of such Indemnitee’s obligations
hereunder or under any other Loan Document, if such Credit Party or such
Subsidiary has obtained a final and nonappealable judgment in its favor on such
claim as determined by a court of competent jurisdiction.

     

    
      
        
        

      

      
        - 97
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    (ii)          Agent
shall promptly give Borrowers written notice of all suits or actions instituted
against Lenders with respect to which Borrowers have indemnified Lenders, and
Borrowers shall timely proceed to defend any such suit or action through counsel
reasonably acceptable to Lenders.  In the event that Lenders determine
in good faith that the subject action, if decided adversely to Lenders’
interest, would have a material adverse effect upon any Lender, Lenders shall
also have the right, at the expense of Borrowers, to participate in or, at
Lenders’ election, assume the defense or prosecution of such suit, action, or
proceeding, and in the latter event Borrowers may employ counsel and participate
therein.  Agent shall have the right to adjust, settle, or compromise
any claim, suit, or judgment after notice to Borrowers, unless Borrowers desire
to litigate such claim, defend such suit, or appeal such judgment and
simultaneously therewith deposit with Agent collateral security sufficient to
pay any judgment rendered, with interest, costs, legal fees and expenses; and
the right of Lenders to indemnification under this Agreement shall extend to any
money paid by Lenders in settlement or compromise of any such claims, suits, and
judgments in good faith, after notice to Borrowers.

     

    (iii)         If
any suit, action, or other proceeding is brought by Lenders against Borrowers
for breach of Borrowers’ covenant of indemnity herein contained, separate suits
may be brought as causes of action accrue, without prejudice or bar to the
bringing of subsequent suits on any other cause or causes of action, whether
theretofore or thereafter accruing.

     

    (iv)         The
obligations of Borrowers and Parent under this Section 12.15 shall survive the
repayment of the Debt and termination of this Agreement, and shall continue in
full force and effect so long as the possibility of such claim, action or suit
exists.  If, and to the extent that the obligations of Borrowers or
Parent under this Section 13.15 are unenforceable for any reason, Borrowers and
Parent hereby agree to make the maximum contribution to the payment in
satisfaction of such obligations which is permissible under applicable
law.

     

    
      
        
        

      

      
        - 98
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      12.16    
Relationship of
Parties.  It
is hereby acknowledged by Lenders and Borrowers that the relationship between
them created hereby and by the other Loan Documents is that of creditor and
debtor and is not intended to be and shall not in any way be construed to be
that of a partnership, a joint venture, or principal and agent.  It is
hereby further acknowledged that Agent’s disbursement of any Loan proceeds to
anyone other than a Borrower shall not be deemed to make Agent or Lenders a
partner, joint venturer, or principal or agent of Borrowers, but rather shall be
deemed to be solely for the purpose of protecting Lenders’ security for the
Indebtedness.  The relationship between Agent and the Lenders is not
intended by the parties to create, and shall not create, any trust, joint
venture or partnership relation between or among them.

    

     

    
      12.17    
Damage
Waiver.  To
the extent permitted by law, no Borrower shall assert, and each Borrower hereby
waives, any claim against any Indemnified Party, on any theory of liability, for
special, indirect, consequential or punitive damages (as opposed to direct or
actual damages) arising out of, in connection with or as a result of this
Agreement, any other Loan Document, any transaction contemplated by the Loan
Documents, any Loan or the use of proceeds thereof.  No Indemnified
Party shall be liable for any damages arising from the use by unintended
recipients of any information or other materials distributed by it through
telecommunications, electronic or other information transmission systems in
connection with the Loan Documents or the transactions contemplated
thereby.

    

     

    
      12.18    
Publicity.  Agent
may, at its option and in such manner as it may determine and which Master
Borrower shall approve (such approval not to be unreasonably withheld, delayed
or conditioned), announce and publicize the involvement of Agent and Lenders in
the entering into of this Agreement.

    

     

    
      12.19    
No Implied
Waiver.  No
delay or failure of Agent or the Lenders in exercising any right, power, or
remedy hereunder shall operate as a waiver thereof; nor shall any single or
partial exercise thereof or any abandonment or discontinuance of steps to
enforce such a right, power or remedy preclude any other or further exercise
thereof or the exercise of any other right, power or remedy.

    

     

    
      12.20    
USA Patriot
Act.  Each
Lender that is subject to the requirements of the USA Patriot Act (Title III of
Pub.L. 107-56) (signed into law October 26, 2001) (the “Act”) hereby notifies
each Borrower that pursuant to the requirements of the Act, it is required to
obtain, verify and record information that identifies Borrowers, which
information includes the name and address of each Borrower and other information
that will allow such Lender to identify Borrowers in accordance with the Act;
Agent shall obtain such information on behalf of the Lenders.

    

     

    
      
        
        

      

      
        - 99
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      12.21    
Conflict; Construction of
Documents; Reliance.  In
the event of any conflict between the provisions of this Agreement and any of
the other Loan Documents, the provisions of this Agreement shall control; provided that any
provision of the Loan Documents which imposes additional burdens on Borrowers or
further restricts the rights of Borrowers or gives the Agent or Lenders
additional rights shall not be deemed to be in conflict or inconsistent with
this Agreement and shall be given full force and effect.  The parties
hereto acknowledge that they were represented by competent counsel in connection
with the negotiation, drafting and execution of the Loan Documents and that the
Loan Documents shall not be subject to the principle of construing their meaning
against the party which drafted them.  Each Borrower acknowledges that
it has read the entirety of this Agreement and of every other Loan Document and
that Borrowers shall rely solely on their own judgment and on their legal
counsel and advisors in entering into this Agreement and executing the Loan
Documents, without relying in any manner on any statements, representations or
recommendations of Agent or any Lender or any parent, subsidiary or Affiliate of
Agent or of any Lender, or of any employee, officer, agent or advisor of any of
the foregoing entities.

    

     

    
      12.22    
Jurisdiction.  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, BORROWERS HEREBY IRREVOCABLY SUBMIT TO THE NON-EXCLUSIVE
JURISDICTION OF THE BANKRUPTCY COURT OR THE UNITED STATES DISTRICT COURT FOR THE
DISTRICT OF DELAWARE AND ANY APPROPRIATE COURT ON APPEAL THERE
FROM.  BORROWERS 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 BORROWERS MAY HAVE BASED UPON LACK OF PERSONAL
JURISDICTION, IMPROPER VENUE, OR FORUM NON CONVENIENS.  BORROWERS
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 BORROWERS 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 AGENT TO SERVE LEGAL PROCESS IN ANY OTHER MANNER PERMITTED
BY LAW, OR TO PRECLUDE THE ENFORCEMENT BY AGENT 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.

    

     

    
      12.23    
Waiver of Jury
Trial.  BORROWERS,
AGENT AND LENDER, 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 THE LOAN DOCUMENTS, OR IN ANY WAY
PERTAINING TO THE RELATIONSHIPS EVIDENCED BY THIS AGREEMENT.

    

     

    
      
        
        

      

      
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      12.24    
Interim Loan Documents; No
Novation or Impairment of Security Interests.  This
Agreement supersedes, amends and restates in full, the Interim Loan Documents
and all prior amendments thereof.  The Indebtedness referred to herein
includes all of the Indebtedness outstanding pursuant to the Interim Loan
Documents immediately prior to the execution of this Agreement.  This
Agreement shall not cause a novation, payment and reborrowing, or termination of
any of the indebtedness or obligations of Borrowers under the Interim Loan
Documents or other loan documents executed in connection therewith, nor shall it
extinguish, discharge, terminate or impair Borrowers’ indebtedness or
obligations or Agent’s or any Lender’s rights or remedies under the Interim Loan
Documents; provided that all
such indebtedness, obligations, rights and remedies shall be on the terms and
conditions of, and as set forth in, this Agreement, the Notes and the other Loan
Documents.  In addition, this Agreement shall not release, limit or
impair in any way the priority of any security interests and liens held by Agent
for the benefit of the Lenders against any assets of Borrowers arising under the
Interim Loan Documents.

    

     

    
      12.25    
General
Acknowledgments.  Each
Borrower and Parent acknowledges and agrees that:

    

     

    (a)           Neither
this Agreement nor any other agreement entered in connection herewith or
pursuant to the terms hereof shall be deemed or construed to be a compromise,
satisfaction, reinstatement, accord and satisfaction, novation or release of any
of the Pre-Petition Loan Documents, or any rights or obligations thereunder, or
a waiver by Agent or any Lender of any of their rights under the Pre-Petition
Loan Documents or at law or in equity.

     

    (b)           All
liens, security interests, rights and remedies granted to Agent and the Lenders
in the Pre-Petition Loan Documents are hereby renewed, confirmed and continued,
and shall also secure the performance by Borrowers of the Indebtedness
hereunder.

     

    (c)           The
Borrower has no defense, set-off, counterclaim or challenge against the payment
of any sums owing under the Pre-Petition Loan Documents, or the enforcement of
any of the terms or conditions thereof.

     

    (d)           The
Borrower hereby confirms and acknowledges that the Pre-Petition Balance is
validly and duly owing under the Pre-Petition Loan Documents to the Lenders,
including all sums included therein for accrued and unpaid interest, legal fees
and expenses and earned and unpaid fees due to the Agent or the Lenders under
the Pre-Petition Loan Documents.

     

    
      12.26    
Releases. 

    

     

    (a)           Release.

     

    (i)           Each
Borrower hereby acknowledges and agrees that, as of the Closing Date, no right
of offset, defense, counterclaim, claim, causes of action or objection in favor
of any Borrower and Parent against the Lenders (including all lenders prior to
the Closing Date) or the Agent, any other agent or any Issuer exists arising out
of or with respect to (i) the Indebtedness, this Agreement or any of the other
Loan Documents; (ii) any other documents evidencing, securing or in any way
relating to the foregoing, or (iii) the administration or funding of the Loans,
the Commitment or the issuance of Letters of Credit or Tri-Party
Agreements.

     

    
      
        
        

      

      
        - 101
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    (ii)          Each
Borrower hereby expressly waives, releases and relinquishes any and all
defenses, setoffs, claims, counterclaims, causes of action or objections, if
any, against such Lenders, the Agent, the other agents or any Issuer, whether
known or unknown, both at law and in equity, only to the extent arising out of
any matter, cause or event occurring on or prior to the Closing
Date.

     

    (iii)         Each
Borrower for itself, each other Borrower and their respective successors and
assigns in interest and any person that may derivatively or otherwise assert a
claim through or by any of the foregoing to the fullest extent permitted by
applicable law (collectively, the “Releasors”) waives and
releases against Agent and each Lender and each of their respective employees,
agents, representatives, consultants, attorneys, fiduciaries, servants,
officers, directors, partners, predecessors, successors and assigns, subsidiary
corporations, parent corporations, related corporate divisions, participants and
assigns (collectively, the “Releasees”), and covenants not
to commence or pursue any litigation or action, claims, demands, causes of
action, suits, debts, sums of money, accounts, bonds, bills, covenants,
contracts, controversies, agreements, promises, setoffs, recoupments,
counterclaims, defenses, expenses, damages and/or judgments, whatsoever in law
or in equity (whether matured, unmatured, contingent or non-contingent) that
relate in any way, either directly or indirectly, to this Agreement, any Loan
Documents, the transactions contemplated thereby or any action by Agents,
Lenders or any other Releasee in any way related thereto, whether known or
unknown, which each of the Releasors had, now has or may have, in each case only
to the extent arising out of any matter, cause or event occurring prior to the
Closing Date.  Each of the Releasors hereby agrees that federal or
state laws, rights, rules or legal principles of any other jurisdiction which
may be applicable thereto, to the extent that they apply to the matters released
hereby, are knowingly and voluntarily waived and relinquished by such Releasors,
to the full extent that such rights and benefits pertaining to the matters
released herein may be waived, and each of the Releasors hereby agrees and
acknowledges that this waiver is an essential term of this Agreement, without
Agents and Lenders would not have entered into this Agreement.  Each
of the Releasors represents and warrants that it has not purported to transfer,
assign, pledge or otherwise convey any of its right, title or interest in any
matter released hereby to any other person.  In connection with the
release in this Agreement, each of the Releasors acknowledges that it is aware
it may hereafter discover claims presently unknown or unsuspected, or facts in
addition to or different from those which such Borrowers now knows or believes
to be true, with respect to the matters released
herein.  Nevertheless, it is each of the Releasors’ intent in
executing this Agreement to fully, finally and forever release and settle such
matters to the extent they arise out of any matter, cause or event occurring
prior to the Closing Date.  In making this release, each of the
Releasors has consulted with counsel concerning the effect thereof.

     

    (iv)         Nothing
contained in this Section 12.26, is intended to nor shall it limit the
Committee’s rights to bring claims or causes of action against the Lenders as
permitted under the Final Order.

     

    
      
        
        

      

      
        - 102
-

        
          

        

      

      
        
        

      

    

     

    
      12.27    
Limited Subordination of
Deficiency Claim.  By
executing this Agreement, the Agent and each Lender covenants and agrees that
the payment of any Deficiency Claim in the Bankruptcy Cases is hereby expressly
made subordinate to the Limited Unsecured Claim Payment, notwithstanding any
contractual (or other) right of subordination the Agent and the Lenders may be
entitled to assert against any holder of any claim against any
Borrower.  Upon full payment or distribution of the entire Limited
Unsecured Claim Payment to unsecured creditors, each Lender shall then have the
right to payment of its respective Deficiency Claim, if any, and, assuming the
Lender has a Deficiency Claim, to share, pro rata, in any additional
proceeds of any Avoidance Actions and/or any other distributions made to or for
the benefit of unsecured claims in the Bankruptcy Cases.  The
provisions of this Section 12.27 are and are intended solely for the purpose of
defining the relative rights of the Lenders on the one hand and the holders of
unsecured claims against the Borrowers in the Bankruptcy Cases on the other
hand.  Nothing contained in this Section 12.27 is intended to nor
shall it (a) impair, as between the Borrowers and the Lenders, the obligations
of the Borrowers, which are absolute and unconditional, to comply with the terms
of this Agreement and pay to the Lenders any amounts required to be paid
hereunder as and when the same shall become due and payable in accordance with
their terms, (b) other than with respect to payment in full of the Limited
Unsecured Claim Payment pursuant to this Section 12.27, impair, amend or modify
the rights (whether in contract or otherwise) the Agent or any Lender may have
(whether pursuant to contract or otherwise) against (i) any Borrower or (ii) any
holder of any claim against any Borrower, including, without limitation, any
contractual right of subordination the Agent and the Lenders may be entitled to,
which are hereby reserved and preserved in every respect or (c) other than with
respect to the payment in full of the Limited Unsecured Claim Payment pursuant
to this Section 12.27, prevent the Agent or the Lenders from enforcing any
rights and remedies the Agent or any Lender may have (whether pursuant to
contract or otherwise) against (i) any Borrower and (ii) any holder of any claim
against any Borrower, including, without limitation, any contractual right of
subordination the Agent and the Lenders may be entitled to, which are hereby
reserved and preserved in every respect.  Each Lender authorizes and
directs Agent on its behalf to take any action as may be necessary or
appropriate to acknowledge and effectuate the subordination set forth in this
Section 12.27 and appoints the Agent as its attorney-in-fact for any and all
such purposes.  This Section 12.27 shall survive payment of the
Indebtedness and termination of this Agreement.

    

     

    [Remainder
of page is blank]

    
      
         

      

      
        - 103
-

        
          

        

      

      
         

      

    

    IN
WITNESS WHEREOF, the parties hereto have executed this Agreement under seal the
day and year set forth above.

     

    
      
        	
                Master
      Borrower:

              	
                Greenwood
      Financial Inc., a Delaware corporation

              
	 
      	 
      	 
      	 
      
	 
      	
                By:

              	
                /s/ Lawrence J. Dugan

              	 
      
	 
      	
                Name:  Lawrence
      J. Dugan

              
	 
      	
                Title:  Vice
      President

              
	 
      	 
      	 
      	 
      
	
                 Corporate
      Borrowers:

              	
                Community
      Management Service Group, Inc.

              
	 
      	
                OHB
      Homes, Inc.

              
	 
      	
                OHI
      Financing, Inc.

              
	 
      	
                Orleans
      Arizona, 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

              
	 
      	 
      
	
                Limited
      Liability Company

              	 
      
	
                Borrowers:

              	
                Masterpiece
      Homes, LLC

              
	 
      	
                OHI
      PA GP, 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

              
	 
      	
                Orleans
      at Millstone River Preserve,
LLC

              

      

    

    [Borrowers’
signatures continued on the following page]

     

    (Signature
Pages to DIP Loan Agreement)

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

    

    
      
        	 
      	
                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.

              
	 
      	
                RHGP,
      LLC

              
	 
      	
                Wheatley
      Meadows Associates, LLC

              
	 
      	 
      	 
      	 
      
	 
      	
                By:

              	
                /s/ Lawrence J. Dugan

              	 
      
	 
      	
                Name:  Lawrence
      J. Dugan

              
	 
      	
                Title:  Vice
      President

              
	
                Limited
      Partnership

              	 
      
	
                Borrowers:

              	
                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

                

        

      

    

    

    
      
        	 
      	
                Orleans
      RHIL, LP

              
	 
      	
                Realen
      Homes, L.P.

              
	 
      	
                By:

              	
                RHGP,
      LLC, sole General Partner

              
	 
      	 
      	
                By:

              	
                Orleans
      Homebuilders, Inc.,

              
	 
      	 
      	 
      	
                Authorized
      Member

              

      

    

    

    
      
        	 
      	
                By:

              	
                /s/ Lawrence J. Dugan

              
	 
      	
                Name:  Lawrence
      J. Dugan

              
	 
      	
                Title:  Vice
      President

              

      

    

    

    (Signature
Pages to DIP Loan Agreement)

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      
        	
                Parent:

              	
                Orleans
      Homebuilders, Inc., a Delaware corporation

              
	 
      	 
      	 
      	 
      
	 
      	
                By:

              	
                /s/ Lawrence J. Dugan

              	 
      
	 
      	
                Name:  Lawrence
      J. Dugan

              
	 
      	
                Title:  Vice
      President

              

      

    

    

    [Lenders’
signatures continued on the following pages]

    

    (Signature
Pages to DIP Loan Agreement)

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

    

    IN
WITNESS WHEREOF, the parties hereto have executed this Agreemetn under seal the
day and year set forth above.

    

    
      
        	 
      	
                Very
      truly yours,

              
	 
      	 
      
	 
      	
                WELLS
      FARGO BANK, NATIONAL ASSOCIATION, as

                Administrative
      Agent

              
	 
      	 
      	 
      
	 
      	
                By:

              	
                /s/ Nathan R. Rantala

              
	 
      	 
      	
                Name:
      Nathan R. Rantala

              
	 
      	 
      	
                Title:
      Director

              

      

    

    

    (Signature
Pages to DIP Loan Agreement)

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

    

    
      
        	 
      	
                WELLS
      FARGO BANK,

              
	 
      	
                NATIONAL
      ASSOCIATION, as

              
	 
      	
                x
      Revolving Lender, Tranche 1 Term Lender and

                Tranche
      2 Term Lender

              
	 
      	
                 ̈
      Tranche 1 Term Lender

              
	 
      	 
      	 
      
	 
      	
                By: 

              	
                /s/ Nathan R. Rantala

              
	 
      	 
      	
                Name:
      Nathan R. Rantala, Director

              

      

    

    

    (Signature
Pages to DIP Loan Agreement)

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

    

    
      
        	 
      	
                BANK
      OF AMERICA, N.A., as

              
	 
      	
                x
      Revolving Lender, Tranche 1 Term Lender and

                Tranche
      2 Term Lender

              
	 
      	
                 ̈
      Tranche 1 Term Lender

              
	 
      	 
      	 
      
	 
      	
                By: 

              	
                /s/ John L. McDonald

              
	 
      	 
      	
                Name:
      John L. McDonald

              
	 
      	 
      	
                Title:
      SVP

              

      

    

    

    (Signature
Pages to DIP Loan Agreement)

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

    

    
      
        	 
      	
                MANUFACTURERS
      AND TRADERS TRUST

                COMPANY,
      as

              
	 
      	
                x
      Revolving Lender, Tranche 1 Term Lender and

                Tranche
      2 Term Lender

              
	 
      	
                 ̈
      Tranche 1 Term Lender

              
	 
      	 
      
	 
      	
                By: 

              	
                /s/ Anne D. Brehony

              
	 
      	 
      	
                Name:
      Anne D. Brehony

              
	 
      	 
      	
                Title:
      Vice President

              

      

    

    

    (Signature
Pages to DIP Loan Agreement)

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

    

    
      
        	 
      	
                PNC
      BANK, N.A., successor to National City

                Bank,
      as

              
	 
      	
                x
      Revolving Lender, Tranche 1 Term Lender and

                Tranche
      2 Term Lender

              
	 
      	
                 ̈
      Tranche 1 Term Lender

              
	 
      	 
      	 
      
	 
      	
                By: 

              	
                /s/ Chris Guyer

              
	 
      	 
      	
                Name:
      Chris Guyer

              
	 
      	 
      	
                Title:
      VP

              

      

    

    

    (Signature
Pages to DIP Loan Agreement)

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

    

    
      
        	 
      	
                FIRSTRUST
      BANK, as

              
	 
      	
                x
      Revolving Lender, Tranche 1 Term Lender and

                Tranche
      2 Term Lender

              
	 
      	
                x
      Tranche 1 Term Lender

              
	 
      	 
      	 
      
	 
      	
                By: 

              	
                /s/ Seth Mackler

              
	 
      	 
      	
                Name:
      Seth Mackler

              
	 
      	 
      	
                Title:
      Senior Vice President

              

      

    

    

    (Signature
Pages to DIP Loan Agreement)

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

    

    
      
        	 
      	
                COMPASS
      BANK, an Alabama Banking

                Corporation,
      as

              
	 
      	
                x
      Revolving Lender, Tranche 1 Term Lender and

                Tranche
      2 Term Lender

              
	 
      	
                 ̈
      Tranche 1 Term Lender

              
	 
      	 
      	 
      
	 
      	
                By: 

              	
                /s/ Linda Garcia

              
	 
      	 
      	
                Name:
      Linda Garcia

              
	 
      	 
      	
                Title:
      SVP

              

      

    

    

    (Signature
Pages to DIP Loan Agreement)

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

    

    
      
        	 
      	
                TD
      BANK, NA, successor by merger to Commerce

                Bank,
      N.A., as

              
	 
      	
                x
      Revolving Lender, Tranche 1 Term Lender and Tranche 2 Term
      Lender

              
	 
      	
                 ̈
      Tranche 1 Term Lender

              
	 
      	 
      	 
      
	 
      	
                By: 

              	
                /s/ Kenneth V. Jones

              
	 
      	 
      	
                Name:
      Kenneth V. Jones

              
	 
      	 
      	
                Title:
      Vice President

              

      

    

    

    (Signature
Pages to DIP Loan Agreement)

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

    

    
      
        	 
      	
                SUNTRUST
      BANK, as

              
	 
      	
                x
      Revolving Lender, Tranche 1 Term Lender and

                Tranche
      2 Term Lender

              
	 
      	
                x
      Tranche 1 Term Lender

              
	 
      	 
      	 
      
	 
      	
                By: 

              	
                /s/ Janet R. Naifeh

              
	 
      	 
      	
                Name:
      Janet R. Naifeh

              
	 
      	 
      	
                Title:
      Senior Vice-President

              

      

    

    

    (Signature
Pages to DIP Loan Agreement)

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

    

    
      
        	 
      	
                REGIONS
      BANK, successor by merger to

                Amsouth
      Bank, as

              
	 
      	
                x
      Revolving Lender, Tranche 1 Term Lender and

                Tranche
      2 Term Lender

              
	 
      	
                 ̈
      Tranche 1 Term Lender

              
	 
      	 
      	 
      
	 
      	
                By: 

              	
                /s/ William Carroll

              
	 
      	 
      	
                Name:
      William Carroll

              
	 
      	 
      	
                Title:
      Senior Vice President

              

      

    

    

    (Signature
Pages to DIP Loan Agreement)

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

    

    
      
        	 
      	
                JPMORGAN
      CHASE BANK, N.A., as

              
	 
      	
                x
      Revolving Lender, Tranche 1 Term Lender and

                Tranche
      2 Term Lender

              
	 
      	
                x
      Tranche 1 Term Lender

              
	 
      	 
      	 
      
	 
      	
                By: 

              	
                /s/ Michael J. Burke

              
	 
      	 
      	
                Name:
      Michael J. Burke

              
	 
      	 
      	
                Title:
      SVP

              

      

    

    

    (Signature
Pages to DIP Loan Agreement)

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

    

    
      
        
          
            
              	 
      	
                      DEUTSCHE
      BANK TRUST COMPANY

                      AMERICAS,
      as

                    
	 
      	
                       ̈
      Revolving Lender, Tranche 1 Term Lender and

                      Tranche
      2 Term Lender

                    
	 
      	
                      x
      Tranche 1 Term Lender

                    
	 
      	 
      	 
      
	 
      	
                      By: 

                    	
                      /s/ Michael M. Meagher

                    
	 
      	 
      	
                      Name:
      Michael M. Meagher

                    
	 
      	 
      	
                      Title:
      Vice President

                    
	 
      	 
      	 
      
	 
      	 
      	
                      /s/ David J. Crescenzi

                    
	 
      	 
      	
                      Name:
      David J. Crescenzi

                    
	 
      	 
      	
                      Title:
      Managing
Director

                    

            

          

        

      

    

    

    (Signature
Pages to DIP Loan Agreement)

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

    

    
      
        	 
      	
                GOLDMAN
      SACHS CREDIT PARTNERS L.P.

              
	 
      	
                x
      Revolving Lender, Tranche 1 Term Lender and

                Tranche
      2 Term Lender

              
	 
      	
                 ̈
      Tranche 1 Term Lender

              
	 
      	 
      	 
      
	 
      	
                By: 

              	
                /s/

              
	 
      	 
      	
                Name:

              
	 
      	 
      	
                Title:
      Counsel – Assistant Secretary

              

      

    

    

    (Signature
Pages to DIP Loan Agreement)Exhibit 10.2

     

    SECURITY
AGREEMENT

    

    This
SECURITY AGREEMENT (this
“Agreement”) is dated as
of April 21, 2010 and entered into by and among Orleans Homebuilders, Inc., a
Delaware corporation (the “Parent”), Greenwood Financial,
Inc., a Delaware corporation (the “Master Borrower”)
and  certain of the Parent’s subsidiaries party hereto (the “Other Borrowers”) (each of the
Parent, the Master Borrower and the Other Borrowers being individually a “Grantor” and collectively the
“Grantors”) and Wells
Fargo Bank, National Association, as agent  for the Lenders (as
defined below) (in such capacity, the “Agent” or the “Secured Party”).

     

    PRELIMINARY
STATEMENTS

     

    A.           Pursuant
to that certain Amended and Restated Revolving Credit Loan Agreement dated as of
December 22, 2004 (the “Original Credit Agreement”),
executed by Master Borrower, certain of the other Borrowers, Agent, as successor
to Wachovia Bank, National Association, and certain of the Lenders, such Lenders
agreed to provide a credit facility to Borrowers on the terms and conditions
contained in the Original Credit Agreement.

     

    B.           Pursuant
to that certain Amended and Restated Revolving Credit Loan Agreement dated as of
January 24, 2006 (as amended prior to the date hereof, the “Amended Credit Agreement”),
executed by the Master Borrower, certain of the other Borrowers, Agent and
certain of the Lenders, such Lenders agreed to amend and restate the Original
Credit Agreement on the terms and conditions contained in the Amended Credit
Agreement.

     

    C.           Pursuant
to that certain Second Amended and Restated Revolving Credit Loan Agreement
dated as of September 30, 2008 (as amended prior to the date hereof, the “Pre-Petition Credit
Agreement”), executed by Master Borrower, certain of the other Borrowers,
Agent and certain of the Lenders (the “Pre-Petition Lenders”), such
Pre-Petition Lenders agreed to amend and restate the Amended Credit Agreement on
the terms and conditions contained in the Pre-Petition Credit
Agreement.

     

    D.           The
Pre-Petition Credit Agreement matured on December 20, 2009 and the Borrowers
thereunder were unable to repay the Pre-Petition Balance at such
time.

     

    E.           Certain
Borrowers and the Parent requested, and Agent and Pre-Petition Lenders agreed,
to enter into a limited waiver on December 18, 2009 to provide the parties until
February 12, 2010 to establish the terms and conditions under which the Agent
and Pre-Petition Lenders might extend the maturity of the Pre-Petition Credit
Agreement and no such agreement was reached.

     

    F.           On
March 1, 2010 (the “Petition
Date”), the Grantors each filed voluntary petitions for relief under
chapter 11 of the Bankruptcy Code which are being jointly administered under
Case No. 10-10684 (collectively, the “Bankruptcy Cases”) and are pending in the
United States Bankruptcy Court for the District of Delaware (the “Bankruptcy
Court”).

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

     

    G.           On
March 3, 2010 (the “Interim
Order Date”), the Bankruptcy Court entered that certain Interim Order
Pursuant to Bankruptcy Code Section 105, 361, 362, 363, 364 and 507 and
Bankruptcy Rules 2002, 4001 and 9014 (I) Authorizing the Borrowers (A) to obtain
Post-Petition Financing and (B) to use Cash Collateral and (II) Granting (A)
Adequate Protection to Pre-Petition Secured Parties and (B) Related Relief
(together with all exhibits and schedules thereto, collectively, the “Interim Order”), which among
other things approved certain interim financing pursuant to the terms and
conditions of the term sheet (the “Term Sheet”) and letter
agreement (the “Letter
Agreement”, together with the Interim Order and the Term Sheet, the
“Interim Loan
Documents”).

     

    H.           Pursuant
to that certain Debtor-in-Possession Loan Agreement made as of the date hereof
(as amended, restated, supplemented, extended or otherwise modified from time to
time, the “Credit
Agreement”) by and among the Grantors, as borrowers, the lenders party
thereto (the “Lenders”)
and the Agent, the Agent and Lenders  have agreed to make available to
the Borrowers certain credit facilities to be used for the purposes specified in
the Credit Agreement and to amend and restate the Interim Loan Documents (as
defined below).   Capitalized terms not otherwise defined herein
shall have the meanings ascribed to such terms in the Credit
Agreement.

     

    I.           The
Borrowers desire secure all of the Indebtedness under the Credit Agreement and
under the other Loan Documents with a first priority Lien on all of its real,
personal and mixed property.

     

    J.           It
is a condition precedent to the Agent and the Lenders entering into the Credit
Agreement that the Grantors shall have granted the security interests and
undertaken the obligations contemplated by this Agreement.

     

    NOW, THEREFORE, in
consideration of the mutual agreements set forth herein and in order to induce
the Agent and the Lenders to enter into the Credit Agreement and the other Loan
Documents and to make certain financial accommodations thereunder, 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.

     

    Each
Grantor hereby collaterally 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 all of the personal property of such Grantor (other than
Avoidance Actions (as defined in the Credit Agreement)), in each case whether
now or hereafter existing, whether tangible or intangible, whether now owned or
hereafter acquired, wherever the same may be located and whether or not subject
to the UCC, including all Assigned Agreements and the following (the “Collateral”):

     

    (a)           all
Accounts;

     

    (b)           all
Chattel Paper;

    
      
         

      

      
        - 2
-

        
          

        

      

      
         

      

    

     

    (c)          all
Money and all Deposit Accounts, together with all amounts on deposit from time
to time in such Deposit Accounts, including without limitation those Deposit
Accounts set forth on Schedule 11 annexed
hereto;

     

    (d)          all
Documents;

     

    (e)          all
General Intangibles, including all intellectual property, Payment Intangibles
and Software;

     

    (f)           all
Goods, including Inventory, Equipment  and Fixtures;

     

    (g)          all
Instruments;

     

    (h)          all
Investment Property;

     

    (i)           all
Letter-of-Credit Rights and other Supporting Obligations;

     

    (j)           all
Records, including without limitation, all books, records, ledger cards, files,
correspondence, computer programs, tapes, disks and related data processing
software that at any time evidence or contain information relating to any of the
foregoing or are otherwise necessary or helpful in the collection thereof or
realization thereupon;

     

    (k)          all
Commercial Tort Claims, including those set forth on Schedule 1 annexed
hereto;

     

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

     

    (m)         all
life insurance policies, including without limitation those set forth on Schedule 12 annexed
hereto(collectively, the “Life
Insurance Collateral”);

     

    (n)          all
development credits, including without limitation those set forth on Schedule 13 annexed
hereto (collectively, the “Development Credit
Collateral”); and

     

    (o)        
 all Proceeds and Accessions with respect to any of the foregoing
Collateral.

     

    Each
category of Collateral set forth above shall have the meaning set forth in the
UCC (to the extent such term is defined in the UCC), it being the intention of
each Grantor that the description of the Collateral set forth above be construed
to include the broadest possible range of assets.

     

    Notwithstanding
anything herein to the contrary, in no event shall the Collateral include, and
no Grantor shall be deemed to have granted a security interest in, any of such
Grantor’s rights or interests in or under, any license, contract, permit,
Instrument, Security or franchise or any of its rights or interests thereunder
to the extent, but only to the extent, that such a grant would, under the terms
of such license, contract, permit, Instrument, Security or franchise, result in
a breach of the terms of, or constitute a default under, such license, contract,
permit, Instrument, Security or franchise (other than to the extent that any
such term would be rendered ineffective pursuant to the UCC or any other
applicable law (including the Bankruptcy Code) or principles of equity); provided, that
immediately upon the ineffectiveness, lapse or termination of any such provision
the Collateral shall include, and each Grantor shall be deemed to have granted a
security interest in, all such rights and interests as if such provision had
never been in effect.

    
      
         

      

      
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    In the
event that any asset of any Grantor is excluded from the Collateral by virtue of
the foregoing paragraph, such Grantor agrees to use all reasonable efforts to
obtain all requisite consents to enable such Grantor to provide a security
interest in such asset pursuant hereto as promptly as practicable.

     

    SECTION
2.       Security for
Obligations.

     

    This
Agreement secures, and the Collateral is collateral security for, the prompt
payment or performance in full when due, whether at stated maturity, by required
prepayment, declaration, acceleration, demand or otherwise, of all obligations
and liabilities of every nature of each Obligor now or hereafter existing under
or arising out of or in connection with the Credit Agreement and the other Loan
Documents, together with all amendments, restatements, modifications or
extensions or renewals thereof, whether for principal, interest, 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 as a preference,
fraudulent transfer or otherwise, and all obligations of every nature of each
Grantor now or hereafter existing under this Agreement (all such obligations of
each Grantor, collectively, being the “Secured
Obligations”).

     

    Without
limiting the foregoing, the parties hereto acknowledge that the assignment of
any Pledged Equity consisting of Pennsylvania limited partnership interests by
any Grantor to Secured Party pursuant to this Agreement is an assignment of
economic rights only, and in accordance with Section 8562 of the Pennsylvania
Revised Uniform Limited Partnership Act (15 Pa. C.S. § 8562) and any such
assignment entitles the Secured Party solely to share in such profits and
losses, to receive such distributions and to receive such allocations of income,
gain, loss, deduction, or credit or similar items to which such Grantor is
entitled, to the extent assigned, and does not entitle Secured Party to become,
nor shall Secured Party be liable as, a partner in the partnership solely as a
result of this Agreement.

     

    SECTION
3.       Grantor Remains
Liable.

     

    Anything
contained herein to the contrary notwithstanding, (a) the Grantors shall
remain jointly and severally liable under any contracts and agreements included
in the Collateral, to the extent set forth therein, to perform all of its duties
and obligations thereunder to the same extent as if this Agreement had not been
executed, (b) the exercise by Secured Party of any of its rights hereunder
shall not release the Grantors from any of their duties or obligations under the
contracts and agreements included in the Collateral, and (c) Secured Party
shall not have any obligation or liability under any contracts, licenses, and
agreements included in the Collateral by reason of this Agreement, nor shall
Secured Party be obligated to perform any of the obligations or duties of the
Grantors thereunder or to take any action to collect or enforce any claim for
payment assigned hereunder.

    
      
         

      

      
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    SECTION
4.      Representations and
Warranties.

     

    Except as
may be disclosed on a Schedule hereto (or a supplement delivered in connection
with Collateral acquired after the date hereof), each Grantor represents and
warrants as follows:

     

    (a)          Ownership of
Collateral.  Except for the security interest created by this
Agreement, Permitted Liens and Liens permitted by the Credit Agreement, each
Grantor owns its interests in the Collateral free and clear of any
Lien.  Except as may have been filed in favor of Secured Party
relating to this Agreement or permitted under the Credit Agreement and Loan
Documents, no effective financing statement or other instrument similar in
effect covering all or any part of the Collateral is on file in any filing or
recording office, including the PTO and the Copyright Office.

     

    (b)          Perfection.  The
security interests in the Collateral granted to Secured Party for the benefit of
itself and the Lenders hereunder and pursuant to the Final Order constitute
valid security interests in the Collateral, securing the payment of the
Secured Obligations and is perfected pursuant to the Final Order.

     

    (c)          Office Locations; Type and
Jurisdiction of Organization.  Each Grantor’s name as it
appears in official filings in the jurisdiction of its organization, such
Grantor’s type of organization (i.e. corporation, limited partnership, etc.),
jurisdiction of organization, principal place of business, chief executive
office, office where such Grantor keeps its Records regarding the Accounts,
Intellectual Property Collateral and originals of Chattel Paper, and
organization number provided by the applicable government authority of the
jurisdiction of organization are set forth on Schedule 3 annexed
hereto.  All of the Equipment and Inventory (other than Inventory
consisting of real property) is located at the places set forth on Schedule 4 annexed
hereto, except for Inventory which, in the ordinary course of business, is in
transit either (i) from a supplier to any Grantor, (ii) between the locations
set forth on Schedule
4 hereto, or (iii) to customers of any Grantor.

     

    (d)          Names.  No Grantor
(or predecessor by merger or otherwise of such Grantor) has, within the six (6)
months preceding the date hereof, had a different name from the name of such
Grantor listed on the signature pages hereof, except as set forth on Schedule 5 annexed
hereto.

     

    (e)          Delivery of Certain
Collateral.  All certificates or Instruments (excluding checks)
evidencing, comprising or representing the Collateral have been delivered to
Secured Party duly endorsed or accompanied by duly executed instruments of
transfer or assignment in blank.

    
      
         

      

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

     

    (g)          Securities
Collateral.  All of the Pledged Subsidiary Equity set forth on
Schedule 6
annexed hereto has been duly authorized and validly issued and is fully paid and
non-assessable; all of the Pledged Subsidiary Debt has been duly authorized and
is the legally valid and binding obligation of the issuers thereof and is not in
default; there are no outstanding warrants, options or other rights to purchase,
or other agreements outstanding with respect to, or property that is now or
hereafter convertible into, or that requires the issuance or sale of, any
Pledged Subsidiary Equity; Schedule 6 annexed
hereto sets forth all of the Equity Interests and the Pledged Equity owned by
each Grantor, and the percentage ownership in each issuer thereof; and Schedule 7 annexed
hereto sets forth all of the Pledged Debt (other than Pledged Subsidiary Debt)
owned by each Grantor.

     

    (h)        
 Intellectual Property
Collateral.  A true and complete list of all Trademark
Registrations and registration applications for any Trademark owned, held
(whether pursuant to a license or otherwise) or used by each Grantor, in whole
or in part, is set forth on Schedule 8 annexed
hereto; a true and complete list of all Patents owned, held (whether pursuant to
a license or otherwise) or used by each Grantor, in whole or in part, is set
forth on Schedule
9 annexed hereto; a true and complete list of all Copyright Registrations
and registration applications for Copyright Registrations held (whether pursuant
to a license or otherwise) by each Grantor, in whole or in part, is set forth on
Schedule 10
annexed hereto; and after reasonable inquiry, no Grantor is aware of any pending
or threatened claim by any third party that any of the Intellectual Property
Collateral owned, held or used by any Grantor is invalid or
unenforceable.

     

    (i)           Deposit Accounts, Securities
Accounts, Commodity Accounts.  Schedule 11 annexed
hereto lists all Deposit Accounts, Securities Accounts and Commodity Accounts
owned by each Grantor, and indicates the institution or intermediary at which
the account is held and the account number.

     

    (j)           Chattel Paper.  No
Grantor has an interest in any Chattel Paper.

     

    (k)          Letter-of-Credit
Rights.  No Grantor an interest in any Letter-of-Credit
Rights.

     

    (l)           Documents.  No
negotiable Documents are outstanding with respect to any of the
Inventory.

     

    (m)         Assigned
Agreements.  Each Assigned Agreement is in full force and
effect and is enforceable against the parties thereto in accordance with its
terms.

     

    (n)          Development Credit
Collateral.  All certificates evidencing or representing the
Development Credit Collateral have been delivered to Secured Party duly endorsed
by the appropriate Grantor in accordance with requirements of the issuer of such
certificate evidencing such Development Credit Collateral.

    
      
         

      

      
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    (o)         Life Insurance Collateral
Assignment.  Each document necessary to collaterally assign the
Life Insurance Collateral to the Secured Party has been delivered to the Secured
Party duly endorsed by the appropriate Grantor in accordance with the
requirements of the issuer of such Life Insurance Collateral.

     

    (p)         Motor Vehicles.  No
Grantor owns any motor vehicles, except as set forth on Schedule 15 annexed
hereto, which lists each motor vehicle by model, model year, jurisdiction of
registration and vehicle identification number.

     

    The representations and warranties as
to the information set forth in Schedules referred to herein are made as of the
date hereof except that, in the case of a Pledge Supplement, IP Supplement or
notice delivered pursuant to Section 5(d) hereof, such representations and
warranties are made as of the date of such supplement or notice.

    

    SECTION
5.      Further
Assurances.

     

    (a)         Generally.  Each
Grantor agrees that from time to time, at the expense of the Grantors, it 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 will:  (i) notify Secured Party in writing of receipt by
any Grantor of any interest in Chattel Paper and, at the request of Secured
Party, mark conspicuously each item of Chattel Paper and each of its Records
pertaining to the Collateral with a legend, in form and substance satisfactory
to Secured Party, indicating that such Collateral is subject to the security
interest granted hereby, (ii) deliver to Secured Party all promissory notes
and other Instruments and, at the request of Secured Party, all original
counterparts of Chattel Paper, duly endorsed and accompanied by duly executed
instruments of transfer or assignment, all in form and substance satisfactory to
Secured Party, (iii) (A) execute (if necessary) and file (if requested by
the Secured Party) such financing or continuation statements, or amendments
thereto, (B) execute and deliver, and cause to be executed and delivered,
agreements establishing that Secured Party has control of Deposit Accounts and
Investment Property of Grantor, (C) deliver such instruments, notices, records,
documents and consents, and take such other actions, necessary to establish that
Secured Party has control over electronic Chattel Paper and Letter-of-Credit
Rights of Grantor and (D) 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, (iv) deliver to Secured party all executed documents necessary
or desirable to collaterally assign the Life Insurance Collateral and pledge the
Development Credit Collateral to the Secured Party, (v) 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,
(vi) promptly after the acquisition by Grantor of any item of Equipment
that is covered by a certificate of title under a statute of any jurisdiction
under the law of which indication of a security interest on such certificate is
required as a condition of perfection thereof, execute and file with the
registrar of motor vehicles or other appropriate authority in such jurisdiction
an application or other document requesting the notation or other indication of
the security interest created hereunder on such certificate of title,
(vii) within thirty (30) days after the end of each calendar quarter,
deliver to Secured Party copies of all such applications or other documents
filed during such calendar quarter and copies of all such certificates of title
issued during such calendar quarter indicating the security interest created
hereunder in the items of Equipment covered thereby, (viii) at any
reasonable time, upon request by Secured Party, exhibit the Collateral to and
allow inspection of the Collateral by Secured Party, or persons designated by
Secured Party, (ix) at Secured Party’s request, appear in and defend any
action or proceeding that may affect any Grantor’s title to or Secured Party’s
security interest in all or any part of the Collateral, (x) 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, (xi) subject to the provisions of Section 12(h),
execute and deliver, and cause to be executed and delivered, all federal and
state tax forms establishing that the Secured Party has (A) a security interest
in the Refund Collateral, (B) the Secured Party or its designee has the right to
directly receive payments from the federal government or any state government
with respect to such Refund Collateral, and (C) the right to endorse any
instruments of payment drawn on the United States Treasury, or any equivalent
state government agency (these forms shall include, but are not limited to, IRS
Form 2848, Power of Attorney and Declaration of Representative Department of
Treasury Form 234,  General Power of Attorney By a Corporation For the
Collection of Certain Checks Drawn on the United States Treasury and any
equivalent forms issued by any state taxing agency), (xii) provide Secured Party
with any documentation deemed necessary by Secured Party to allow Secured Party
to receive payments with respect to the Refund Collateral in compliance with the
Federal Anti-Assignment Act (31 U.S.C. §3727), (xiii) refrain from authorizing
any person other than Secured Party or its designee to directly receive payment
from the federal government or any state government with respect ot the Refund
Collateral or to endorse any instruments of payment drawn on the United States
Treasury or any equivalent state government agency, and (xiv) revoke any
existing powers of attorney authorizing any person other than Secured Party or
its designee to directly receive payments from the federal government or any
state government with respect to the Refund Collateral or to endorse any
instruments of payment drawn on the United States Treasury or any equivalent
state government agency.  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 (including any financing
statement indicating it covers “all assets” or “all personal property” of each
Grantor) without the signature of any Grantor.

    
      
         

      

      
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    (b)          Securities
Collateral.  Without limiting the generality of the foregoing
Section 5(a), each Grantor agrees that (i) all certificates or Instruments
representing or evidencing the Securities Collateral shall be delivered to and
held by or on behalf of Secured Party pursuant hereto and shall be in suitable
form for transfer by delivery or, as applicable, shall be accompanied by such
Grantor’s endorsement, where necessary, or duly executed instruments of transfer
or assignments in blank, all in form and substance satisfactory to Secured Party
and (ii) it will, upon obtaining any additional Equity Interests or
Indebtedness, promptly (and in any event within five (5) Business Days) deliver
to Secured Party a Pledge Supplement, duly executed by such Grantor, in respect
of such additional Pledged Equity or Pledged Debt; provided, that the
failure of such Grantor to execute a Pledge Supplement with respect to any
additional Pledged Equity or Pledged Debt shall not impair the security interest
of Secured Party therein or otherwise adversely affect the rights and remedies
of Secured Party hereunder with respect thereto.  Upon each such
acquisition, the representations and warranties contained in Section 4(f) hereof
shall be deemed to have been made by each Grantor acquiring such Pledged Equity
or Pledged Debt as to such Pledged Equity or Pledged Debt, whether or not such
Pledge Supplement is delivered.

    
      
         

      

      
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    (c)          Intellectual Property
Collateral.  Each Grantor shall promptly notify Secured Party
in writing of any rights to any registered Intellectual Property Collateral
acquired by such Grantor after the date hereof.  Promptly after the
filing of an application for any Trademark Registration, Patent or Copyright
Registration, each Grantor so filing an application shall execute and deliver to
Secured Party an IP Supplement, and submit a Grant for recordation with respect
thereto in the PTO or Copyright Office, as applicable; provided, the failure of
any Grantor to execute an IP Supplement or submit a Grant for recordation with
respect to any additional Intellectual Property Collateral shall not impair the
security interest of Secured Party therein or otherwise adversely affect the
rights and remedies of Secured Party hereunder with respect
thereto.  Upon delivery to Secured Party of an IP Supplement, Schedules 8, 9 and 10
annexed hereto and Schedule A to each
Grant, as applicable, shall be deemed modified to include reference to any
right, title or interest in any existing Intellectual Property Collateral or any
Intellectual Property Collateral set forth on Schedule A to such IP
Supplement.  Upon each such acquisition, the representations and
warranties contained in Section 4(h) hereof shall be deemed to have been made by
the Grantor acquiring such Intellectual Property as to such Intellectual
Property Collateral, whether or not such IP Supplement is
delivered.

     

    (d)         Commercial Tort
Claims.  No Grantor has any Commercial Tort Claims as of the
date hereof, except as set forth on Schedule 1 annexed
hereto.  In the event that any Grantor shall at any time after the
date hereof have any Commercial Tort Claims, such Grantor shall promptly notify
Secured Party thereof in writing, which notice shall (i) set forth in reasonable
detail the basis for and nature of such Commercial Tort Claim and (ii)
constitute an amendment to this Agreement by which such Commercial Tort Claim
shall constitute part of the Collateral.

     

    SECTION
6.      Certain Covenants of
Grantor.

     

    Each
Grantor shall:

     

    (a)           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;

     

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

     

    (c)           give
Secured Party at least thirty (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;

     

    (d)           if
Secured Party gives value to enable any Grantor to acquire rights in or the use
of any Collateral, use such value for such purposes;

    
      
         

      

      
        - 9
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    (e)           keep
correct and accurate Records of Collateral at the locations described in Schedule 3 annexed
hereto;

     

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

     

    (g)           subject
to any required Bankruptcy Court approval, pay promptly when due all property
and other taxes, assessments and governmental charges or levies imposed upon,
and all claims (including claims for labor, services, materials and supplies)
against, the Collateral expect to the extent the validity theroef is being
contested in good faith and except for Permitted Liens; provided that such
Grantor shall in any event pay such taxes, assessments, charges, levies or
claims not later than five (5) days prior to the date of any proposed sale under
any judgment, writ or warrant of attachment entered or filed against such
Grantor or any of the Collateral as a result of the failure to make such
payment; and

     

    (h)          upon
receipt of any Refund Collateral, prepay the Loans in accordance with Section
2.10(b)(iii) of the Credit Agreement.

    

    SECTION
7.      Special Covenants With
Respect to Equipment and Inventory.

     

    Each
Grantor shall:

     

    (a)           if
any Inventory is in possession or control of any of any Grantor’s agents or
processors, and in any event upon the occurrence of an Event of Default,
instruct such agent or processor to hold all such Inventory for the account of
Secured Party and subject to the instructions of Secured Party;

     

    (b)           if
any Inventory is located on premises leased by any Grantor, deliver to Secured
Party a fully executed Collateral Access Agreement as required by the Credit
Agreement;

     

    (c)           promptly
upon the issuance and delivery to any Grantor of any negotiable Document,
deliver such Document to Secured Party; and

     

    (d)          at
its own expense, maintain insurance with respect to the Equipment and Inventory
in accordance with the terms of Section 6.6 of the Credit
Agreement.

     

    SECTION
8.      Special Covenants with
respect to Accounts, Assigned Agreements and certain
Collateral.

     

    (a)           Each
Grantor shall, for not less than three (3) years from the date on which each
Account of such Grantor arose, maintain (i) complete Records of such
Account, including records of all payments received, credits granted and
merchandise returned, and (ii) all documentation relating
thereto.

    
      
         

      

      
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    (b)          Except
as otherwise provided in this subsection (b), each Grantor shall, in
accordance with sound business practices, continue to collect, at its own
expense, all amounts due or to become due to such Grantor under the
Accounts.  In connection with such collections, each Grantor may take
(and upon the occurrence and during the continuance of an Event of Default, at
Secured Party’s direction, shall take) such action as such Grantor or Secured
Party may deem necessary or advisable to enforce collection of amounts due or to
become due under the Accounts; provided, however,
that Secured Party shall have the right at any time, upon the occurrence and
during the continuation of an Event of Default and upon written notice to such
Grantor of its intention to do so, to (i) notify the account debtors or obligors
under any Accounts of the assignment of such Accounts to Secured Party and to
direct such account debtors or obligors to make payment of all amounts due or to
become due to such Grantor thereunder directly to Secured Party, (ii) notify
each Person maintaining a lockbox or similar arrangement to which account
debtors or obligors under any Accounts have been directed to make payment to
remit all amounts representing collections on checks and other payment items
from time to time sent to or deposited in such lockbox or other arrangement
directly to Secured Party, (iii) enforce collection of any such Accounts at the
expense of the Grantors and (iv) adjust, settle or compromise the amount or
payment thereof, in the same manner and to the same extent as such Grantor might
have done.  After receipt by any Grantor of the notice from Secured
Party referred to in the proviso to the preceding sentence, (A) all amounts
and proceeds (including checks and other instruments) received by such Grantor
in respect of the Accounts shall be received in trust for the benefit of Secured
Party hereunder, shall be segregated from other funds of such Grantor and shall
be forthwith paid over or delivered to Secured Party in the same form as so
received (with any necessary endorsement) to be held as cash Collateral and
applied as provided by Section 17 hereof, and (B) such Grantor shall
not, without the written consent of Secured Party, adjust, settle or compromise
the amount or payment of any Account, or release wholly or partly any account
debtor or obligor thereof, or allow any credit or discount thereon.

     

    (c)          Each
Grantor shall at its expense:

     

    (i)           if
consistent with sound business practices, perform and observe all terms and
provisions of the Assigned Agreement, Life Insurance Collateral and Development
Credit Collateral  to be performed or observed by it, maintain such
Collateral in full force and effect, enforce the such Collateral in accordance
with their terms, and take all such action to such end as may be from time to
time requested by Secured Party; and

     

    (ii)           upon
request of Secured Party, (A) furnish to Secured Party, promptly upon receipt
thereof, copies of all notices, requests and other documents received by such
Grantor under or pursuant to the Assigned Agreement, Life Insurance Collateral
and Development Credit Collateral and from time to time such information and
reports regarding such  Collateral as Secured Party may reasonably
request and (B) make to the parties to such Collateral such demands and requests
for information and reports for action as such Grantor is entitled to make under
such Collateral.

    
      
         

      

      
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    (d)           Upon
the occurrence and during the continuance of an Event of Default, no Grantor
shall (i) cancel or terminate any of the Assigned Agreement, Life Insurance
Collateral or Development Credit Collateral or consent to or accept any
cancellation or termination thereof; (ii) amend or otherwise modify such
Collateral or give any consent, waiver or approval thereunder; (iii) waive any
default under or breach of such Collateral; (iv) consent to or permit or accept
any prepayment of amounts to become due under or in connection with such
Collateral, except as expressly provided therein; or (v) take any other action
in connection with such Collateral that could reasonably be expected to
materially impair the value of the interest or rights of such Grantor thereunder
or that could reasonably be expected to materially impair the interest or rights
of Secured Party.

     

    SECTION
9.      Special Covenants With
Respect to the Securities Collateral.

     

    (a)           Form of Securities
Collateral.  Secured Party shall have the right at any time to
exchange certificates or instruments representing or evidencing Securities
Collateral for certificates or instruments of smaller or larger
denominations.  If any Securities Collateral is not a security
pursuant to Section 8-103 of the UCC, Grantor shall not take any action that,
under such Section, converts such Securities Collateral into a security without
causing the issuer thereof to issue to it certificates or instruments evidencing
such Securities Collateral, which it shall promptly deliver to Secured Party as
provided in this Section 9(a).

     

    (b)          Covenants.  Each
Grantor shall (i) not, except as expressly permitted by the Credit Agreement or
Loan Documents, permit any issuer of Pledged Subsidiary Equity to merge or
consolidate unless all the outstanding Equity Interests of the surviving or
resulting Person are, upon such merger or consolidation pledged hereunder, and
no cash, securities or other property is distributed in respect of the
outstanding Equity Interests of any other constituent corporation; (ii) cause
each issuer of Pledged Subsidiary Equity not to issue Equity Interests in
addition to or in substitution for the Pledged Subsidiary Equity issued by such
issuer, except to such Grantor; (iii) immediately upon its acquisition (directly
or indirectly) of any Equity Interests, including additional Equity Interests in
each issuer of Pledged Equity comply with Section 5(b); (iv) immediately upon
issuance of any and all Instruments or other evidences of additional
Indebtedness from time to time owed to such Grantor by any obligor on the
Pledged Debt, comply with Section 5; (v) promptly deliver to Secured Party all
written notices received by it with respect to the Securities Collateral and
consistent with sound business practices; (vi) at its expense (A) perform and
comply in all material respects with all terms and provisions of any agreement
related to the Securities Collateral required to be performed or complied with
by it, (B) maintain all such agreements in full force and effect and (C) enforce
all such agreements in accordance with their terms; and (vii), at the request of
Secured Party, promptly execute and deliver to Secured Party an agreement
providing for control by Secured Party of all Security Entitlements, Securities
Accounts, Commodity Contracts and Commodity Accounts of such
Grantor.

     

    (c)          Voting and
Distributions.  So long as no Event of Default shall have
occurred and be continuing, (i) each Grantor shall be entitled to exercise any
and all voting and other consensual rights pertaining to the Securities
Collateral or any part thereof for any purpose not prohibited by the terms of
this Agreement, the Credit Agreement or the Loan Documents; provided, such
Grantor shall not exercise or refrain from exercising any such right if Secured
Party shall have notified such Grantor that, in Secured Party’s judgment, such
action would have a material adverse effect on the value of the Securities
Collateral or any part thereof; and (ii) such Grantor shall be entitled to
receive and retain any and all dividends, other distributions, principal and
interest paid in respect of the Securities Collateral.

    
      
         

      

      
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    Upon the
occurrence and during the continuation of an Event of Default, (x) upon written
notice from Secured Party to any Grantor, all rights of such Grantor to exercise
the voting and other consensual rights which it would otherwise be entitled to
exercise pursuant hereto shall cease, and all such rights shall thereupon become
vested in Secured Party who shall thereupon have the sole right to exercise such
voting and other consensual rights; (y) all rights of such Grantor to receive
the dividends, other distributions, principal and interest payments which it
would otherwise be authorized to receive and retain pursuant hereto shall cease,
and all such rights shall thereupon become vested in Secured Party who shall
thereupon have the sole right to receive and hold as Collateral such dividends,
other distributions, principal and interest payments; and (z) all dividends,
principal, interest payments and other distributions which are received by such
Grantor contrary to the provisions of clause (y) above shall be received in
trust for the benefit of Secured Party, shall be segregated from other funds of
such Grantor and shall forthwith be paid over to Secured Party as Collateral in
the same form as so received (with any necessary endorsements).

     

    In order
to permit Secured Party to exercise the voting and other consensual rights which
it may be entitled to exercise pursuant hereto and to receive all dividends and
other distributions which it may be entitled to receive hereunder, (I) each
Grantor shall promptly execute and deliver (or cause to be executed and
delivered) to Secured Party all such proxies, dividend payment orders and other
instruments as Secured Party may from time to time reasonably request, and (II)
without limiting the effect of clause (I) above, each Grantor hereby grants to
Secured Party an irrevocable proxy to vote the Pledged Equity and to exercise
all other rights, powers, privileges and remedies to which a holder of the
Pledged Equity would be entitled (including giving or withholding written
consents of holders of Equity Interests, calling special meetings of holders of
Equity Interests and voting at such meetings), which proxy shall be effective,
automatically and without the necessity of any action (including any transfer of
any Pledged Equity on the record books of the issuer thereof) by any other
Person (including the issuer of the Pledged Equity or any officer or agent
thereof), upon the occurrence and during the continuance of an Event of Default
and which proxy shall only terminate upon the payment in full of the Secured
Obligations, the cure of such Event of Default or waiver thereof as evidenced by
a writing executed by Secured Party.

     

    SECTION
10.    Special Covenants With
Respect to the Intellectual Property Collateral.

     

    (a)          Each
Grantor shall:

     

    (i)           use
reasonable efforts so as not to permit the inclusion in any contract to which it
hereafter becomes a party of any provision that could or might in any way impair
or prevent the creation of a security interest in, or the assignment of, any
Grantor’s rights and interests in any property included within the definitions
of any Intellectual Property Collateral acquired under such
contracts;

    
      
         

      

      
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    (ii)           take
any and all reasonable steps to protect the secrecy of all trade secrets
relating to the products and services sold or delivered under or in connection
with the Intellectual Property Collateral, including, without limitation, where
appropriate entering into confidentiality agreements with employees and labeling
and restricting access to secret information and documents; and

     

    (iii)         use
a commercially appropriate standard of quality (which may be consistent with
such Grantor’s past practices) in the manufacture, sale and delivery of products
and services sold or delivered under or in connection with the
Trademarks.

     

    (b)          Except
as otherwise provided in this Section 10, each Grantor shall, in accordance with
sound business practices, continue to collect, at its own expense, all amounts
due or to become due to such Grantor in respect of the Intellectual Property
Collateral or any portion thereof.  In connection with such
collections, each Grantor may take (and upon the occurrence and during the
continuance of an Event of Default, at Secured Party’s direction, shall take)
such action as such Grantor or Secured Party may deem reasonably necessary or
advisable to enforce collection of such amounts; provided, Secured
Party shall have the right at any time, upon the occurrence and during the
continuation of an Event of Default and upon written notice to such Grantor of
its intention to do so, to notify the obligors with respect to any such amounts
of the existence of the security interest created hereby and to direct such
obligors to make payment of all such amounts directly to Secured Party, and,
upon such notification and at the expense of such Grantor, to enforce collection
of any such amounts and to adjust, settle or compromise the amount or payment
thereof, in the same manner and to the same extent as such Grantor might have
done.  After receipt by any Grantor of the notice from Secured Party
referred to in the proviso to the preceding sentence and upon the occurrence and
during the continuance of any Event of Default, (i) all amounts and
proceeds (including checks and Instruments) received by such Grantor in respect
of amounts due to such Grantor in respect of the Intellectual Property
Collateral or any portion thereof shall be received in trust for the benefit of
Secured Party hereunder, shall be segregated from other funds of such Grantor
and shall be forthwith paid over or delivered to Secured Party in the same form
as so received (with any necessary endorsement) to be held as cash Collateral
and applied as provided by Section 17 hereof, and (ii) such Grantor shall
not adjust, settle or compromise the amount or payment of any such amount or
release wholly or partly any obligor with respect thereto or allow any credit or
discount thereon.

     

    (c)          Each
Grantor shall have the duty diligently, through counsel reasonably acceptable to
Secured Party, to prosecute, file and/or make, unless and until such Grantor, in
its commercially reasonable judgment, decides otherwise, (i) any
application for registration relating to any of the Intellectual Property
Collateral owned, held or used by such Grantor and set forth on Schedules 8, 9 or 10 annexed hereto, as
applicable, that is pending as of the date of this Agreement, (ii) any
Copyright Registration on any existing or future unregistered but copyrightable
works (except for works of nominal commercial value or with respect to which
such Grantor has determined in the exercise of its commercially reasonable
judgment that it shall not seek registration), (iii) any application on any
future patentable but unpatented innovation or invention comprising Intellectual
Property Collateral, and (iv) any Trademark opposition and cancellation
proceedings, renew Trademark Registrations and Copyright Registrations and do
any and all acts which are necessary or desirable to preserve and maintain all
rights in all Intellectual Property Collateral.  Any expenses incurred
in connection therewith shall be borne solely by the
Grantors.  Subject to the foregoing, each Grantor shall give Secured
Party prior written notice of any abandonment of any Intellectual Property
Collateral.

    
      
         

      

      
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    (d)          Except
as provided herein, each Grantor shall have the right to commence and prosecute
in its own name, as real party in interest, for its own benefit and at its own
expense, such suits, proceedings or other actions for infringement, unfair
competition, dilution, misappropriation or other damage, or reexamination or
reissue proceedings as are necessary to protect the Intellectual Property
Collateral.  Each Grantor shall promptly, following its becoming aware
thereof, notify Secured Party of the institution of, or of any adverse
determination in, any proceeding (whether in the PTO, the Copyright Office or
any federal, state, local or foreign court) or regarding such Grantor’s
ownership, right to use, or interest in any Intellectual Property
Collateral.  Each Grantor shall provide to Secured Party any
information with respect thereto requested by Secured Party.

     

    (e)          In
addition to, and not by way of limitation of, the granting of a security
interest in the Collateral pursuant hereto, each Grantor, effective upon the
occurrence and during the continuance of an Event of Default, hereby assigns,
transfers and conveys to Secured Party the nonexclusive right and license to use
all Trademarks, tradenames, Copyrights, Patents or technical processes
(including, without limitation, the Intellectual Property Collateral) owned or
used by such Grantor that relate to the Collateral, together with any goodwill
associated therewith, all to the extent necessary to enable Secured Party to
realize on the Collateral in accordance with this Agreement and to enable any
transferee or assignee of the Collateral to enjoy the benefits of the
Collateral.  This right shall inure to the benefit of all successors,
assigns and transferees of Secured Party and its successors, assigns and
transferees, whether by voluntary conveyance, operation of law, assignment,
transfer, foreclosure, deed in lieu of foreclosure or otherwise.  Such
right and license shall be granted free of charge, without requirement that any
monetary payment whatsoever be made to such Grantor.  If and to the
extent that any Grantor is permitted to license the Intellectual Property
Collateral, Secured Party shall promptly enter into a non-disturbance agreement
or other similar arrangement, at such Grantor’s request and expense, with such
Grantor and any licensee of any Intellectual Property Collateral permitted
hereunder in form and substance reasonably satisfactory to Secured Party
pursuant to which (i) Secured Party shall agree not to disturb or interfere
with such licensee’s rights under its license agreement with such Grantor so
long as such licensee is not in default thereunder, and (ii) such licensee
shall acknowledge and agree that the Intellectual Property Collateral licensed
to it is subject to the security interest created in favor of Secured Party and
the other terms of this Agreement.

    
      
         

      

      
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    SECTION
11.    Collateral
Account.

     

    Secured
Party is hereby authorized to establish and maintain at its office at 201 S.
College Street, 8th Floor,
Charlotte, NC  28288-5708 as a blocked account under the sole dominion
and control of Secured Party, one or more restricted Deposit Accounts designated
as “Orleans Collateral Account”.  All amounts at any time held in the
Collateral Accounts shall be beneficially owned by the Grantors but shall be
held in the name of Secured Party hereunder, as collateral security for the
Secured Obligations upon the terms and conditions set forth
herein.  Grantors shall have no right to withdraw, transfer or, except
as expressly set forth herein, in the Credit Agreement or in the Loan Documents,
otherwise receive any funds deposited into the Collateral
Account.  Anything contained herein to the contrary notwithstanding,
the Collateral Accounts shall be subject to such applicable laws, and such
applicable regulations of the Board of Governors of the Federal Reserve System
and of any other appropriate banking or government authority, as may now or
hereafter be in effect.  All deposits of funds in the Collateral
Accounts shall be made by wire transfer (or, if applicable, by intra-bank
transfer from another account of the Grantors) of immediately available funds,
in each case addressed in accordance with instructions of Secured
Party.  Grantors shall, promptly after initiating a transfer of funds
to the Collateral Accounts, give notice to Secured Party by telefacsimile of the
date, amount and method of delivery of such deposit.  Cash held by
Secured Party in the Collateral Accounts shall not be invested by Secured Party
but instead shall be maintained as a cash deposit in the Collateral Account
pending application thereof as elsewhere provided in this Agreement, the Credit
Agreement or the Loan Documents.  To the extent permitted under
Regulation Q of the Board of Governors of the Federal Reserve System, any cash
held in the Collateral Accounts shall bear interest at the standard rate paid by
Secured Party to its customers for deposits of like amounts and
terms.  Subject to Secured Party’s rights hereunder, any interest
earned on deposits of cash in the Collateral Accounts shall be deposited
directly in, and held in, the Collateral Accounts.

     

    SECTION
12.    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 obtain and
adjust insurance required to be maintained by such Grantor or paid to Secured
Party pursuant to Section 7;

     

    (b)           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;

     

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

     

    (d)           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;

     

    (e)           to
pay or discharge taxes or Liens (other than taxes not required to be discharged,
Permitted Liens and Liens permitted under 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;

    
      
         

      

      
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    (f)           upon
the occurrence and during the continuance of an Event of Default, to sign and
endorse any invoices, freight or express bills, bills of lading, storage or
warehouse receipts, drafts against debtors, assignments, verifications and
notices in connection with Accounts and other documents relating to the
Collateral;

     

    (g)           upon
the occurrence and during the continuance of an Event of Default, generally to
sell, transfer, pledge, make any agreement with respect to or otherwise deal
with any of the Collateral as fully and completely as though Secured Party were
the absolute owner thereof for all purposes, and to do, at Secured Party’s
option and the 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, all as fully and effectively as any Grantor might
do; and

     

    (h)          
upon the occurrence and during the continuance of an Event of Default, to file
with the Internal Revenue Service and the United States Department of Treasury
and any equivalent state agency, executed powers of attorney provided by
Grantors in accordance with Section 5 of this Agreement.

     

    

    SECTION
13.    Secured Party May
Perform.

     

    If any
Grantor fails to perform any agreement contained herein, Secured Party may, if
such agreement is not performed by Grantor within ten (10) 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, jointly and severally,
by the Grantors under Section 18(b).

     

    SECTION
14.    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.

    
      
         

      

      
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    SECTION
15.    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) require Grantor to,
and each Grantor hereby agrees that it will at its expense and upon request of
Secured Party forthwith, assemble all or part of the Collateral as directed by
Secured Party and make it available to Secured Party at a place to be designated
by Secured Party that is reasonably convenient to both parties, (ii) enter
onto the property where any Collateral or books and records related to the
Collateral is located and take possession thereof with or without judicial
process, (iii) prior to the disposition of the Collateral, store, process,
repair or recondition the Collateral or otherwise prepare the Collateral for
disposition in any manner to the extent Secured Party deems appropriate,
(iv) take possession of such Grantor’s premises or place custodians in
exclusive control thereof, remain on such premises and use the same and any of
such Grantor’s equipment for the purpose of completing any work in process,
taking any actions described in the preceding clause (iii) and collecting any
Secured Obligation, (v) without notice except as specified below, 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, (vi) 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 and provide instructions directing the disposition of funds
in Deposit Accounts not maintained with Secured Party or any Lender, (vii)
provide entitlement orders with respect to Security Entitlements and other
Investment Property constituting a part of the Collateral and, without notice to
any Grantor, transfer to or  register in the name of Secured Party or
any of its nominees any or all of the Securities Collateral and (viii) take all
action necessary to receive payments from the federal and any state government
with respect to the Refund Collateral, and exercise any and all authority
granted by Department of Treasury Form 234, General Power of Attorney By
a  Corporation For the Collection of Certain Checks Drawn on the
United States Treasury, and any equivalent forms issued by any state taxing
authority.  Secured Party or any Lender may be the purchaser of any or
all of the Collateral at any such sale and Secured Party or such Lender 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 purchaser at any such sale shall hold the property sold
absolutely free from any claim or right on the part of any Grantor, and each
Grantor hereby waives (to the extent permitted by applicable law) all rights of
redemption, stay and/or appraisal which it now has or may at any time in the
future have under any rule of law or statute now existing or hereafter
enacted.  Each Grantor agrees that, to the extent notice of sale shall
be required by law, at least ten (10) days’ notice to such Grantor of the time
and place of any public sale or the time after which any private sale is to be
made shall constitute reasonable notification.  Secured Party shall
not be obligated to make any sale of Collateral regardless of notice of sale
having been given.  Secured Party may adjourn any public or private
sale from time to time by announcement at the time and place fixed therefor, and
such sale may, without further notice, be made at the time and place to which it
was so adjourned.  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.  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
15 will cause irreparable injury to Secured Party, that Secured Party has 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 each Grantor, and each Grantor hereby waives and agrees not
to assert any defenses against an action for specific performance of such
covenants except for a defense that no default has occurred giving rise to the
Secured Obligations becoming due and payable prior to their stated
maturities.

    
      
         

      

      
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    (b)         Securities
Collateral.

     

    (i)           Each
Grantor recognizes that, by reason of certain prohibitions contained in the
Securities Act and applicable state securities laws, Secured Party may be
compelled, with respect to any sale of all or any part of the Securities
Collateral conducted without prior registration or qualification of such
Securities Collateral under the Securities Act and/or such state securities
laws, to limit purchasers to those who will agree, among other things, to
acquire the Securities Collateral for their own account, for investment and not
with a view to the distribution or resale thereof.  Each Grantor
acknowledges that any such private placement may be at prices and on terms less
favorable than those obtainable through a sale without such restrictions
(including an offering made pursuant to a registration statement under the
Securities Act) and, notwithstanding such circumstances and the registration of
any rights granted to Secured Party by Grantor pursuant hereto, each Grantor
agrees that any such private placement shall not be deemed, in and of itself, to
be commercially unreasonable and that Secured Party shall have no obligation to
delay the sale of any Securities Collateral for the period of time necessary to
permit the issuer thereof to register it for a form of sale requiring
registration under the Securities Act or under applicable state securities laws,
even if such issuer would, or should, agree to so register it.  If
Secured Party determines to exercise its right to sell any or all of the
Securities Collateral, upon written request, each Grantor shall and shall cause
each issuer of any Securities Collateral to be sold hereunder from time to time
to furnish to Secured Party all such information as Secured Party may request in
order to determine the amount of Securities Collateral that may be sold by
Secured Party in exempt transactions under the Securities Act and the rules and
regulations of the Securities and Exchange Commission thereunder, as the same
are from time to time in effect.

     

    (ii)           Upon
the occurrence and during the continuation of an Event of Default, (x) upon
written notice from Secured Party to any Grantor, all rights of such Grantor to
receive the allocations, distributions and other payments in respect of the
Assigned Interest to which it would otherwise be entitled shall cease, and all
such rights shall thereupon become vested in Secured Party who shall thereupon
have the sole right to receive and hold as Collateral such allocation,
distributions and other payments; and (y) all allocations, distributions and
other payments which are received by Grantor contrary to the provisions of
clause (x) above shall be received in trust for the benefit of Secured Party,
shall be segregated from other funds of Grantor and shall forthwith be paid over
to Secured Party as Collateral in the same form as so received (with any
necessary endorsements).

     

    (c)         Collateral Accounts. If an
Event of Default has occurred and is continuing, any amounts on deposit in the
Collateral Accounts shall be held by Secured Party and applied, pursuant to
Section 17.

    
      
         

      

      
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    SECTION
16.    Additional Remedies for
Intellectual Property Collateral.

     

    (a)           Anything
contained herein to the contrary notwithstanding, upon the occurrence and during
the continuation of an Event of Default, (i) Secured Party shall have the
right (but not the obligation) to bring suit, in the name of any Grantor,
Secured Party or otherwise, to enforce any Intellectual Property Collateral, in
which event such Grantor shall, at the request of Secured Party, do any and all
lawful acts and execute any and all documents required by Secured Party in aid
of such enforcement and the Grantors shall promptly, upon demand, reimburse and
indemnify Secured Party as provided in Section 18 hereof, in connection with the
exercise of its rights under this Section 16, and, to the extent that Secured
Party shall elect not to bring suit to enforce any Intellectual Property
Collateral as provided in this Section, each Grantor agrees to use all
reasonable measures, whether by action, suit, proceeding or otherwise, to
prevent the infringement of any of the Intellectual Property Collateral by
others and for that purpose agrees to use its commercially reasonable judgment
in maintaining any action, suit or proceeding against any Person so infringing
reasonably necessary to prevent such infringement; (ii) upon written demand
from Secured Party, each Grantor shall execute and deliver to Secured Party an
assignment or assignments of the Intellectual Property Collateral and such other
documents as are necessary or appropriate to carry out the intent and purposes
of this Agreement; (iii) each Grantor agrees that such an assignment and/or
recording shall be applied to reduce the Secured Obligations outstanding only to
the extent that Secured Party receives cash proceeds in respect of the sale of,
or other realization upon, the Intellectual Property Collateral; and
(iv) within five (5) Business Days after written notice from Secured Party,
each Grantor shall make available to Secured Party, to the extent within such
Grantor’s power and authority, such personnel in such Grantor’s employ as
Secured Party may reasonably designate, by name, title or job responsibility, to
permit Grantor to continue, directly or indirectly, to produce, advertise and
sell the products and services sold or delivered by such Grantor under or in
connection with the Trademarks, Trademark Registrations and Trademark Rights,
such persons to be available to perform their prior functions on Secured Party’s
behalf and to be compensated by Secured Party at theGrantors’ expense on a per
diem, pro-rata basis consistent with the salary and benefit structure applicable
to each as of the date of such Event of Default.

     

    (b)           If
(i) an Event of Default shall have occurred and, by reason of cure, waiver,
modification, amendment or otherwise, no longer be continuing, (ii) no
other Event of Default shall have occurred and be continuing, (iii) an
assignment to Secured Party of any rights, title and interests in and to the
Intellectual Property Collateral shall have been previously made, and
(iv) the Secured Obligations shall not have become immediately due and
payable, upon the written request of any Grantor, Secured Party shall promptly
execute and deliver to such Grantor such assignments as may be necessary to
reassign to such Grantor any such rights, title and interests as may have been
assigned to Secured Party as aforesaid, subject to any disposition thereof that
may have been made by Secured Party; provided, after giving effect to such
reassignment, Secured Party’s security interest granted pursuant hereto, as well
as all other rights and remedies of Secured Party granted hereunder, shall
continue to be in full force and effect; and provided further, the rights, title
and interests so reassigned shall be free and clear of all Liens other than
Liens (if any) encumbering such rights, title and interest at the time of their
assignment to Secured Party and other Liens permitted by this Agreement, the
Credit Agreement and the Loan Documents.

    
      
         

      

      
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    SECTION
17.    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 accordance with Section 10.4
of the Credit Agreement.

     

    SECTION
18.    Indemnity and
Expenses.

     

    (a)           Grantors
agree to jointly and severally 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 failure of
Secured Party or any Lender to comply with the requirements of the UCC imposed
upon a Secured Party under Secured Party’s control in connection with the
enforcement of this Agreement.

     

    (b)           The
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 (i) the administration of this Agreement, (ii) the
custody, preservation, use or operation of, or the sale of, collection from, or
other realization upon, any of the Collateral, (iii) the exercise or
enforcement of any of the rights of Secured Party and Lenders hereunder, or
(iv) the failure by any Grantor to perform or observe any of the provisions
hereof.

     

    (c)           The
obligations of Grantors in this Section 18 shall survive (i) the
termination of this Agreement and the discharge of Grantor’s other obligations
under this Agreement, the Credit Agreement and the Loan Documents.

     

    SECTION
19.    Continuing Security
Interest; Termination and Release.

     

    (a)           This
Agreement shall create a continuing security interest in the Collateral and
shall (i) remain in full force and effect until the payment in full of the
Secured Obligations, (ii) be binding upon each Grantor and its successors
and assigns, and (iii) inure, together with the rights and remedies of
Secured Party hereunder, to the benefit of Secured Party and its successors,
transferees and assigns.  Without limiting the generality of the
foregoing clause (iii), Secured Party may assign or otherwise transfer any Note
held by it to any other Person, and such other Person shall thereupon become
vested with all the benefits in respect thereof granted to Secured Party herein
or otherwise.

     

    (b)           Upon
the payment in full of all Secured Obligations, the security interest granted
hereby shall terminate and all rights to the Collateral shall revert to the
Grantors.  Upon any such termination Secured Party will, at Grantors’
expense, execute and deliver to the Grantors such documents as Grantors shall
reasonably request to evidence such termination.

    
      
         

      

      
        - 21
-

        
          

        

      

      
         

      

    

     

    SECTION
20.     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, by each
Grantor.  Any such waiver or consent shall be effective only in the
specific instance and for the specific purpose for which it was
given.

     

    SECTION
21.     Notices.

     

    Any
notice or other communication herein required or permitted to be given in
accordance with Section 12.10 of the Credit Agreement.

     

    SECTION
22.     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
23.     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
24.     Rules of
Construction.

     

    Any of the terms defined herein may,
unless the context otherwise requires, be used in the singular or the plural,
depending on the reference.  References to “Section” shall be to a
Section of this Agreement unless otherwise specifically
provided.  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.  The use in this Agreement of the words “include” or
“including”, when following any general statement, term or matter, shall not be
construed to limit such statement, term or matter to the specific items or
matters set forth immediately following such word or to similar items or
matters, whether or not nonlimiting language (such as “without limitation” or
“but not limited to” or words of similar import) is used with reference thereto,
but rather shall be deemed to refer to all other items or matters that fall
within the broadest possible scope of such general statement, term or
matter.

    
      
         

      

      
        - 22
-

        
          

        

      

      
         

      

    

    SECTION
25.     Governing
Law.

     

    THIS
AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE
GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE
INTERNAL LAWS OF THE COMMONWEALTH OF PENNSYLVANIA, WITHOUT REGARD TO CONFLICTS
OF LAWS PRINCIPLES, EXCEPT TO THE EXTENT THAT THE UCC PROVIDES THAT THE
PERFECTION OF THE SECURITY INTEREST HEREUNDER, OR REMEDIES HEREUNDER, IN RESPECT
OF ANY PARTICULAR COLLATERAL ARE GOVERNED BY THE LAWS OF A JURISDICTION OTHER
THAN THE COMMONWEALTH OF PENNSYLVANIA, IN WHICH CASE THE LAWS OF SUCH
JURISDICTION SHALL GOVERN WITH RESPECT TO THE PERFECTION OF THE SECURITY
INTEREST IN, OR THE REMEDIES WITH RESPECT TO, SUCH PARTICULAR
COLLATERAL.

     

    SECTION
26.     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 THE RELATIONSHIP EVIDENCED HEREBY, THE GRANTORS
HEREBY IRREVOCABLY SUBMIT TO THE NON-EXCLUSIVE JURISDICTION OF THE BANKRUPTCY
COURT OR THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF DELAWARE AND ANY
APPROPRIATE COURT ON APPEAL THERE FROM.  GRANTORS EXPRESSLY SUBMIT AND
CONSENT IN ADVANCE TO SUCH JURISDICTION IN ANY ACTION OR SUIT COMMENCED IN ANY
SUCH COURT, AND THE GRANTORS HEREBY WAIVE ANY OBJECTION WHICH THE GRANTORS MAY
HAVE BASED UPON LACK OF PERSONAL JURISDICTION, IMPROPER VENUE, OR FORUM NON
CONVENIENS.  THE GRANTORS HEREBY WAIVE PERSONAL SERVICE OF THE
SUMMONS, COMPLAINT AND ANY OTHER PROCESS ISSUED IN ANY SUCH ACTION OR SUIT AND
AGREE THAT SERVICE OF SUCH SUMMONS, COMPLAINT, AND ANY OTHER PROCESS MAY BE MADE
BY REGISTERED OR CERTIFIED MAIL ADDRESSED TO THE GRANTORS IN ACCORDANCE WITH
SECTION 21 HEREOF 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 AGENT TO SERVE
LEGAL PROCESS IN ANY OTHER MANNER PERMITTED BY LAW, OR TO PRECLUDE THE
ENFORCEMENT BY SECURED PARTY OR ANY LENDER 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
27.     Waiver of Jury
Trial.

     

    THE
GRANTORS AND THE 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 OR
THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT OR IN ANY WAY PERTAINING TO THE
RELATIONSHIPS EVIDENCED BY THIS AGREEMENT.

    
      
         

      

      
        - 23
-

        
          

        

      

      
         

      

    

     

    SECTION
28.    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.

     

    SECTION
29.    Definitions.

     

    (a)           Each
capitalized term utilized in this Agreement that is not defined in the Credit
Agreement in this 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:

     

    “Assigned Agreements” means the
agreements set forth on Schedule 14 annexed
hereto, as each such agreement may be amended, restated, supplemented or
otherwise modified from time to time, including without limitation, (a) all
rights of the Grantors to receive moneys due or to become due under or pursuant
to the Assigned Agreements, (b) all rights of Grantor to receive proceeds of any
Supporting Obligations with respect to the Assigned Agreements, (c) all claims
of each Grantor for damages arising out of any breach of or default under the
Assigned Agreements, and (d) all rights of the Grantors to terminate, amend,
supplement, modify or exercise rights or options under the Assigned Agreements,
to perform thereunder and to compel performance, and otherwise exercise all
remedies thereunder.

     

    “Assigned Interest” means all
rights of any Grantor to received allocations, distributions and any other
monies in respect of Pledged Equity consisting of such Grantor’s limited
partnership interest certain Pennsylvania limited partnerships, including,
without limitation, (a)  all claims of such Grantor for damages arising out
of any breach of or default by the general partner or the limited partnership
with respect to such the Assigned Interest, and (b) all rights of such
Grantor to terminate, amend, supplement, modify or exercise rights or options,
to perform and to compel performance, and otherwise exercise all remedies of
such Grantor with respect to, the Assigned Interest described in this
definition.

     

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

     

     “Collateral Account” means one
or more accounts designated as the “Orleans Collateral Account” established
pursuant to Section 11.

     

    “Copyright Office” means the
United States Copyright Office or any successor or substitute office in which it
is necessary or, in the opinion of Secured Party, necessary to record a Grant in
order to create or perfect Liens on, or evidence the interest of Secured Party
in, Copyrights, Copyright Registrations and Copyright Rights.

    
      
         

      

      
        - 24
-

        
          

        

      

      
         

      

    

     

    “Copyright Registrations”
means all copyright registrations issued to Grantor and applications for
copyright registration that have been or may hereafter be issued or applied for
thereon in the United States and any state thereof and in foreign countries
(including, without limitation, the registrations set forth on Schedule 10 annexed
hereto, as the same may be amended pursuant hereto from time to
time).

     

    “Copyright Rights” means all
common law and other rights in and to the Copyrights in the United States and
any state thereof and in foreign countries including all copyright licenses (but
with respect to such copyright licenses, only to the extent permitted by such
licensing arrangements), the right (but not the obligation) to renew and extend
Copyright Registrations and any such rights and to register works protectable by
copyright and the right (but not the obligation) to sue in the name of Grantor
or in the name of Secured Party for past, present and future infringements of
the Copyrights and any such rights.

     

    “Copyrights” means all items
under copyright in various published and unpublished works of authorship
including, without limitation, computer programs, computer data bases, other
computer software layouts, trade dress, drawings, designs, writings, and
formulas (including, without limitation, the works set forth on Schedule 10 annexed
hereto, as the same may be amended pursuant hereto from time to
time).

     

     “Development Credit Collateral”
has the meaning set forth in 1(n).

     

    “Equity Interests” means all
shares of stock, partnership interests, interests in joint ventures, limited
liability company interests and all other equity interests in a Person, whether
such stock or interests are classified as Investment Property or General
Intangibles under the UCC.

     

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

     

    “Grant” means a Grant of
Trademark Security Interest, substantially in the form of Exhibit I annexed
hereto, and a Grant of Patent Security Interest, substantially in the form of
Exhibit II
annexed hereto, and a Grant of Copyright Security Interest, substantially in the
form of Exhibit
III annexed hereto.

     

    “Intellectual Property
Collateral” means, with respect to each Grantor all right, title and
interest (including rights acquired pursuant to a license or otherwise but only
to the extent permitted by agreements governing such license or other use) in
and to all

     

    (a)           Copyrights,
Copyright Registrations and Copyright Rights, including, without limitation,
each of the Copyrights, rights, titles and interests in and to the Copyrights,
all derivative works and other works protectable by copyright, which are
presently, or in the future may be, owned, created (as a work for hire for the
benefit of Grantor), authored (as a work for hire for the benefit of Grantor),
or acquired by Grantor, in whole or in part, and all Copyright Rights with
respect thereto and all Copyright Registrations therefor, heretofore or
hereafter granted or applied for, and all renewals and extensions thereof,
throughout the world;

     

    (b)          Patents;

    
      
         

      

      
        - 25
-

        
          

        

      

      
         

      

    

    (c)           Trademarks,
Trademark Registrations, the Trademark Rights and goodwill of Grantor’s business
symbolized by the Trademarks and associated therewith;

     

    (d)          all
trade secrets, trade secret rights, know-how, customer lists, processes of
production, ideas, confidential business information, techniques, processes,
formulas, and all other proprietary information; and

     

    (e)          all
proceeds thereof (such as, by way of example and not by limitation, license
royalties and proceeds of infringement suits).

     

    “IP Supplement” means an IP
Supplement, substantially in the form of Exhibit V annexed
hereto.

     

    “Lender” has the meaning set
forth in the Recitals.

     

    “Life Insurance Collateral” has
the meaning set forth in 1(m).

     

    “Patents” means all patents
and patent applications and rights and interests in patents and patent
applications under any domestic or foreign law that are presently, or in the
future may be, owned or held by each Grantor and all patents and patent
applications and rights, title and interests in patents and patent applications
under any domestic or foreign law that are presently, or in the future may be,
owned by each Grantor in whole or in part (including, without limitation, the
patents and patent applications set forth on Schedule 9 annexed
hereto), all rights (but not obligations) corresponding thereto to sue for past,
present and future infringements and all re-issues, divisions, continuations,
renewals, extensions and continuations-in-part thereof.

     

    “Person” means and includes
natural persons, corporations, limited partnerships, general partnerships,
limited liability companies, limited liability partnerships, joint stock
companies, joint ventures, associations, companies, trusts, banks, trust
companies, land trusts, business trusts or other organizations, whether or not
legal entities, and governments (whether federal, state or local, domestic or
foreign, and including political subdivisions thereof) and agencies or other
administrative or regulatory bodies thereof.

     

    “Pledged Debt” means the
Indebtedness from time to time owed to any Grantor, including the indebtedness
set forth on Schedule
7 annexed hereto and issued by the obligors named therein, the
instruments and certificates evidencing such Indebtedness and all interest, cash
or other property received, receivable or otherwise distributed in respect of or
exchanged therefor.

     

    “Pledged Equity” means all
Equity Interests now or hereafter owned by any Grantor, including all securities
convertible into, and rights, warrants, options and other rights to purchase or
otherwise acquire, any of the foregoing, including without limitation, (i) those
owned on the date hereof and set forth on Schedule 6 annexed
hereto, (ii) the certificates or other instruments representing any of the
foregoing and any interest of any Grantor in the entries on the books of any
securities intermediary pertaining thereto, and (iii) all distributions,
dividends and other property received, receivable or otherwise distributed in
respect of or exchanged therefor, provided, however, that Agent acknowledges
that certain Pledged Equity may be subject to Section 8924(a) of the
Pennsylvania Limited Liability Company Law of 1994, as amended.

    
      
         

      

      
        - 26
-

        
          

        

      

      
         

      

    

     

    “Pledged Subsidiary Debt”
means Pledged Debt owed to any Grantor by any obligor that is, or becomes, a
direct or indirect subsidiary of such Grantor, of which such Grantor is a direct
or indirect subsidiary or that controls, is controlled by or under common
control with such Grantor.

     

    “Pledged Subsidiary Equity”
means Pledged Equity in a Person that is, or becomes a direct subsidiary of any
Grantor.

     

    “Pledge Supplement” means a
Pledge Supplement, in substantially the form of Exhibit IV annexed
hereto, in respect of the additional Pledged Equity or Pledged Debt pledged
pursuant to this Agreement.

     

    “PTO” means the United States
Patent and Trademark Office or any successor or substitute office in which
filings are necessary or, in the opinion of Secured Party, desirable in order to
create or perfect Liens on, or evidence the interest of Secured Party in, any
Patents, Trademarks, Trademark Registrations or Trademark Rights.

     

    “Refund Collateral” has the
meaning set forth in 1(l).

     

    “Secured Obligations” has the
meaning set forth in Section 2 hereof.

     

    “Securities Collateral” means
the Pledged Equity, the Pledged Debt and any other Investment Property in which
any Grantor has an interest.

     

    “Trademark Registrations”
means all registrations that have been or may hereafter be issued or applied for
thereon in the United States and any state thereof and in foreign countries
(including, without limitation, the registrations and applications set forth on
Schedule 8
annexed hereto).

     

    “Trademark Rights” means all
common law and other rights (but in no event any of the obligations) in and to
the Trademarks in the United States and any state thereof and in foreign
countries.

     

    “Trademarks” means all
trademarks, service marks, designs, logos, indicia, tradenames, trade dress,
corporate names, company names, business names, fictitious business names, trade
styles and/or other source and/or business identifiers and applications
pertaining thereto, owned by any Grantor, or hereafter adopted and used, in its
business (including, without limitation, the trademarks specifically set forth
on Schedule 8
annexed hereto).

     

    “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
30.       Entire
Agreement.

     

    This
Agreement and the other Loan Documents embody the entire agreement and
understanding between the Grantors and the Agent, and supersede all prior
agreements and understandings between such parties relating to the subject
matter hereof and thereof.  Accordingly, the Loan Documents may not be
contradicted by evidence of prior, contemporaneous or subsequent oral agreements
of the parties.  There are no unwritten oral agreements between the
parties.

    
      
         

      

      
        - 27
-

        
          

        

      

      
         

      

    

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

     

    
      
        
          	 	
                  BORROWERS:

                
	 	 
	 	
                  Parent:

                
	 	
                  Orleans
      Homebuilders, Inc., a Delaware corporation

                
	 	 
      
	 	
                  By:

                	
                  /s/ Lawrence J. Dugan

                
	 	 
      	
                  Lawrence
      J. Dugan

                
	 	 
      	
                  Vice
      President

                
	 	 
      	 
      
	 	
                  Master
      Borrower:

                
	 	
                  Greenwood
      Financial Inc., a Delaware corporation

                
	 	 
      
	 	
                  By:

                	
                  /s/ Lawrence J. Dugan

                
	 	 
      	
                  Lawrence
      J. Dugan

                
	 	 
      	
                  Vice
      President

                
	 	 
      
	 	
                  Other
      Borrowers:

                
	 	
                  OHB
      Homes, Inc.

                
	 	
                  Orleans
      Corporation

                
	 	
                  Orleans
      Corporation of New Jersey

                
	 	
                  Orleans
      Construction Corp.

                
	 	
                  Parker
      & Lancaster Corporation

                
	 	
                  Parker
      & Orleans Homebuilders, Inc.

                
	 	
                  Sharp
      Road Farms, Inc.

                
	 	
                  Community
      Management Services Group, Inc.

                
	 	
                  OHI
      Financing, Inc.

                
	 	
                  Orleans
      Arizona, Inc.

                
	 	 
      
	 	
                  By:

                	
                  /s/ Lawrence J. Dugan

                
	 	 
      	
                  Lawrence
      J. Dugan

                
	 	 
      	
                  Vice
      President

                

        

      

    

    

    (Signature
Page to DIP Security Agreement)

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

    

    
      
        	 	
                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

              
	 	
                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

              
	 	
                OHI
      PA GP, LLC

              
	 	
                RHGP,
      LLC

              
	 	 
      
	 	
                By:

              	
                /s/ Lawrence J. Dugan

              
	 	 
      	
                Lawrence
      J. Dugan

              
	 	 
      	
                Vice
      President

              

      

    

    

    (Signature
Page to DIP Security Agreement)

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

    

    
      
        
          
            	 	
                    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

                  
	 	 
      	
                    Lawrence
      J. Dugan

                  
	 	 
      	
                    Vice
      President

                  
	 	 
      	 
      
	 	
                    Orleans
      RHIL, LP

                  
	 	
                    Realen
      Homes, L.P.

                  
	 	
                    By:

                  	
                    RHGP,
      LLC, sole General Partner

                  
	 	 
      	
                    By:

                  	
                    Orleans
      Homebuilders, Inc.,

                  
	 	 
      	 
      	
                    Authorized
      Member

                  
	 	 
      	 
      
	 	 
      	 
      	
                    By:

                  	
                    /s/ Lawrence J. Dugan

                  
	 	 
      	 
      	 
      	
                    Lawrence
      J. Dugan

                  
	 	 
      	 
      	 
      	
                    Vice
      President

                  

          

        

      

    

     

    (Signature
Page to DIP Security Agreement)

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

     

    
      
        
          
            
              
                	 	WELLS
      FARGO BANK, NATIONAL ASSOCIATION,
	 	as
      Agent on behalf of itself and the other Lenders and as
	 	Secured
      Party
	 	 
	 	
                        By:

                      	
                        /s/ Nathan R. Rantala

                      
	 	
                        Name: 

                      	
                        Nathan R. Rantala

                      
	 	
                        Title:

                      	
                        Director

                      

              

            

          

        

      

    

    

    (Signature
Page to DIP Security Agreement)

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