TABLE OF CONTENTS

 

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ARTICLE I		INTERPRETATION AND DEFINITIONS		1
Section 1.1.		Interpretation		1
Section 1.2.		Definitions		2
ARTICLE II		REPORTS		5
Section 2.1.		List of Holders		5
Section 2.2.		Periodic Reports to the Guarantee Trustee		5
Section 2.3.		Event of Default; Waiver		6
Section 2.4.		Event of Default; Notice		6
ARTICLE III		POWERS, DUTIES AND RIGHTS OF THE GUARANTEE TRUSTEE		6
Section 3.1.		Powers and Duties of the Guarantee Trustee		6
Section 3.2.		Certain Rights of the Guarantee Trustee		7
Section 3.3.		Compensation		8
Section 3.4.		Indemnity		9
Section 3.5.		Securities		9
ARTICLE IV		GUARANTEE TRUSTEE		9
Section 4.1.		Guarantee Trustee; Eligibility		9
Section 4.2.		Appointment, Removal and Resignation of the Guarantee Trustee		10
ARTICLE V		PARENT GUARANTEE		10
Section 5.1.		Parent Guarantee		10
Section 5.2.		Waiver of Notice and Demand		11
Section 5.3.		Obligations Not Affected		11
Section 5.4.		Rights of Holders, the Note Holders and the Trust		12
Section 5.5.		Guarantee of Payment		12
Section 5.6.		Subrogation		12
Section 5.7.		Independent Obligations		12
Section 5.8.		Enforcement		12
Section 5.9.		Subordination		13
ARTICLE VI		TERMINATION		13
Section 6.1.		Termination		13
ARTICLE VII		MISCELLANEOUS		13
Section 7.1.		Successors and Assigns		13
Section 7.2.		Amendments		13
Section 7.3.		Notices		14
Section 7.4.		Benefit		14
Section 7.5.		Governing Law		14
Section 7.6.		Submission to Jurisdiction		15
Section 7.7.		Counterparts		15
Section 7.8.		The Indenture		15

 

 

ARTICLE VIII		CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE AND OWNERSHIP OF THE COMPANY		15
Section 8.1.		Parent Guarantor May Consolidate, etc., Only on Certain Terms		15
Section 8.2.		Dividends, Distributions and Payments		16
Section 8.3.		Successor Company Substituted		17
Section 8.4.		Ownership of the Company		17
ARTICLE IX		REPRESENTATIONS AND WARRANTIES		17
Section 9.1.		Representations and Warranties of Parent Guarantor		17

 

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

 

WITNESSETH:

 

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

 

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

 

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

 

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

 

ARTICLE I

 

INTERPRETATION AND DEFINITIONS

 

Section 1.1.     Interpretation .

 

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

 

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

 

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

 

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

 

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

 

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

 

 

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

 

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

 

Section 1.2.     Definitions .

 

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

 

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

 

“ Beneficiaries ” means the Guarantee Trustee and the Holders.

 

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

 

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

 

(i)      any sale, lease, exchange or other transfer (in one transaction or a series of related transactions) of all or substantially all of the assets of the Parent Guarantor to any Person or group of related Persons for purposes of Section 13(d) of the Exchange Act (a “Group”), together with any Affiliates thereof, on an arm’s length basis with an entity that is not an Affiliate of the Company or the Guarantor; or

 

(ii)     any Person or Group (other than Jeffrey P. Orleans and his Affiliates and family or any Affiliate of the Company or the Parent Guarantor (collectively, a “JPO Party”)) shall acquire either by purchase from a JPO Party or from the Parent Guarantor through purchase or merger or otherwise, directly or indirectly, beneficially or of record, shares representing more than 80% of the issued and outstanding Equity Interests of the Parent Guarantor and more than 50% of the aggregate ordinary voting power represented by the issued and outstanding Equity Interests of the Parent Guarantor.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

ARTICLE II

 

REPORTS

 

Section 2.1.     List of Holders .

 

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

 

Section 2.2.     Periodic Reports to the Guarantee Trustee .

 

(a)           The Parent Guarantor shall deliver to the Guarantee Trustee, within ninety (90) days after the end of each fiscal year of the Parent Guarantor ending after the date of this Parent Guarantee Agreement, an Officers’ Certificate covering the preceding fiscal year, stating whether or not to the knowledge of the signers thereof the Parent Guarantor is in default in the performance or observance of any of the terms or provisions or any of the conditions of this Parent Guarantee Agreement (without regard to any period of grace or requirement of notice provided hereunder) and if the Company or the Guarantor is in default under the terms of the Indenture or if the Parent Guarantor shall be in default hereof, specifying all such defaults and the nature and status thereof of which they have knowledge.

 

(b)           The Parent Guarantor shall furnish the information and documentation the Company is required to furnish pursuant to Sections 7.3, 10.3, 10.7 and 10.8 of the Indenture, subject to the confidentiality provisions thereof. The delivery requirement under this Section 2.2(b) may be satisfied by the Company’s compliance with the Indenture.

 

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Section 2.3.     Event of Default; Waiver .

 

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

 

Section 2.4.     Event of Default; Notice .

 

(a)           The Guarantee Trustee shall, within ninety (90) days after the occurrence hereunder of a default, transmit to the Company and the Holders notices of all defaults actually known to the Guarantee Trustee, unless such defaults have been cured or waived before the giving of such notice.  For the purpose of this Section 2.4, the term “default” means any event that is, or after notice or lapse of time or both would become, an Event of Default.

 

(b)           The Guarantee Trustee shall not be deemed to have knowledge of any Event of Default unless the Guarantee Trustee shall have received written notice, or a Responsible Officer charged with the administration of this Parent Guarantee Agreement shall have obtained written notice, of such Event of Default from the Parent Guarantor, the Company or a Holder.

 

ARTICLE III

 

POWERS, DUTIES AND RIGHTS OF THE GUARANTEE TRUSTEE

 

Section 3.1.     Powers and Duties of the Guarantee Trustee .

 

(a)           This Parent Guarantee Agreement shall be held by the Guarantee Trustee for the benefit of the Holders, and the Guarantee Trustee shall not transfer this Parent Guarantee Agreement to any Person except a Holder exercising its rights pursuant to Section 5.4(d) or to a Successor Guarantee Trustee upon acceptance by such Successor Guarantee Trustee of its appointment to act as Successor Guarantee Trustee.  The right, title and interest of the Guarantee Trustee shall automatically vest in any Successor Guarantee Trustee, upon acceptance by such Successor Guarantee Trustee of its appointment hereunder, and such vesting and succession of title shall be effective whether or not conveyancing documents have been executed and delivered pursuant to the appointment of such Successor Guarantee Trustee.

 

(b)           The rights, immunities, duties and responsibilities of the Guarantee Trustee shall be as provided by this Parent Guarantee Agreement and there shall be no other duties or obligations, express or implied, of the Guarantee Trustee.  Notwithstanding the foregoing, no provisions of this Parent Guarantee Agreement shall require the Guarantee Trustee to expend or risk its own funds or otherwise incur any financial liability in the performance of any of its duties hereunder, or in the exercise of any of its rights or powers, if it shall have reasonable grounds for believing that repayment of such funds or adequate indemnity against such risk or liability is not reasonably assured to it.  Whether or not herein expressly so provided, every provision of this Parent Guarantee Agreement relating to the conduct or affecting the liability of or affording protection to the Guarantee Trustee shall be subject to the provisions of this Section 3.1. To the extent that, at law or in equity, the Guarantee Trustee has duties and liabilities relating to the Holders, the Guarantee Trustee shall not be liable to any Holder for the Guarantee Trustee’s good faith reliance on the provisions of this Parent Guarantee Agreement.  The provisions of this Parent Guarantee Agreement, to the extent that they restrict the duties and liabilities of the Guarantee Trustee otherwise existing at law or in equity, are agreed by the Parent Guarantor and the Holders to replace such other duties and liabilities of the Guarantee Trustee.

 

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(c)           No provision of this Parent Guarantee Agreement shall be construed to relieve the Guarantee Trustee from liability for its own negligent action, negligent failure to act or own willful misconduct, except that:

 

(i)      the Guarantee Trustee shall not be liable for any error of judgment made in good faith by a Responsible Officer of the Guarantee Trustee, unless it shall be proved that the Guarantee Trustee was negligent in ascertaining the pertinent facts upon which such judgment was made; and

 

(ii)     the Guarantee Trustee shall not be liable with respect to any action taken or omitted to be taken by it in good faith in accordance with the direction of the Holders of not less than a Majority in Principal Amount of the Notes relating to the time, method and place of conducting any proceeding for any remedy available to the Guarantee Trustee, or exercising any trust or power conferred upon the Guarantee Trustee under this Parent Guarantee Agreement.

 

Section 3.2.     Certain Rights of the Guarantee Trustee .

 

(a)           Subject to the provisions of Section 3.1:

 

(i)      the Guarantee Trustee may conclusively rely, and shall be fully protected in acting or refraining from acting in good faith and in accordance with the terms hereof, upon any resolution, certificate, statement, instrument, opin