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.

 

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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.

 

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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.

 

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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.

 

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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

 

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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

 

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	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.

 

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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.

 

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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.

 

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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.

 

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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.

 

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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.

 

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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.

 

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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]

 

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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)

 

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	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)

 

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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)

 

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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)

 

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	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)

 

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	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)

 

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	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)

 

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	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)

 

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	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)

 

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	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)

 

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	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)

 

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	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)

 

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	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)

 

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	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)

 

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	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)

 

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	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)

 

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