**Execution Version****Exhibit 10.1**SENIOR NOTE PURCHASEAND REDEMPTION AGREEMENTby and betweenCOMSTOCK HOMEBUILDING COMPANIES, INC.,andKODIAK WAREHOUSE JPM LLC Dated as of March 15, 2007 
 

 
TABLE OF CONTENTS       Page 1. Definitions  1      2. Redemption of the Original Notes and Purchase and Sale of the Senior Notes  2      3. Conditions  2      4. Representations and Warranties of the Company  5      5. Representations and Warranties of the Purchaser  13      6. Covenants and Agreementsof the Company  14      7. Payment of Expenses  17      8. Indemnification  18      9. Termination; Representations and Indemnities to Survive  19      10. Amendments  19      11. Notices  19      12. Parties in Interest; Successors and Assigns  21      13. Applicable Law  21      14. Submission to Jurisdiction  21      15. Counterparts and Facsimile  21      16. Notice of Intended Transfer  21      SCHEDULES AND EXHIBITS     Schedule 4(1) — List of Significant Subsidiaries; Certain Prohibitions Against the Payment ofDistributions, the Repayment of Debt or the Transfer of AssetsSchedule 4(p) — Legal ProceedingsSchedule 4(u) — Certain Documents Subject to Future Filing as Exhibits to 1934 Act ReportsSchedule 4(x) — Claims Against Real PropertySchedule 4(ee) — Environmental Matters     Exhibit A — Form of Company Counsel’s Opinion Pursuant to Section 3(b)(i)
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     Exhibit B — Form of General Counsel Opinion or Officers’ Certificate Pursuant toSection 3(b)(ii)Exhibit C — Form of Tax Counsel Opinion Pursuant to Section 3(c)Exhibit D — Form of Trustee Counsel Opinion Pursuant to Section 3(d)Exhibit E — Form of Officer’s Financial Certificate Pursuant to Section 6(h)Exhibit F — Form of Control Agreement
 

 
SENIOR NOTE PURCHASE AND REDEMPTION AGREEMENT     This SENIOR NOTE PURCHASE AND REDEMPTION AGREEMENT, dated as of March 15, 2007 (this“Purchase Agreement”), is entered into by and among Comstock Homebuilding Companies, Inc.,a Delaware corporation (the “Company”), and Kodiak Warehouse JPM LLC, a Delaware limitedliability company, or its assignee (the “Purchaser”).WITNESSETH:     WHEREAS, pursuant to that certain Note Purchase Agreement, dated as of May 4, 2006, theCompany issued and sold to Kodiak Warehouse LLC (the “Initial Purchaser”) Thirty MillionDollars ($30,000,000) in aggregate principal amount of the Company’s junior subordinated notes,bearing interest at a fixed rate of 9.72% per annum through the interest payment date in June 2011and thereafter at a variable rate, reset quarterly, equal to LIBOR (as defined in the JuniorSubordinated Indenture, dated as of May 4, 2006 (the “Original Indenture”) between theCompany and Wells Fargo Bank, N.A. (the “Original Trustee”)) plus 4.20% per annum (the“Original Notes”);     WHEREAS, the Initial Purchaser sold, transferred and assigned its rights, title and interestsin and to the Original Notes to the Purchaser;     WHEREAS, the Purchaser and the Company desire to provide for the redemption of the OriginalNotes and for the Company’s issuance and sale to the Purchaser of Thirty Million Dollars($30,000,000) in aggregate principal amount of the Company’s senior unsecured notes, bearinginterest at a fixed rate of 9.72% per annum through the interest payment date in June 2011 andthereafter at a variable rate, reset quarterly, equal to LIBOR (as defined in the Indenture (asdefined below)) plus 4.20% per annum (the “Senior Notes”);     WHEREAS, the Company, as of the date of this Purchase Agreement, is not insolvent, nor uponconsummation of the transactions contemplated hereby will it be rendered insolvent, and the sum ofthe Company’s debts is less than the value of all of the Company’s property at a fair valuation;     WHEREAS, the sale of the Senior Notes to the Purchaser constitutes an extension of new creditto the Company and is not a substitution for any existing obligation; and     WHEREAS, the Senior Notes will be issued pursuant to an Indenture, dated as of the ClosingDate (the “Indenture”), between the Company and Wells Fargo Bank, N.A., as indenturetrustee (in such capacity, the “Trustee”).     NOW, THEREFORE, in consideration of the foregoing and the mutual agreements and subject to theterms and conditions herein set forth, the parties hereto agree as follows:          1. Definitions. This Purchase Agreement, the Control Agreement (as defined herein),the Indenture and the Senior Notes are collectively referred to herein as the “OperativeDocuments.” All other capitalized terms used but not defined in this Purchase Agreement shallhave the respective meanings ascribed thereto in the Indenture.
 

 
          2. Redemption of the Original Notes and Purchase and Sale of the Senior Notes.          (a) Notwithstanding any restrictions in the Original Indenture relating to the redemption ofthe Original Notes, the Company agrees to redeem the Original Notes, and the Purchaser agrees toaccept the redemption of the Original Notes (the “Redemption”), on the Closing Date (asdefined below) at a redemption price equal to Thirty Million Six Hundred Seven Thousand FiveHundred Dollars ($30,607,500) (collectively the sum of (i) one hundred percent (100%) of theprincipal amount thereof, and (ii) all accrued and unpaid interest including Additional Interest(as defined in the Original Indenture) thereon as of March 15, 2007 (the “RedemptionPrice”).          (b) On the Closing Date, the Redemption Price will become due and payable and any intereston the Original Notes shall cease to accrue on and after said date.          (c) The Company agrees to sell to the Purchaser, and the Purchaser agrees to purchase fromthe Company, Thirty Million Dollars ($30,000,000) in aggregate principal amount of the SeniorNotes for an amount (the “Purchase Price”) equal to Thirty Million Dollars ($30,000,000).The Purchaser shall be responsible for the rating agency costs and expenses.          (d) Delivery or transfer of, and payment for, the Original Notes and the Senior Notes shallbe made at 10:00 A.M. Chicago time (11:00 A.M. New York City time), on March 15, 2007 (such dateand time of delivery and payment for the Original Notes and the Senior Notes being herein calledthe “Closing Date”). The Original Notes shall be redeemed and delivered to the Companyupon receipt by the Purchaser of the Redemption Price by wire transfer in immediately availablefunds on the Closing Date to a U.S. account designated by the Purchaser at least two BusinessDays prior to the Closing Date. The Senior Notes shall be transferred and delivered to thePurchaser against the payment of the Purchase Price to the Company made by wire transfer inimmediately available funds on the Closing Date to a U.S. account designated in writing by theCompany at least two Business Days prior to the Closing Date.          (e) Delivery of the Senior Notes shall be made at such location, and in such names anddenominations, as the Purchaser shall designate at least two Business Days in advance of theClosing Date and surrender of the Original Notes shall occur at the same location. The Companyagrees to have the Senior Notes available for inspection and checking by the Purchaser inChicago, Illinois, not later than 1:00 P.M., Chicago time (2:00 P.M. New York City time), on theBusiness Day prior to the Closing Date. The closing for the purchase and sale of the Senior Notes(the “Closing”) shall occur at the offices of Winston & Strawn LLP, 35 West Wacker Drive,Chicago, Illinois 60601, or such other place as the parties hereto shall agree.          3. Conditions. The obligations of the parties under this Purchase Agreement aresubject to the following conditions:
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          (a) The representations and warranties contained herein shall be accurate as of the date ofdelivery of the Senior Notes.          (b) (i) Greenberg Traurig LLP, counsel for the Company (the “Company Counsel”), shallhave delivered an opinion, dated the Closing Date, addressed to the Purchaser, its successors andassigns and the Trustee, in substantially the form set out in Exhibit A hereto and (ii) theCompany shall have furnished to the Purchaser the opinion of the Company’s General Counsel or acertificate signed by the Company’s Chief Executive Officer, President or an Executive VicePresident and the Company’s Chief Financial Officer, Treasurer or Assistant Treasurer, dated theClosing Date, addressed to the Purchaser, in substantially the form set out in Exhibit Bhereto. In rendering their opinion, the Company Counsel may rely as to factual matters uponcertificates or other documents furnished by officers and directors of the Company and bygovernment officials (provided, however, that copies of any such certificates ordocuments are delivered to the Purchaser) and by and upon such other documents as such counsel may,in their reasonable opinion, deem appropriate as a basis for the Company Counsel’s opinion. TheCompany Counsel may specify the jurisdictions in which they are admitted to practice and that theyare not admitted to practice in any other jurisdiction and are not experts in the law of any otherjurisdiction. Such Company Counsel opinions shall not state that they are to be governed orqualified by, or that they are otherwise subject to, any treatise, written policy or other documentrelating to legal opinions, including, without limitation, the Legal Opinion Accord of the ABASection of Business Law (1991).          (c) The Purchaser shall have been furnished the opinion of Winston & Strawn LLP, special taxcounsel for the Purchaser, dated the Closing Date, addressed to the Purchaser and the Trustee,addressing the matters set out in Exhibit C hereto (subject to customary assumptions andqualifications).          (d) The Purchaser shall have received the opinion of Potter Anderson & Corroon LLP, specialcounsel for the Trustee, dated the Closing Date, addressed to the Purchaser and its successors andassigns, in substantially the form set out in Exhibit D hereto.          (e) The Company shall have furnished to the Purchaser a certificate of the Company, signed bythe Chief Executive Officer, President or an Executive Vice President, and Chief Financial Officeror Treasurer of the Company, dated the Closing Date, as to clauses (i) and (ii) below:          (i) the representations and warranties of the Company in this Purchase Agreement are trueand correct on and as of the Closing Date with the same effect as if made on the Closing Date,and the Company has complied with all the agreements and satisfied all the conditions on itspart to be performed or satisfied at or prior to the Closing Date; and          (ii) except as set forth in the Company’s 1934 Act Reports (as defined below), since thedate of the Financial Statements (as defined in Section 4 (r)), there has been nooccurrence that has had or is reasonably expected to result in a material adverse change in oreffect on the condition (financial or otherwise), earnings, business, liabilities
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or assets of the Company and its subsidiaries, whether or not arising from transactionsoccurring in the ordinary course of business (a “Material Adverse Effect”).          (f) Subsequent to the execution of this Purchase Agreement, with the exception of mattersdisclosed by the Company to Purchaser in the Company’s 1934 Act Reports, there shall not havebeen any change in or affecting the condition (financial or otherwise), earnings, business,liabilities or assets of the Company and its subsidiaries, whether or not occurring in theordinary course of business, the effect of which is, in the Purchaser’s judgment, so material andadverse as to make it impractical or inadvisable to proceed with the purchase of the SeniorNotes.          (g) The redemption of the Original Notes and the purchase of and payment for the SeniorNotes as described in this Purchase Agreement shall (a) not be prohibited by any applicable lawor governmental regulation, (b) not subject the Purchaser to any penalty or, in the reasonablejudgment of the Purchaser, other onerous conditions under or pursuant to any applicable law orgovernmental regulation and (c) be permitted by the laws and regulations of the jurisdictions towhich the Purchaser is subject.          (h) The Company shall have received all consents, permits and other authorizations, and madeall such filings and declarations, as may be required on or before the Closing Date from anyperson or entity pursuant to any law, statute, regulation or rule (federal, state, local andforeign), or pursuant to any agreement, order or decree to which the Company is a party or towhich it is subject, in connection with the transactions contemplated by this Purchase Agreement.          (i) The Purchaser and the Trustee shall have received a fully executed copy of a ControlAgreement in the form of Exhibit F hereto.          (j) The Purchaser and the Original Trustee shall have received (i) a copy of the resolutionof the board of directors of the Company authorizing the transactions contemplated by thisPurchase Agreement, including the redemption of the Original Notes, and (ii) an officers’certificate and opinion of counsel, in each case in accordance with the terms Section 11.3 of theOriginal Indenture.          (k) Prior to the Closing Date, the Company shall have furnished to the Purchaser and itscounsel such further information, certificates and documents as the Purchaser or its counsel mayreasonably request.          If any of the conditions specified in this Section 3 shall not have been fulfilledwhen and as required by this Purchase Agreement, or if any of the opinions, certificates anddocuments mentioned above or elsewhere in this Purchase Agreement shall not be reasonablysatisfactory in form and substance to the Purchaser or its counsel, this Purchase Agreement and allthe Purchaser’s obligations hereunder may be canceled at, or at any time prior to, the Closing Dateby the Purchaser. Notice of such cancellation shall be given to the Company in writing or bytelephone or facsimile confirmed in writing.          Each certificate signed by any officer of the Company and delivered to the Purchaser or itscounsel in connection with the Operative Documents and the transactions
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contemplated hereby and thereby shall be deemed to be a representation and warranty of theCompany and not by such officer in any individual capacity.          4. Representations and Warranties of the Company. The Company represents and warrantsto, and agrees with the Purchaser, as of the date hereof and as of the Closing Date, as follows:          (a) Neither the Company nor any of its “Affiliates” (as defined in Rule 501(b) of RegulationD (“Regulation D”) under the Securities Act (as defined below)), nor any person acting onits or their behalf, has, directly or indirectly, made offers or sales of any security, orsolicited offers to buy any security, under circumstances that would require the registration ofany of the Senior Notes under the Securities Act of 1933, as amended (the “SecuritiesAct”).          (b) Neither the Company nor any of its Affiliates, nor any person acting on its or theirbehalf, has (i) offered for sale or solicited offers to purchase the Senior Notes or (ii) engagedin any form of “general solicitation” or “general advertising” (within the meaning of RegulationD) in connection with any offer or sale of any of the Senior Notes.          (c) The Senior Notes (i) are not and have not been listed on a national securities exchangeregistered under Section 6 of the Securities Exchange Act of 1934, as amended (the “ExchangeAct”), or quoted on a U.S. automated inter-dealer quotation system and (ii) are not of anopen-end investment company, unit investment trust or face-amount certificate company that is, oris required to be, registered under Section 8 of the Investment Company Act of 1940, as amended(the “Investment Company Act”), and the Senior Notes otherwise satisfy the eligibilityrequirements of Rule 144A(d)(3) promulgated pursuant to the Securities Act (“Rule144A(d)(3)”).          (d) Neither the Company nor any of its Affiliates, nor any person acting on its or theirbehalf, has engaged, or will engage, in any “directed selling efforts” within the meaning ofRegulation S under the Securities Act with respect to the Senior Notes.          (e) The Company is not, and, immediately following consummation of the transactionscontemplated hereby and the other Operative Documents and the application of the net proceedsfrom the purchase and sale of the Senior Notes, will not be, an “investment company” or an entity“controlled” by an “investment company,” in each case within the meaning of Section 3(a) of theInvestment Company Act.          (f) The Company has not paid or agreed to pay to any person or entity, directly orindirectly, any fees or other compensation for soliciting another to purchase any of the SeniorNotes.          (g) The Indenture has been duly authorized by the Company and, on the Closing Date, willhave been duly executed and delivered by the Company and, assuming due authorization, executionand delivery thereof by the Trustee, will be a legal, valid and binding obligation of theCompany, enforceable against the Company in accordance with its terms, subject to applicablebankruptcy, insolvency and similar laws affecting creditors’ rights generally and to generalprinciples of equity (the “Enforceability Exceptions”).
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          (h) The Senior Notes have been duly authorized by the Company and, on the Closing Date, willhave been duly executed and delivered to the Trustee for authentication in accordance with theIndenture and, when authenticated in the manner provided for in the Indenture and delivered to thePurchaser against payment therefor in accordance with this Purchase Agreement, will constitutelegal, valid and binding obligations of the Company entitled to the benefits of the Indenture,enforceable against the Company in accordance with their terms, subject to the EnforceabilityExceptions.          (i) This Purchase Agreement has been duly authorized, executed and delivered by the Companyand is a legal, valid and binding obligation of the Company, enforceable against the Company inaccordance with its terms, subject to the Enforceability Exceptions and the effect of anyapplicable public policy against the enforcement of the indemnification provisions of this PurchaseAgreement set forth in Section 8.          (j) The Control Agreement has been duly authorized, executed and delivered by the Company andis a legal, valid and binding obligation of the Company, enforceable against the Company inaccordance with its terms, subject to the Enforceability Exceptions and the effect of anyapplicable public policy against the enforcement of the indemnification provisions of the ControlAgreement.          (k) Neither the redemption of the Original Notes, nor the issuance and sale of the SeniorNotes, nor the execution and delivery of and compliance with the Operative Documents by theCompany, nor the consummation of the transactions contemplated hereby or thereby, or the use of theproceeds therefrom, (i) will conflict with or constitute a violation or breach of the charter orbylaws or similar organizational documents of the Company or any subsidiary of the Company or anyapplicable law, statute, rule, regulation, judgment, order, writ or decree of any government,governmental authority, agency or instrumentality or court, domestic or foreign (collectively, the“Governmental Entities”), or of any arbitrator, in each case having jurisdiction over theCompany or any of its subsidiaries or their respective properties or assets, (ii) will conflictwith or constitute a violation or breach of, or a default or Repayment Event (as defined below)under, or result in the creation or imposition of any pledge, security interest, claim, lien orother encumbrance of any kind (each, a “Lien”) upon any property or assets of the Companyor any of its subsidiaries (other than to the extent of the amounts subject to the Lien of theControl Agreement) pursuant to, any contract, indenture, mortgage, loan agreement, note, lease orother agreement or instrument to which (A) the Company or any of its subsidiaries is a party or bywhich it or any of them may be bound, or (B) any of the property or assets of the Company or any ofits subsidiaries is subject, except, in the case of this clause (ii), for such conflicts,violations, breaches, defaults, Repayment Events or Liens which (X) would not, singly or in theaggregate, adversely affect the consummation of the transactions contemplated by the OperativeDocuments and (Y) would not, singly or in the aggregate, have a Material Adverse Effect or (iii)require the consent, approval, authorization or order of any court or Governmental Entity. As usedherein, a “Repayment Event” means any event or condition which gives the holder of anynote, debenture or other evidence of indebtedness (or any person acting on such holder’s behalf)the right to require the repurchase, redemption or repayment of all or a portion of suchindebtedness by the Company or any of its subsidiaries prior to its scheduled maturity.
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          (l) The Company has been duly incorporated and is validly existing as a corporation in goodstanding under the laws Delaware, with all requisite corporate power and authority to own, leaseand operate its properties and conduct the business it transacts and proposes to transact, and isduly qualified to transact business and is in good standing as a foreign corporation in eachjurisdiction where the nature of its activities requires such qualification, except where thefailure of the Company to be so qualified would not, singly or in the aggregate, have a MaterialAdverse Effect.          (m) The Company has no subsidiaries that are material to its business, financial condition orearnings other than those subsidiaries listed in Schedule 4(1) hereto (collectively, the“Significant Subsidiaries”). Each Significant Subsidiary has been duly organized and isvalidly existing as a corporation, limited liability company, limited partnership or statutorytrust in good standing under the laws of the jurisdiction in which it is chartered, organized orformed, with all requisite power and authority to own, lease and operate its properties and conductthe business it transacts and proposes to transact. Each Significant Subsidiary is duly qualifiedto transact business and is in good standing as a foreign corporation, limited liability company,limited partnership or statutory trust in each jurisdiction where the nature of its activitiesrequires such qualification, except where the failure to be so qualified would not, singly or inthe aggregate, have a Material Adverse Effect. Except as set forth on Schedule 4(1) hereto,no subsidiary of the Company is currently prohibited, directly or indirectly, under any agreementor other instrument to which it is a party or is subject, from paying any dividends to the Company,from making any other distribution on such subsidiary’s capital stock or other Equity Interests,from repaying to the Company any loans or advances to such subsidiary from the Company or fromtransferring any of such subsidiary’s properties or assets to the Company or any other subsidiaryof the Company.          (n) The Company and each of the Company’s subsidiaries hold all necessary approvals,authorizations, orders, licenses, consents, registrations, qualifications, certificates and permits(collectively, the “Governmental Licenses”) of and from Governmental Entities necessary toconduct their respective businesses as now being conducted, and neither the Company nor any of theCompany’s subsidiaries has received any notice of proceedings relating to the revocation ormodification of any such Government License, except where the failure to be so licensed or approvedor the receipt of an unfavorable decision, ruling or finding, would not, singly or in theaggregate, have a Material Adverse Effect; all of the Governmental Licenses are valid and in fullforce and effect, except where the invalidity or the failure of such Governmental Licenses to be infull force and effect, would not, singly or in the aggregate, have a Material Adverse Effect; andthe Company and its subsidiaries are in compliance with all applicable laws, rules, regulations,judgments, orders, decrees and consents, except where the failure to be in compliance would not,singly or in the aggregate, have a Material Adverse Effect.          (o) All of the issued and outstanding Equity Interests of the Company and each of itssubsidiaries are validly issued, fully paid and nonassessable; all of the issued and outstandingEquity Interests of each subsidiary of the Company is owned by the Company, directly or throughsubsidiaries, free and clear of any Lien, claim or equitable right; and none of the issued andoutstanding Equity Interests of the Company or any subsidiary of the
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Company was issued in violation of any preemptive or similar rights arising by operation of law,under the charter, by-laws, certificate of formation, limited liability company agreement,certificate of limited partnership, agreement of limited partnership or similar organizationaldocument of such entity or under any agreement to which the Company or any of its subsidiaries is aparty.          (p) Except as otherwise disclosed to the Purchaser in writing, neither the Company nor any ofits subsidiaries is (i) in violation of its respective charter, by-laws, certificate of formation,limited liability company agreement, certificate of limited partnership, agreement of limitedpartnership or similar organizational document, (ii) in default in the performance or observance ofany obligation, agreement, covenant or condition contained in any contract, indenture, mortgage,loan agreement, note, lease or other agreement or instrument relating to Debt or (iii) in defaultin the performance or observance of any obligation, agreement, covenant or condition contained inany contract, indenture, mortgage, loan agreement, note, lease or other agreement or instrument towhich the Company or any such subsidiary is a party or by which it or any of them may be bound orto which any of the property or assets of any of them is subject,, except, in the case of clause(ii), where such violation or default would not, singly or in the aggregate, have a MaterialAdverse Effect. No default by the Company has occurred and is continuing in the payment of anyprincipal of or premium or interest on any Senior Debt (as such term is defined in the OriginalIndenture).          (q) Except as set forth on Schedule 4(p) hereto, there is no action, suit orproceeding before or by any Governmental Entity or arbitrator, now pending or, to the knowledge ofthe Company, threatened against or affecting the Company or any of the Company’s subsidiaries,except for such actions, suits or proceedings that, if adversely determined, would not, singly orin the aggregate, adversely affect the consummation of the transactions contemplated by theOperative Documents or have a Material Adverse Effect; and the aggregate of all pending legal orgovernmental proceedings to which the Company or any of its subsidiaries is a party or of which anyof their respective properties or assets is subject, including ordinary routine litigationincidental to the Company’s and its subsidiaries’ business, are not expected to result in aMaterial Adverse Effect.          (r) The accountants of the Company who certified the Financial Statements are independentpublic accountants of the Company and its subsidiaries within the meaning of the Securities Act,and the rules and regulations of the Securities and Exchange Commission (the “Commission”)thereunder.          (s) The audited consolidated financial statements (including the notes thereto) and schedulesof the Company and its consolidated subsidiaries for the three (3) fiscal years ended December 31,2005 (the “Financial Statements”) and the interim unaudited consolidated financialstatements of the Company and its consolidated subsidiaries for the three and nine months periodsended September 30, 2006 (the “Interim FinancialStatements”) provided to the Purchaserare the most recent available audited and unaudited consolidated financial statements of theCompany and its consolidated subsidiaries, respectively, and fairly present in all materialrespects, in accordance with U.S. generally accepted accounting principles (“GAAP”), thefinancial position of the Company and its consolidated subsidiaries, and the results of operationsand changes in financial condition as of the dates and for the periods
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therein specified subject, in the case of the Interim Financial Statements, to year-end adjustments(which are expected to consist solely of recurring adjustments in the normal course of business).Such consolidated financial statements and schedules have been prepared in accordance with GAAPconsistently applied throughout the periods involved (except as otherwise noted therein).          (t) Neither the Company nor any of its subsidiaries has any material liability, whether knownor unknown, whether asserted or unasserted, whether absolute or contingent, whether accrued orunaccrued, whether liquidated or unliquidated, and whether due or to become due, including anyliability for taxes (and there is no past or present fact, situation, circumstance, condition orother basis for any present or future action, suit, proceeding, hearing, charge, complaint, claimor demand against the Company or its subsidiaries that could give rise to any such liability),except for (i) liabilities set forth in the Financial Statements and (ii) normal fluctuations inthe amount of the liabilities referred to in clause (i) above occurring in the ordinary course ofbusiness of the Company and its subsidiaries since the date of the most recent balance sheetincluded in such Financial Statements.          (u) Except as set forth in the Company’s 1934 Act Reports, since the respective dates of theFinancial Statements and the Interim Financial Statements, there has been (A) no occurrence that isreasonably expected to result in a Material Adverse Effect and (B) no dividend or distribution ofany kind declared, paid or made by the Company on any class of its capital stock.          (v) The documents of the Company filed with the Commission in accordance with the ExchangeAct, from and including the commencement of the fiscal year covered by the Company’s most recentAnnual Report on Form 10-K, at the time they were or hereafter are filed by the Company with theCommission (collectively, the “1934 Act Reports”), complied and will comply in all materialrespects with the requirements of the Exchange Act and the rules and regulations of the Commissionthereunder (the “1934 Act Regulations”), and, at the date of this Purchase Agreement and onthe Closing Date, do not and will not include an untrue statement of a material fact or omit tostate a material fact required to be stated therein or necessary to make the statements therein, inthe light of the circumstances under which they were made, not misleading; and other than suchinstruments, agreements, contracts and other documents as are filed as exhibits to the Company’sAnnual Report on Form 10-K, Quarterly Reports on Form 10-Q or Current Reports on Form 8-K, thereare no instruments, agreements, contracts or other documents of a character described in Item 601of Regulation S-K promulgated by the Commission to which the Company or any of its subsidiaries isa party, and which the Company is required to file, other than such as are permitted to be filedwith the Company’s next periodic report under the 1934 Act Regulations, and set forth onSchedule 4(u) attached hereto. The Company is in compliance with all currently applicablerequirements of the Exchange Act and the currently applicable rules and regulations promulgatedthereunder that were added by or resulted from the Sarbanes-Oxley Act of 2002.          (w) No labor dispute with the employees of the Company or any of its subsidiaries exists or,to the knowledge of the executive officers of the Company, is imminent, except those which wouldnot, singly or in the aggregate, have a Material Adverse Effect.
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          (x) No filing with, or authorization, approval, consent, license, order, registration,qualification or decree of, any Governmental Entity, other than those that have been made orobtained, is necessary or required for the performance by the Company of its obligations under theOperative Documents or the consummation by the Company of the transactions contemplated by theOperative Documents.          (y) Except as set forth on Schedule 4(x), the Company and each Significant Subsidiaryhave (a) good and marketable title in fee simple to all real property owned by them, (b) good andmarketable title to all real property-related interests owned by them and (c) good and marketabletitle to all personal property owned by them, in each case free and clear of all Liens and defects,except such as do not materially affect the value of such property and do not interfere with theuse made and proposed to be made by the Company and the Significant Subsidiaries; and all of theleases and subleases under which the Company or any subsidiary of the Company holds properties arein full force and effect, except where the failure of such leases and subleases to be in full forceand effect would not, singly or in the aggregate, have a Material Adverse Effect, and none of theCompany or any subsidiary of the Company has any notice of any claim of any sort that has beenasserted by anyone adverse to the rights of the Company or any subsidiary of the Company under anysuch leases or subleases, or affecting or questioning the rights of such entity to the continuedpossession of the leased or subleased premises under any such lease or sublease, except for suchclaims that would not, singly or in the aggregate, have a Material Adverse Effect.          (z) The Company and each of the Significant Subsidiaries have timely and duly filed all TaxReturns (as defined below) required to be filed by them, and all such Tax Returns are true, correctand complete in all material respects. The Company and each of the Significant Subsidiaries havetimely and duly paid in full all material Taxes required to be paid by them (whether or not suchamounts are shown as due on any Tax Return). To the knowledge of the Company, there are no federal,state or other Tax audits or deficiency assessments proposed or pending with respect to the Companyor any of the Significant Subsidiaries. As used herein, the terms “Tax” or “Taxes”mean (i) all federal, state, local and foreign taxes, and other assessments of a similar nature(whether imposed directly or through withholding), including any interest, additions to tax orpenalties applicable thereto imposed by any Governmental Entity, and (ii) all liabilities inrespect of such amounts arising as a result of being a member of any affiliated, consolidated,combined, unitary or similar group, as a successor to another person or by contract. As usedherein, the term “Tax Returns” means all federal, state, local and foreign Tax returns,declarations, statements, reports, schedules, forms and information returns and any amendmentsthereto filed or required to be filed with any Governmental Entity.          (aa) Interest payable by the Company on the Senior Notes is deductible by the Company forUnited States federal income tax purposes. There are no rulemaking or similar proceedings beforethe United States Internal Revenue Service or comparable federal, state, local or foreigngovernment bodies which involve or affect the Company or any of its subsidiaries, which, if thesubject of an action unfavorable to the Company or any such subsidiary, could result in a MaterialAdverse Effect.
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          (bb) The books, records and accounts of the Company and its subsidiaries accurately and fairlyreflect, in reasonable detail, the transactions in, and dispositions of, the assets of, and theresults of operations of, the Company and its subsidiaries. The Company and each of itssubsidiaries maintains a system of internal accounting controls sufficient to provide reasonableassurances that (i) transactions are executed in accordance with management’s general or specificauthorizations, (ii) transactions are recorded as necessary to permit preparation of financialstatements in accordance with GAAP and to maintain asset accountability, (iii) access to assets ispermitted only in accordance with management’s general or specific authorization and (iv) therecorded accountability for assets is compared with the existing assets at reasonable intervals andappropriate action is taken with respect to any differences.          (cc) The Company and the Significant Subsidiaries are insured by insurers of recognizedfinancial responsibility against such losses and risks and in such amounts in all material respectsas are customary in the businesses in which they are engaged. All policies of insurance andfidelity or surety bonds insuring the Company or any of the Significant Subsidiaries or theCompany’s or Significant Subsidiaries’ respective businesses, assets, employees, officers anddirectors are in full force and effect. The Company and each of the subsidiaries are in compliancewith the terms of such policies and instruments in all material respects. Neither the Company norany Significant Subsidiary has reason to believe that it will not be able to renew its existinginsurance coverage in all material respects as and when such coverage expires or to obtain similarcoverage from similar insurers as may be necessary to continue its business at a cost that wouldnot have a Material Adverse Effect. Within the past twelve months, neither the Company nor anySignificant Subsidiary has been denied any insurance coverage which it has sought or for which ithas applied.          (dd) The Company and its subsidiaries or any person acting on behalf of the Company and itssubsidiaries including, without limitation, any director, officer, agent or employee of the Companyor its subsidiaries has not, directly or indirectly, while acting on behalf of the Company and itssubsidiaries (i) used any corporate funds for unlawful contributions, gifts, entertainment or otherunlawful expenses relating to political activity, (ii) made any unlawful payment to foreign ordomestic government officials or employees or to foreign or domestic political parties or campaignsfrom corporate funds, (iii) violated any provision of the Foreign Corrupt Practices Act of 1977, asamended, or (iv) made any other unlawful payment.          (ee) The information provided by the Company pursuant to this Purchase Agreement, the otherOperative Documents and the transactions contemplated hereby and thereby does not, as of the datehereof, and will not as of the Closing Date, contain any untrue statement of a material fact oromit to state any material fact necessary to make the statements therein, in the light of thecircumstances under which they were made, not misleading.          (ff) Except as set forth on Schedule 4(ee) hereto, (i) the Company and itssubsidiaries have been and are in material compliance with applicable Environmental Laws (asdefined below), (ii) none of the Company, any of its subsidiaries or, to the best of the Company’sknowledge, any other owners of any of the real properties currently or previously owned, leased oroperated by the Company or any of its subsidiaries (collectively, the
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“Properties”) at any time or any other party, has at any time “released” (as suchterm is defined in CERCLA (as defined below)) or otherwise disposed of a material quantity ofHazardous Materials (as defined below) on, to, in, under or from the Properties, (iii) neitherthe Company nor any of its subsidiaries has used or intends to use the Properties or anysubsequently acquired properties, other than in material compliance with applicable EnvironmentalLaws, (iv) neither the Company nor any of its subsidiaries has received any notice of, or has anyknowledge of any occurrence or circumstance which, with notice or passage of time or both, wouldgive rise to a material claim under or pursuant to any Environmental Law with respect to theProperties or their respective assets or arising out of the conduct of the Company or itssubsidiaries, (v) none of the Properties are included or, to the best of the Company’s knowledge,proposed for inclusion on the National Priorities List issued pursuant to CERCLA by the UnitedStates Environmental Protection Agency or, to the best of the Company’s knowledge, proposed forinclusion on any similar list or inventory issued pursuant to any other Environmental Law orissued by any other Governmental Entity, (vi) none of the Company, any of its subsidiaries oragents or, to the best of the Company’s knowledge, any other person or entity for whose conductany of them is or may be held responsible, has generated, manufactured, refined, transported,treated, stored, handled, disposed, transferred, produced or processed any Hazardous Material atany of the Properties, except in material compliance with all applicable Environmental Laws, andhas not transported or arranged for the transport of any Hazardous Material from the Propertiesto another property, except in material compliance with all applicable Environmental Laws, (vii)no lien has been imposed on the Properties by any Governmental Entity in connection with thepresence on or off such Property of any Hazardous Material or with respect to an EnvironmentalLaw, and (viii) none of the Company, any of its subsidiaries or, to the best of the Company’sknowledge, any other person or entity for whose conduct any of them is or may be heldresponsible, has entered into or been subject to any consent decree, compliance order, oradministrative order with respect to material liabilities or violations at the Properties or anyfacilities or improvements or any operations or activities thereon.          As used herein, “Hazardous Material” shall include, without limitation, any flammablematerials, explosives, radioactive materials, hazardous materials, hazardous substances, hazardouswastes, toxic substances or related materials, asbestos, petroleum, petroleum products and anyhazardous material as defined by any federal , state or local environmental law, statute,ordinance, rule or regulation, including, without limitation, the Comprehensive EnvironmentalResponse, Compensation, and Liability Act of 1980, as amended, 42 U.S.C. §§ 9601-9675(“CERCLA”), the Hazardous Materials Transportation Act, as amended, 49 U.S.C. §§ 5101-5127,the Resource Conservation and Recovery Act, as amended, 42 U.S.C. §§ 6901-6992k, the EmergencyPlanning and Community Right -to-Know Act of 1986, as amended, 42 U.S. C. §§ 11001-11050 , theToxic Substances Control Act, as amended, 15 U.S.C. §§ 2601-2692, the Federal Insecticide,Fungicide and Rodenticide Act, as amended, 7 U.S.C. §§ 136-136y, the Clean Air Act, as amended, 42U.S.C. §§ 7401-7642, the Clean Water Act, as amended (Federal Water Pollution Control Act), 33U.S.C. §§ 1251-1387 , the Safe Drinking Water Act, as amended , 42 U.S.C. §§ 300f-300j-26, and theOccupational Safety and Health Act, as amended, 29 U.S.C. §§ 651-678, and any analogous state laws,as any of the above may be amended from time to time and in the regulations promulgated pursuant toeach of the foregoing (including environmental statutes and laws not specifically defined herein)
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(individually,an “Environmental Law” and collectively, the“Environmental Laws”) or by anyGovernmental Entity.          (gg) In the ordinary course of its business, the Company periodically reviews the effect ofEnvironmental Laws on the business, operations and properties of the Company and itssubsidiaries, and periodically identifies and evaluates associated costs and liabilities(including, without limitation, any capital or operating expenditures required for clean-up,closure of properties or compliance with Environmental Laws or any permit, license or approval,any related constraints on operating activities and any potential liabilities to third parties).On the basis of such reviews and the amount of its established reserves, the Company hasreasonably concluded that such associated costs and liabilities would not, individually or in theaggregate, result in a Material Adverse Effect.          (hh) The Company has not filed any voluntary petition in bankruptcy or been adjudicated abankrupt or insolvent, or filed any petition or answer seeking any reorganization, liquidation,dissolution or similar relief under any federal bankruptcy or insolvency laws, or other relieffor debtors, or sought or consented to or acquiesced in the appointment of any trustee, receiver,conservator or liquidator of all or any substantial part of its respective properties. NoProceeding (as such term is defined in the Original Indenture) has occurred and is continuing.The Company is solvent and, upon consummation of the transactions contemplated hereby, will besolvent. The Company is not engaged in, or about to engage in, a business or a transaction forwhich the remaining assets of the Company are unreasonably small in relation to the business ortransaction, and the Company does not intend to incur, nor believes that it will incur, debtsbeyond its ability to pay such debts as they become due. The Company has negotiated in good faithand has entered into the transactions contemplated by this Purchase Agreement in good faith.          5. Representations and Warranties of the Purchaser. The Purchaser represents andwarrants to, and agrees with, the Company as follows:          (a) The Purchaser is aware that the Senior Notes have not been and will not be registeredunder the Securities Act and may not be offered or sold within the United States or to “U.S.persons” (as defined in Regulation S under the Securities Act) except in accordance with Rule 903of Regulation S under the Securities Act or pursuant to an exemption from the registrationrequirements of the Securities Act.          (b) The Purchaser is an “accredited investor,” as such term is defined in Rule 501(a) ofRegulation D under the Securities Act.          (c) Neither the Purchaser, nor any of the Purchaser’s Affiliates, nor any person acting onthe Purchaser’s or the Purchaser’s Affiliate’s behalf has engaged, or will engage, in any form of“general solicitation” or “general advertising” (within the meaning of Regulation D promulgatedunder the Securities Act) in connection with any offer or sale of the Senior Notes.          (d) The Purchaser understands and acknowledges that (i) no public market exists for any ofthe Senior Notes and that it is unlikely that a public market will ever exist for
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the Senior Notes, (ii) the Purchaser is purchasing the Senior Notes for its own account, forinvestment and not with a view to, or for offer or sale in connection with, any distributionthereof in violation of the Securities Act or other applicable securities laws, subject to anyrequirement of law that the disposition of its property be at all times within its control andsubject to its ability to resell such Senior Notes pursuant to an effective registrationstatement under the Securities Act or pursuant to an exemption therefrom or in a transaction notsubject thereto, and the Purchaser agrees to the legends and transfer restrictions applicable tothe Senior Notes contained in the Indenture, and (iii) the Purchaser has had the opportunity toask questions of, and receive answers and request additional information from, the Company and isaware that it may be required to bear the economic risk of an investment in the Senior Notes.          (e) The Purchaser is a limited liability company duly formed, validly existing and in goodstanding under the laws of the State of Delaware with all requisite limited liability companypower and authority to execute, deliver and perform the Operative Documents to which it is aparty, to make the representations and warranties specified herein and therein and to consummatethe transactions contemplated herein.          (f) This Purchase Agreement has been duly authorized , executed and delivered by thePurchaser and no filing with , or authorization, approval, consent, license, order, registration,qualification or decree of, any governmental body, agency or court having jurisdiction over thePurchaser, other than those that have been made or obtained, is necessary or required for theperformance by the Purchaser of its obligations under this Purchase Agreement or to consummatethe transactions contemplated herein.          (g) The execution and delivery of this Purchase Agreement by the Purchaser does not, and theconsummation by the Purchaser of the transactions contemplated hereby (including the Redemption)will not: (i) violate or conflict with or constitute a breach or default (or an event that withnotice or lapse of time, or both, would become a breach or default) under or will result in thetermination of, or accelerate the performance required under any contract or agreement to whichthe Purchaser is a party or by which it is bound, or result in the creation of any Lien on theOriginal Notes; or (ii) violate any law applicable to the Purchaser.          (h) The Purchaser is the record and beneficial owner of all of the Original Notes as setforth in the Recitals hereto and is conveying and transferring to the Company all of its legaland beneficial ownership in the Original Notes, free and clear of any Liens.          6. Covenants and Agreements of the Company. The Company covenants and agrees with thePurchaser as follows:          (a) During the period from the date of this Purchase Agreement to the Closing Date, theCompany shall use its best efforts and take all action necessary or appropriate to cause itsrepresentations and warranties contained in Section 4 to be true as of the Closing Date,after giving effect to the transactions contemplated by this Purchase Agreement, as if made onand as of the Closing Date.
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          (b) The Company will arrange for the qualification of the Senior Notes for sale under the lawsof such jurisdictions as the Purchaser may designate and will maintain such qualifications ineffect so long as required for the sale of the Senior Notes. The Company will promptly advise thePurchaser of the receipt by the Company of any notification with respect to the suspension of thequalification of the Senior Notes for sale in any jurisdiction or the initiation or threatening ofany proceeding for such purpose.          (c) The Company will not, nor will it permit any of its Affiliates to, nor will the Companypermit any person acting on its behalf (other than the Purchaser and its Affiliates) to, directlyor indirectly, resell any Senior Notes that have been acquired by any of them.          (d) The Company will not, nor will it permit any of its Affiliates or any person acting on itsbehalf (other than the Purchaser and its Affiliates) to, engage in any “directed selling efforts”within the meaning of Regulation S under the Securities Act with respect to the Senior Notes.          (e) The Company will not, nor will it permit any of its Affiliates or any person acting on itsbehalf to, directly or indirectly, (i) sell, offer for sale or solicit offers to buy or otherwisenegotiate in respect of any security (as defined in the Securities Act) that would or could beintegrated with the sale of the Senior Notes in any manner that would require the registration ofthe Senior Notes under the Securities Act or (ii) make offers or sales of any security, or solicitoffers to buy any security, under circumstances that would require the registration of any of theSenior Notes under the Securities Act.          (f) The Company will not, nor will it permit any of its Affiliates or any person acting on itsbehalf (other than the Purchaser and its Affiliates) to, engage in any form of “generalsolicitation” or “general advertising” (within the meaning of Regulation D) in connection with anyoffer or sale of the any of the Senior Notes.          (g) So long as any of the Senior Notes are outstanding, (i) the Senior Notes shall not belisted on a national securities exchange registered under Section 6 of the Exchange Act or quotedin a U.S. automated inter-dealer quotation system, (ii) the Company shall not be an open-endinvestment company, unit investment trust or face-amount certificate company that is, or isrequired to be, registered under Section 8 of the Investment Company Act, and, the Senior Notesshall otherwise satisfy the eligibility requirements of Rule 144A(d)(3) and (iii) the Company shallnot engage, nor permit any of its subsidiaries to engage, in any activity that would cause it orany such subsidiary to be an “investment company” under the provisions of the Investment CompanyAct.          (h) The Company shall furnish to (i) the holder, and subsequent holders, of the Senior Notes,(ii) Kodiak Capital Management Company LLC, 2107 Wilson Boulevard, Suite 450, Arlington, Virginia22201, Attention: Robert M. Hurley, or such other address as designated by Kodiak CapitalManagement Company LLC) and (iii) any beneficial owner of the Senior Notes reasonably identified tothe Company (which identification may be made by either such beneficial owner or by Kodiak CapitalManagement Company LLC), a duly completed and executed officer’s financial certificate in the formattached hereto as Exhibit E,
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including the financial statements referenced in such Exhibit, which certificate and financialstatements shall be so furnished by the Company not later than forty-five (45) days after the endof each of the first three fiscal quarters of each fiscal year of the Company and not later thanninety (90) days after the end of each fiscal year of the Company, or, if applicable, such shorterrespective periods as may then be required by the Commission for the filing by the Company ofQuarterly Reports on Form 10-Q and Annual Reports on Form 10-K.          (i) During any period in which the Company is not subject to and in compliance with Section 13or 15(d) of the Exchange Act, or the Company is not exempt from such reporting requirementspursuant to and in compliance with Rule 12g3-2(b) under the Exchange Act, the Company shall provideto each holder of the Senior Notes and to each prospective purchaser (as designated by such holder)of the Senior Notes, upon the request of such holder or prospective purchaser, any informationrequired to be provided by Rule 144A(d)(4) under the Securities Act, if applicable. Any informationprovided by the Company pursuant to this Section 6(i) will not, at the date thereof, contain anyuntrue statement of a material fact or omit to state any material fact necessary to make thestatements therein, in light of the circumstances under which they were made, not misleading. Ifthe Company is required to register under the Exchange Act, such reports filed in compliance withRule 12g3-2(b) shall be sufficient information as required above. This covenant is intended to befor the benefit of the Purchaser, the holders of the Senior Notes, and the prospective purchasersdesignated by the Purchaser and such holders, from time to time, of the Senior Notes.          (j) The Company covenants and agrees with Purchaser that the Company will not, without theprior written consent of Purchaser, offer, sell, contract to sell, grant any option to purchase orotherwise dispose of, directly or indirectly, any Debt (as such term is defined in the Indenture)unless (i) the Company shall be in compliance with each of the covenants contained herein and inthe Indenture immediately after the closing of any transaction relating to such offer, sale,contract to sell, grant, purchase or other dispositions, (ii) such Debt is Permitted Debt (as suchterm is defined in the Indenture) or (iii) such Debt (x) shall be expressly subordinate by itsterms to the Senior Notes and (y) shall not contain any covenants of the Company which are morerestrictive than the financial covenants contained in the Indenture.          (k) The Company will not identify any of Indemnified Parties (as defined below) in a pressrelease or any other public statement without the consent of such Indemnified Party.          (l) The Purchaser shall have the right under this Purchase Agreement and the Indenture torequest the substitution of new Senior Notes for all or a portion of the Senior Notes held by thePurchaser (the “Replacement Senior Notes”). The Replacement Senior Notes shall bear termsidentical to the Senior Notes with the sole exception of interest payment dates (and correspondingredemption date and maturity date), which will be specified by the Purchaser. In no event will theinterest payment dates (and corresponding redemption date and maturity date) on the ReplacementSenior Notes vary by more than sixty (60) calendar days from the original interest payment dates(and corresponding redemption date and maturity date) under the Senior Notes. The Company agrees tocooperate with all reasonable requests of the Purchaser in connection with any of the foregoing;provided, that no
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action requested of the Company in connection with such cooperation shall materiallyincrease the obligations or materially decrease the rights of the Company pursuant to suchdocuments.          (m) Notwithstanding anything to the contrary otherwise contained herein or in any otherOperative Document, prior to earlier of (i) the date eighteen (18) months from the date hereofand (ii) the occurrence of a Change-of-Control (as defined in the Indenture), the Company shallnot offer to issue any other unsecured Debt (as such term is defined in the Indenture) whichranks *pari passu*with the Senior Notes (including the Senior Notes or securities convertibleinto, or exercisable or exchangeable for the same) to any other Person, unless the Company shallfirst offer to Purchaser the opportunity to purchase such unsecured Debt, and shall first provideto Purchaser a written notice thereof stating the proposed terms and conditions (the “OfferedTerms”). The Purchaser shall have the right to accept the Offered Terms by written notice tothe Company given within ten (10) days after the Purchaser’s receipt of the Offered Terms. If thePurchaser does not accept the Offered Terms within such period, the Purchaser shall be deemed tohave rejected the Offered Terms and the Company may consummate such issuance of unsecured Debtduring the sixty (60) month period beginning on the date of the expiration of the applicableperiod; provided, that such issuance of unsecured Debt shall be consummated onsubstantially the same terms as the Offered Terms and shall otherwise be in accordance with theterms hereof, including Section 6(j). If such issuance of unsecured Debt is not consummatedwithin such sixty (60) month period, the provisions of this Section 6(m) shall againapply in respect of any issuance of unsecured Debt which ranks *pari passu*with the Senior Noteswhether made during such sixty (60) month period or thereafter.          (n) On each of March 30, 2007, June 30, 2007 and either, at the Company’s option, September30, 2007 or December 30, 2007, the Company shall deposit into the Interest Reserve Account anamount equal to the amount of interest paid with respect to the Senior Notes on such InterestPayment Date pursuant to Section 3.1(a) of the Indenture. The amounts on deposit in the InterestReserve Account shall not be released to the Company until such time as the Company shall (i)have maintained a Fixed Charge Coverage Ratio (as defined in the Indenture) of not less than 2.0to 1.0 as of the four (4) immediately preceding fiscal quarters in each case for, collectively,such quarter together with the preceding three (3) quarters and (ii) be in compliance with allother covenants contained herein and in the Indenture.          7. Payment of Expenses. The Company agrees to pay all costs and expenses incident tothe performance of the obligations of the Company under this Purchase Agreement, whether or not thetransactions contemplated herein are consummated or this Purchase Agreement is terminated,including all costs and expenses incident to (i) the fees and expenses of qualifying the SeniorNotes under the securities laws of the several jurisdictions as provided in Section 6(b),(iii) the fees and expenses of the counsel, the accountants and any other experts or advisorsretained by the Company, (iv) the fees and all reasonable expenses of the Trustee and any othertrustee or paying agent appointed under the Operative Documents, including the fees anddisbursements of counsel for such trustees or paying agent, which fees shall not exceed a $2,000acceptance fee, $4,000 in administrative fees annually and the fees and expenses of Potter Anderson& Corroon LLP, (v) the reasonable fees and expenses of Winston & Strawn LLP, special counselretained by the Purchaser and (vi) the reasonable fees and expenses of the
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Original Trustee, including the reasonable fees and disbursements of counsel for the OriginalTrustee; provided, that with respect to (v) and (vi) above, such fees and expenses shall be paid onthe Closing Date.          If the sale of the Senior Notes provided for in this Purchase Agreement is not consummatedbecause any condition set forth in Section 3 to be satisfied by the Company is notsatisfied, because this Purchase Agreement is terminated pursuant to Section 9 or becauseof any failure, refusal or inability on the part of the Company to perform all obligations andsatisfy all conditions on its part to be performed or satisfied hereunder other than by reason of adefault by the Purchaser, the Company will reimburse the Purchaser upon demand for all reasonableout-of-pocket expenses (including the fees and expenses of the Purchaser’s counsel specified inclause (v) of the immediately preceding paragraph) that shall have been incurred by the Purchaserin connection with the Redemption and the proposed purchase and sale of the Senior Notes.          8. Indemnification. (a) The Company agrees to indemnify and hold harmless thePurchaser, the Purchaser’s Affiliates and Kodiak Capital Management Company LLC (collectively, the“Indemnified Parties”), each person, if any, who “controls” any of the Indemnified Partieswithin the meaning of either the Securities Act or the Exchange Act, and the Indemnified Parties’respective directors, officers, employees and agents, against any and all losses, claims, damagesor liabilities, joint or several, to which the Indemnified Parties or any of them may becomesubject under the Securities Act, the Exchange Act or other federal or state statutory law orregulation, at common law or otherwise, insofar as such losses, claims, damages or liabilities (oractions in respect thereof) arise out of, are based upon or connected with (i) any untrue statementor alleged untrue statement of a material fact contained in any information or documents furnishedor made available to the Purchaser by or on behalf of the Company, (ii) the omission or allegedomission to state therein a material fact required to be stated therein or necessary to make thestatements therein not misleading, (iii) the breach or alleged breach of any representation,warranty or agreement of the Company contained herein or (iv) the execution and delivery by theCompany of this Purchase Agreement or any of the other Operative Documents and/or the consummationof the transactions contemplated hereby and thereby, and agrees to reimburse each such IndemnifiedParty, as incurred, for any legal or other expenses reasonably incurred by it in connection withinvestigating or defending any such loss, claim, damage, liability or action. The indemnityagreements contained in this Section 8 are in addition to any liability which the Companymay otherwise have.          (b) Promptly after receipt by an Indemnified Party under this Section 8 of notice ofthe commencement of any action, such Indemnified Party will, if a claim in respect thereof is tobe made against the Company under this Section 8, promptly notify the Company in writingof the commencement thereof, but the failure so to notify the Company (i) will not relieve theCompany from liability under paragraph (a) above unless and to the extent that such failureresults in the forfeiture by the Company of material rights and defenses and (ii) will not, inany event, relieve the Company from any obligations to any Indemnified Party other than theindemnification obligation provided in paragraph (a) above. The Purchaser shall be entitled toappoint counsel to represent the Indemnified Party in any action for which indemnification issought. The Company may participate at its own expense in the defense of any such action;provided, that counsel to the Company shall not (except with the consent of theIndemnified Party) also be counsel to the Indemnified Party. In no event shall the
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Company be liable for fees and expenses of more than one counsel (in addition to any localcounsel) separate from its own counsel for all Indemnified Parties in connection with any oneaction or separate but similar or related actions in the same jurisdiction arising out of thesame general allegations or circumstances, unless an Indemnified Party believes that his, her orits interests are not aligned with the interests of another Indemnified Party or that a conflictof interest might result. The Company will not, without the prior written consent of theIndemnified Parties, settle or compromise or consent to the entry of any judgment with respect toany pending or threatened claim, action, suit or proceeding in respect of which indemnificationmay be sought hereunder (whether or not the Indemnified Parties are actual or potential partiesto such claim, action, suit or proceeding) unless such settlement, compromise or consent includesan unconditional release of each Indemnified Party from all liability arising out of such claim,action, suit or proceeding.          9. Termination; Representations and Indemnities to Survive. This Purchase Agreementshall be subject to termination in the absolute discretion of the Purchaser, by notice given to theCompany prior to delivery of and payment for the Senior Notes, if prior to such time (i) adowngrading shall have occurred in the rating accorded the Company’s debt securities by any“nationally recognized statistical rating organization,” as that term is used by the Commission inRule 153-1(c)(2)(vi)(F) under the Exchange Act, or such organization shall have publicly announcedthat it has under surveillance or review, with possible negative implications, its rating of theCompany’s debt securities, (ii) the Company shall be unable to sell and deliver to the Purchaser atleast Thirty Million Dollars ($30,000,000) in aggregate principal amount of the Senior Notes, (iii)a suspension or material limitation in trading in securities generally shall have occurred on theNew York Stock Exchange, (iv) a suspension or material limitation in trading in any of theCompany’s securities shall have occurred on the exchange or quotation system upon which theCompany’ securities are traded, if any, (v) a general moratorium on commercial business activitiesshall have been declared either by federal or Delaware authorities, (vi) there shall have occurredany outbreak or escalation of hostilities, or declaration by the United States of a nationalemergency or war or other calamity or crisis the effect of which on financial markets is such as tomake it, in the Purchaser’s judgment, impracticable or inadvisable to proceed with the offering orpurchase of the Senior Notes or (vii) the Company shall be unable to cause the Redemption to occur,including, without limitation, the payment of the Redemption Price. The respective agreements,representations, warranties, indemnities and other statements of the Company or its officers ortrustees and of the Purchaser set forth in or made pursuant to this Purchase Agreement will remainin full force and effect, regardless of any investigation made by or on behalf of the Purchaser orthe Company or any of the their respective officers, directors or controlling persons, and willsurvive delivery of and payment for the Senior Notes. The provisions of Sections 7 and8 shall survive the termination or cancellation of this Purchase Agreement.          10. Amendments . This Purchase Agreement may not be modified, amended, altered orsupplemented, except upon the execution and delivery of a written agreement by each of the partieshereto.          11. Notices. All communications hereunder shall be in writing and effective only onreceipt, and shall be mailed, delivered by hand or courier or sent by facsimile and confirmed:
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If to the Purchaser, to:c/o Kodiak Capital Management Company, LLC