Document:

WWW.EXFILE.COM, INC. -- 14590 -- ARKADOS GROUP, INC. -- EXHIBIT 10.34 TO FORM 10-KSB

    EXHIBIT
      10.34

    Oleg
      Logvinov

    27
      Beacon Hill Drive

    East
      Brunswick, NJ 08816

    

    

    

                October
      10,
      2006

    

    

    Kirk
      Warshaw, CFO

    Arkados
      Group,, Inc.

    220
      Old
      New Brunswick Road, Suite 202

    Piscataway,
      NJ 08854

    

    Re: Employment
      Agreement dated as of May 23, 2004

    

    Dear
      Kirk:

    

    I
      refer
      you to the above referenced agreement. Pursuant to Section 3c) of the agreement,
      a bonus of $65,333 was payable to me as of December 28, 2005. I hereby agree
      to
      temporarily waive this default for a period of 30 days ending November 9,
      2006

    

    The
      temporary waive is made with full reservation of any rights I have under the
      employment agreement and applicable law and does not alter my letter dated
      July
      19, 2006 relating to the payment of deferred payroll.

    

    Please
      confirm your receipt of this letter by signing below and returning a copy to
      me
      by facsimile or e-mail, original by mail.

     

     

    
      	 	 	 
	 	
            
	 
 	 
 	Very
              truly yours,
	
            	  	/s/ Oleg
              Logvinov
	 	
              
Oleg
              Logvinov
	 	
            

    

     

     

    cc:      
      Herbert H. Sommer, Esq.

        Len
      Breslow,
      Esq.

     

    
 

    Receipt
      confirmed:

     

     

    CDKNET.COM,
      INC.

    

    

    By:
      _________________________________

          
      Kirk Warshaw, CFOEXHIBIT 4.1

     

    
      Exhibit
        4.1

       

       

      CORONADO
        INDUSTRIES, INC.

      16857
        E. Saguaro Boulevard

      Fountain
        Hills, AZ 85268

      

      October
        1, 2006

      

      Coronado
        Employees and Consultants, 

      

      The
        Company’s Board of Directors has decided to make available to all employees and
        consultants, shares of the Company’s common stock
        at
        a negotiated price of not less than 90% of the lowest closing trading price
        during the week prior to the compensation being due.

      

      To
        participate in this program, all you have to do is execute this letter in
        the
        space below, and indicate the amount of wages you wish to
        have
        allocated to this Plan and the pay period from which your salary will be
        credited. Your free-trading shares will be delivered to
        you
        within a few days.

       

      
         

        
          	 	 	 
	 	CORONADO
                  INDUSTRIES, INC.
	 
 	 
 	 
 
	 	By:  	/s/ 
                  Gary R. Smith
	 	
                  

                
	 	Gary
                  R. Smith, President

        

      

       

      
        

      

      
        	
                

              	 	
                

              
	Amount of Compensation	 	Employee/Consultant
                Signature 
	 	 	 
	 	 	 
	 	 	 
	 	 	 
	
                

              	 	
                

              
	Period From 	 	
                Name
                  of Employee/Consultant 

              
	Which To Be Paid 	 	
                (Please
                  Print)Exhibit 4.1

Execution Copy

STOCK PURCHASE
AGREEMENT

by and among

AFFORDABLE RESIDENTIAL COMMUNITIES INC.

and

THE PURCHASERS NAMED HEREIN

Dated as
of October 6, 2006

TABLE OF
CONTENTS

	
  

  	
   

  	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 1.

  	
   

  	
  Authorization and Closing

  	
   

  	
  1

  
	
  1A.

  	
   

  	
  Authorization of the Common Stock

  	
   

  	
  1

  
	
  1B.

  	
   

  	
  Purchase and Sale of the Common Stock

  	
   

  	
  1

  
	
  1C.

  	
   

  	
  The Closing

  	
   

  	
  1

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 2.

  	
   

  	
  Conditions of Each Purchaser’s Obligation at the
  Closing

  	
   

  	
  2

  
	
  2A.

  	
   

  	
  Representations and Warranties; Covenants

  	
   

  	
  2

  
	
  2B.

  	
   

  	
  NLASCO Acquisition

  	
   

  	
  2

  
	
  2C.

  	
   

  	
  Articles of Amendment and Restatement

  	
   

  	
  2

  
	
  2D.

  	
   

  	
  Registration Agreement

  	
   

  	
  2

  
	
  2E.

  	
   

  	
  Shareholder Approvals

  	
   

  	
  2

  
	
  2F.

  	
   

  	
  Third Party Consents

  	
   

  	
  3

  
	
  2G.

  	
   

  	
  Governmental Consents and Approvals

  	
   

  	
  3

  
	
  2H.

  	
   

  	
  Material Adverse Change

  	
   

  	
  3

  
	
  2I.

  	
   

  	
  Securities Law Compliance

  	
   

  	
  3

  
	
  2J.

  	
   

  	
  Listing of Shares

  	
   

  	
  3

  
	
  2K.

  	
   

  	
  Opinion of the Company’s Counsel

  	
   

  	
  3

  
	
  2L.

  	
   

  	
  Litigation

  	
   

  	
  3

  
	
  2M.

  	
   

  	
  Compliance with Applicable Laws

  	
   

  	
  3

  
	
  2N.

  	
   

  	
  Proceedings

  	
   

  	
  3

  
	
  2O.

  	
   

  	
  Closing Documents

  	
   

  	
  3

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 3.

  	
   

  	
  Covenants Prior to Closing

  	
   

  	
  4

  
	
  3A.

  	
   

  	
  General

  	
   

  	
  4

  
	
  3B.

  	
   

  	
  Third Party Notices and Consents

  	
   

  	
  4

  
	
  3C.

  	
   

  	
  Governmental Notices and Consents

  	
   

  	
  4

  
	
  3D.

  	
   

  	
  Operation of Business

  	
   

  	
  5

  
	
  3E.

  	
   

  	
  Full Access

  	
   

  	
  5

  
	
  3F.

  	
   

  	
  Notice of Material Developments

  	
   

  	
  5

  
	
  3G.

  	
   

  	
  No Inconsistent Actions

  	
   

  	
  5

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 4.

  	
   

  	
  Covenants

  	
   

  	
  5

  
	
  4A.

  	
   

  	
  Information

  	
   

  	
  5

  
	
  4B.

  	
   

  	
  Inspection of Property

  	
   

  	
  5

  
	
  4C.

  	
   

  	
  Use of Proceeds

  	
   

  	
  6

  
	
  4D.

  	
   

  	
  Public Disclosures

  	
   

  	
  6

  
	
  4E.

  	
   

  	
  Confidentiality

  	
   

  	
  6

  
	
  4F.

  	
   

  	
  Board Observer

  	
   

  	
  7

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 5.

  	
   

  	
  Transfer of Restricted Securities

  	
   

  	
  7

  
	
  5A.

  	
   

  	
  General Provisions

  	
   

  	
  7

  
	
  5B.

  	
   

  	
  Rule 144A

  	
   

  	
  7

  
	
  5C.

  	
   

  	
  Restrictive Legends

  	
   

  	
  7

  
	
  5D.

  	
   

  	
  Legend Removal

  	
   

  	
  8

  

 

 i
 

 

	
  

  	
   

  	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 6.

  	
   

  	
  Representations and Warranties of the Company

  	
   

  	
  8

  
	
  6A.

  	
   

  	
  Organization; Ownership; Power; Qualification of the
  Company

  	
   

  	
  8

  
	
  6B.

  	
   

  	
  Subsidiaries

  	
   

  	
  8

  
	
  6C.

  	
   

  	
  Capital Stock and Related Matters

  	
   

  	
  9

  
	
  6D.

  	
   

  	
  Authorization; No Breach

  	
   

  	
  9

  
	
  6E.

  	
   

  	
  SEC Reports and Financial Statements

  	
   

  	
  10

  
	
  6F.

  	
   

  	
  No Material Adverse Effect

  	
   

  	
  12

  
	
  6G.

  	
   

  	
  Absence of Certain Developments

  	
   

  	
  12

  
	
  6H.

  	
   

  	
  Litigation, etc.

  	
   

  	
  13

  
	
  6I.

  	
   

  	
  Brokerage, etc.

  	
   

  	
  14

  
	
  6J.

  	
   

  	
  Governmental Consent, etc.

  	
   

  	
  14

  
	
  6K.

  	
   

  	
  Compliance with Laws

  	
   

  	
  14

  
	
  6L.

  	
   

  	
  Proxy Statement

  	
   

  	
  15

  
	
  6M.

  	
   

  	
  NLASCO Representations

  	
   

  	
  15

  
	
  6N.

  	
   

  	
  Disclosure

  	
   

  	
  15

  
	
  6O.

  	
   

  	
  Closing Date

  	
   

  	
  15

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 7.

  	
   

  	
  Definitions

  	
   

  	
  15

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Section 8.

  	
   

  	
  Miscellaneous

  	
   

  	
  21

  
	
  8A.

  	
   

  	
  Termination

  	
   

  	
  21

  
	
  8B.

  	
   

  	
  Fees and Expenses

  	
   

  	
  22

  
	
  8C.

  	
   

  	
  Remedies

  	
   

  	
  22

  
	
  8D.

  	
   

  	
  Indemnification

  	
   

  	
  22

  
	
  8E.

  	
   

  	
  Purchaser’s Investment Representations

  	
   

  	
  24

  
	
  8F.

  	
   

  	
  Consent to Amendments

  	
   

  	
  25

  
	
  8G.

  	
   

  	
  Survival of Representations and Warranties

  	
   

  	
  25

  
	
  8H.

  	
   

  	
  Successors and Assigns

  	
   

  	
  25

  
	
  8I.

  	
   

  	
  Generally Accepted Accounting Principles

  	
   

  	
  26

  
	
  8J.

  	
   

  	
  Severability

  	
   

  	
  26

  
	
  8K.

  	
   

  	
  Counterparts

  	
   

  	
  26

  
	
  8L.

  	
   

  	
  Descriptive Headings; Interpretation

  	
   

  	
  26

  
	
  8M.

  	
   

  	
  Governing Law

  	
   

  	
  26

  
	
  8N.

  	
   

  	
  Notices

  	
   

  	
  26

  
	
  8O.

  	
   

  	
  Press Releases

  	
   

  	
  27

  
	
  8P.

  	
   

  	
  No Strict Construction

  	
   

  	
  27

  
	
  8Q.

  	
   

  	
  Complete Agreement

  	
   

  	
  27

  

 

Schedules and
Exhibits

List of Exhibits

Schedule of
Purchasers

 ii

 

STOCK PURCHASE AGREEMENT

THIS STOCK PURCHASE
AGREEMENT is made as of October 6, 2006, by and among Affordable Residential
Communities Inc., a Maryland corporation (the “Company”), and the
Persons listed on the Schedule of Purchasers attached hereto
(collectively referred to herein as the “Purchasers” and individually as
a “Purchaser”).  The Company and
the Purchasers are sometimes collectively referred to herein as the “Parties”
and individually as a “Party.” 
Except as otherwise provided herein, capitalized terms used herein are
defined in Section 7 hereof.

WHEREAS, the Company and
the Company’s wholly owned subsidiary, ARC Insurance Holdings Inc., a Delaware
corporation, entered into a Stock Purchase Agreement (the “NLASCO Agreement”)
relating to the proposed acquisition (the “Acquisition”) of NLASCO,
Inc., a Delaware corporation (“NLASCO”).

WHEREAS, the Company will
consummate a rights offering pursuant to which its existing holders of Common
Stock will purchase additional shares of the Company’s Common Stock in
connection with the Acquisition (the “Rights Offering”).

WHEREAS, the Company
desires to sell to the Purchasers, and the Purchasers desire to purchase from
the Company, certain shares of the Company’s Common Stock in connection with
the Acquisition on the terms and subject to the conditions set forth herein.

NOW, THEREFORE, in
consideration of the mutual covenants, agreements and understandings contained
herein, and intending to be legally bound, the Parties agree as follows:

Section 1.               Authorization
and Closing.

1A.          Authorization of the Common Stock.  The Company shall authorize the issuance and
sale to the Purchasers of shares of its Common Stock, par value $.01 per share
(the “Common Stock”), having the rights and preferences set forth in the
Articles of Amendment and Restatement.

1B.          Purchase and Sale of the Common
Stock.  At the Closing, the Company
shall sell to each Purchaser and, subject to the terms and conditions set forth
herein, each Purchaser shall purchase from the Company the number of shares of
Common Stock set forth opposite such Purchaser’s name on the Schedule of
Purchasers, as updated prior to Closing pursuant to Section 1C to
reflect the final Common Stock Amount and Share Purchase Price, at a price per
share of Common Stock equal to the Share Purchase Price.  The aggregate purchase price for the Common
Stock (the “Common Stock Purchase Price”) purchased by the Purchasers
shall be $20,000,000.

1C.          The Closing.  The closing of the purchases and sales of the
Common Stock (the “Closing”) shall take place at a location mutually
acceptable to the Parties simultaneously with the closing of the Acquisition,
subject to the satisfaction or waiver of the conditions to Closing set forth in
Section 2 below (the date of the Closing, the “Closing Date”).  At the Closing, the Company shall deliver to
each Purchaser stock certificates evidencing the Common Stock to be purchased
by such Purchaser, registered in such Purchaser’s or its

 

nominee’s name, upon payment of the purchase
price thereof by wire transfer of immediately available funds to an account
designated by the Company at least two (2) business days prior to the Closing,
in the amount set forth opposite such Purchaser’s name on the Schedule of
Purchasers.  The stock certificates
shall be made available for examination by the Purchasers at least one (1)
business day prior to the Closing Date. 
The Company shall deliver to the Purchasers a Schedule of Purchasers
revised to reflect the final Common Stock Amount and Share Purchase Price at
least one (1) business day prior to the Closing Date, which revised Schedule
of Purchasers shall be in form and substance reasonably acceptable to the
Majority Purchasers.

Section 2.               Conditions
of Each Purchaser’s Obligation at the Closing.  The obligation of each Purchaser to purchase
and pay for the Common Stock at the Closing is subject to the satisfaction as
of the Closing of the following conditions:

2A.          Representations and Warranties;
Covenants.  The representations and
warranties contained in Section 6 hereof that are subject to
materiality, Material Adverse Effect or dollar threshold qualifications shall
be true and correct in all respects at and as of the Closing and the
representations and warranties contained in Section 6 that are not
subject to materiality, Material Adverse Effect or dollar threshold
qualifications shall be true and correct in all material respects at and as of
the Closing, in each case as though then made and as though the Closing Date
was substituted for the date of this Agreement throughout such representations
and warranties and the Company shall have performed in all material respects
all of the covenants required to be performed by it hereunder prior to the
Closing.

2B.          NLASCO Acquisition.  The Company shall have consummated, or shall
be contemporaneously consummating, the Acquisition on the terms set forth in
the NLASCO Agreement and the Company shall not have waived any conditions to the
closing of the Acquisition other than as agreed in writing by the Majority
Purchasers.

2C.          Articles of Amendment and
Restatement.  The Company’s Articles
of Amendment and Restatement (the “Articles of Amendment and Restatement”)
in effect as of the date hereof shall continue be in full force and effect
under the laws of the State of Maryland as of the Closing and shall not have
been amended or modified other amendments disclosed to the Purchasers in
writing as of the date hereof or as otherwise agreed in writing by the Majority
Purchasers.

2D.          Registration Agreement.  The Company shall have delivered to the
Purchasers an executed registration rights agreement in form and substance as
set forth in Exhibit A attached hereto (the “Registration
Agreement”), and the Registration Agreement shall be in full force and
effect as of the Closing and shall not have been amended or modified.

2E.           Shareholder Approvals.  The Company shall have obtained all
shareholder consents and approvals required, if any, to authorize, issue and
sell the Common Stock hereunder (whether such consents and approvals are
required under applicable law or the rules and regulations of the New York
Stock Exchange or otherwise).

 2
 

2F.           Third Party Consents.  The Company shall have received or obtained
all third party consents and approvals, if any, that are necessary for the
consummation of the transactions contemplated hereby or that are required in
order to prevent a breach of or default under, a termination or modification
of, giving rise to the right of any change of control or similar payments
pursuant to, or acceleration of the terms of, any contract, agreement or
document to which the Company or any of its Subsidiaries is a party and which
is material to the Company, in each case on terms and conditions reasonably
satisfactory to the Purchasers.

2G.          Governmental Consents and Approvals.  The Parties shall have received or obtained
all governmental and regulatory consents and approvals, if any, that are
necessary for the consummation of the transactions contemplated hereby, in each
case on terms and conditions reasonably satisfactory to the Purchasers
(collectively, the “Governmental Approvals”).

2H.          Material Adverse Change.  Since the date hereof, there shall have
occurred no event, violation, inaccuracy, circumstance, condition or other
matter which has or which could reasonably be expected to have a Material
Adverse Effect.

2I.            Securities Law Compliance.  The Company shall have made all filings under
all applicable federal and state securities laws necessary to consummate the
issuance of the Common Stock pursuant to this Agreement in compliance with such
laws.

2J.           Listing of Shares.  The Company’s Common Stock shall have been
listed for trading on the New York Stock Exchange and shall not have been
suspended by the Securities and Exchange Commission or the National Association
of Securities Dealers (the “NASD”) from trading on the New York Stock
Exchange nor shall suspension by the Securities and Exchange Commission or the
NASD have been threatened or be reasonably likely (whether with or without the
passage of time).

2K.          Opinion of the Company’s Counsel.  Each Purchaser shall have received from the
Company’s general counsel an opinion in form and substance as set forth in Exhibit B
attached hereto which shall be addressed to each Purchaser and dated the date
of the Closing.

2L.           Litigation.  No action, suit, investigation or other
proceeding shall be pending or threatened before any court or governmental or
regulatory official, body or authority in which it is sought to restrain or
prohibit the transactions contemplated hereby and no injunction, judgment,
order, decree or ruling with respect thereto shall be in effect.

2M.         Compliance with Applicable Laws.  The purchase of the Common Stock by each Purchaser
hereunder shall not be prohibited by any applicable law or governmental rule or
regulation and shall not subject such Purchaser to any penalty, liability or
other onerous condition under or pursuant to any applicable law or governmental
rule or regulation.

2N.          Proceedings.  All corporate and other proceedings taken or
required to be taken by the Company in connection with the transactions
contemplated hereby to be consummated at or prior to the Closing.

2O.          Closing Documents.  The Company shall have delivered to each
Purchaser all of the following documents:

 3
 

(i)            an
Officer’s Certificate, dated the Closing Date, stating that the conditions
specified in Section 1A and Section 2 inclusive, have been
satisfied in all material respects;

(ii)           a
certified copy of the resolutions duly adopted by the Company’s Board
authorizing the execution, delivery and performance of the Transaction
Documents, the issuance and sale of the Common Stock, the consummation of the
Rights Offering, the consummation of the Acquisition and the consummation of
all other transactions contemplated by this Agreement and of any resolutions
duly adopted by the Company’s shareholders with respect to any of the
foregoing;

(iii)          certified
copies of the Articles of Amendment and Restatement and the Bylaws as in effect
at the Closing;

(iv)          to
the extent available, copies of all third party and Governmental Approvals
required in connection with the consummation of the transactions hereunder
(including, without limitation, all blue sky law filings and waivers of any
preemptive rights and rights of first refusal); and

(v)           such
other documents relating to the transactions contemplated by this Agreement as
any Purchaser may reasonably request.

Any condition specified
in this Section 2 may be waived if consented to by each Purchaser;
provided that no such waiver shall be effective against any Purchaser unless it
is set forth in writing executed by such Purchaser.

Section 3.               Covenants
Prior to Closing.

3A.          General.  Each of the Parties shall use reasonable
efforts to take all action and to do all things necessary, proper or advisable
in order to consummate and make effective the transactions contemplated by this
Agreement (including satisfaction, but not waiver, of the conditions set forth
in Section 2 above).  At the
Closing, the applicable Parties shall execute and deliver all of the agreements
and instruments contemplated hereby to be executed and delivered by the Parties
at the Closing.

3B.          Third Party Notices and Consents.  The Company shall, and shall cause each
Subsidiary to, use reasonable efforts to give all required notices to third
parties and obtain all required third party consents and waivers in connection
with the transactions contemplated by this Agreement (including the initial
issuance and purchase of the Common Stock by the Purchasers hereunder).

3C.          Governmental Notices and Consents.  Each of the Parties shall give any notices
to, make any filings with, and use reasonable efforts to obtain, any
authorizations, consents and approvals of governments and governmental agencies
in connection with the matters contemplated by this Agreement.  Each Party shall promptly inform the other
Parties of any communications to or from the Securities and Exchange Commission
or any other Governmental Entity regarding the transactions contemplated by
this Agreement.

 4
 

3D.          Operation of Business.  The Company shall, and shall cause each
Subsidiary to, operate its business only in the usual and ordinary course of
business consistent with past practice and use reasonable efforts to preserve
the goodwill and organization of its business and the relationships with its
clients, suppliers, employees and other Persons having business relations with
the Company or its Subsidiaries.

3E.           Full Access.  The Company shall (i) permit, and shall cause
its Representatives and Subsidiaries to permit, the Purchasers and their
Representatives full and complete access (during normal business hours and
subject to reasonable advance notice) to the Company’s and its Subsidiaries’
books and records, facilities and personnel, (ii) use reasonable efforts to
cause its independent accountants to be available to the Purchasers and their
Representatives in the presence of a Representative of the Company  (during normal business hours and subject to
reasonable advance notice), in connection with their due diligence review of
the Company and its affairs and operations or otherwise in connection with the
transactions contemplated hereby and (iii) use reasonable efforts to provide
Purchasers and their Representatives access to NLASCO information, personnel
and accountants to the extent permitted under the NLASCO Agreement.

3F.           Notice of Material Developments.  Each Party shall give prompt written notice
to the other Parties of (i) any material variances in any of its
representations or warranties contained in Section 6 or Section 8F
below, as applicable, (ii) any material breach of any covenant hereunder
by such Party and (iii) any other material development affecting the
ability of such Party to consummate the transactions contemplated by this
Agreement, including the NLASCO Acquisition.

3G.          No Inconsistent Actions.  The Company covenants and agrees that it will
not and will not permit any Subsidiary to take any action which is inconsistent
in any material respect with their respective obligations under this Agreement
or that would hinder or delay in any material respect the consummation of the
transactions contemplated by this Agreement.

Section 4.               Covenants.

4A.          Information.  The Company shall deliver to each Purchaser,
with reasonable promptness, such information and financial data concerning the
Company and its Subsidiaries as any Person entitled to receive information
under this Section 4A may reasonably request:

4B.          Inspection of Property.  The Company shall permit any Representatives
designated by each Purchaser, upon reasonable notice and during normal business
hours and at such other times as any such holder may reasonably request, to
(i) visit and inspect any of the properties of the Company and its
Subsidiaries, (ii) examine the corporate and financial records of the
Company and its Subsidiaries and make copies thereof or extracts therefrom and
(iii) discuss the affairs, finances and accounts of any such corporations
with the directors, officers and key employees of the Company and its
Subsidiaries, and the Company shall use its reasonable efforts to cause the
independent accountants of the Company and its Subsidiaries to be available, in
the presence of a Company Representative, to such Purchaser’s or holder’s
Representatives.

 5
 

4C.          Use of Proceeds.  The Company shall not, without the prior
written consent of the Majority Purchasers, use the proceeds from the sale of
the Common Stock other than to complete the acquisition of NLASCO on the terms
set forth in the NLASCO Agreement, and to pay related costs, fees and expenses.

4D.          Public Disclosures.  After the date hereof, the Company shall not,
nor shall it permit any Subsidiary to, disclose any Purchaser’s name or
identity as an investor in the Company in any press release or other public
announcement or in any document or material filed with any Governmental Entity
without the prior written consent of such Purchaser, unless such disclosure is
required by applicable law or governmental regulations or by order of a court
of competent jurisdiction, in which case, unless otherwise prohibited by
applicable law, prior to making such disclosure the Company shall give written
notice to such Purchaser describing in reasonable detail the proposed content of
such disclosure and shall permit the Purchaser to review and comment upon the
form and substance of such disclosure.

4E.           Confidentiality.

(i)            Each
Purchaser shall hold, and shall use its reasonable efforts to cause its
Representatives to hold, in confidence, unless compelled to disclose by
judicial or administrative process or by other requirements of law or national
stock exchange, all confidential documents and information concerning the
Company or any of its Subsidiaries furnished to the such Purchaser, except to
the extent that such information can be shown to have been (a) previously known
on a non-confidential basis by the Purchaser or such Representatives, (b)
in the public domain through no fault of such Purchaser or its Representatives
(acting in their capacity as such or with respect to information received in
their capacity as such) or (c) later acquired by such Purchaser or its
Representatives from sources other than the Company or any of its Subsidiaries
not known by such Purchaser or such Representatives, as applicable, to be bound
by any confidentiality obligation; provided that a Purchaser may
disclose such information if required by applicable law, subject to compliance
with Section 4E(ii); provided  further that a Purchaser may
disclose such information to any of its Representatives in connection with the
transactions contemplated by this Agreement or its ownership of the Common
Stock and monitoring of its investment therein so long as such Persons are
informed by the Purchaser of the confidential nature of such information and
are directed by such Purchaser to treat such information confidentially; provided
further that the Purchaser may disclose such information in connection
with a sale or transfer (or prospective sale or transfer) permitted by Section
5A of any Common Stock if such Purchaser’s transferee (or prospective
transferee) agrees to be bound by the provisions of this section.  Each Purchaser agrees that it shall not and
it shall cause each of its Representatives not to use any confidential
documents or information for any purpose other than monitoring and evaluating
its investment in the Company and in connection with the transactions
contemplated by this Agreement.

(ii)           In
the event any of the holders of Common Stock or anyone to whom any of the
holders of Common Stock transmit confidential information is requested or
required (by oral questions, interrogatories, requests for information or
documents, subpoenas, civil investigative demand or similar process) to
disclose any

 6
 

such information, such Purchaser shall provide the Company with prompt
notice so that the Company may seek a protective order or other appropriate
remedy and/or waive such holder’s compliance with the provisions of this
section.  In the event that such
protective order or other remedy is not obtained sufficiently promptly so as
not to adversely affect such Purchaser or those of its officers, directors,
employees, accountants, counsel, consultants, advisors and agents as to whom
the information has been requested or required, or the Company waives such
holder’s compliance with the provisions of this Agreement, such holder will
furnish only that portion of such information that such holder is advised by
counsel is legally required and shall, at the Company’s expense and direction,
exercise its reasonable efforts to obtain reliable assurance that confidential
treatment will be accorded such information.

4F.           Board Observer.  The Majority Purchasers may designate an
individual (the “Observer”) who shall be entitled to notice of all Board
meetings and distributions of all Board materials in the same manner and at the
same time as such notices and materials are provided to members of the Board,
and shall be entitled to attend and participate in all Board meetings as an observer
(but not to vote on any matters thereat), with expenses reimbursed on the same
terms as those of the members of the Board. 
Notwithstanding the preceding sentence, the Board may restrict the
Observer’s attendance as an observer at any meeting of the Board if the Board,
based upon the advice of counsel, determines that such attendance at a meeting
could cause the Company to lose the benefit of protection in respect of what
would otherwise be privileged communications.

Section 5.               Transfer
of Restricted Securities.

5A.          General Provisions.  Restricted Securities are transferable only
pursuant to (i) a public offering registered under the Securities Act,
(ii) in-kind distributions by any holder that is an investment fund to its
partners or members, (iii) Rule 144 or Rule 144A of the Securities and
Exchange Commission (or any similar rule or rules then in force) if such rule
is available and, as applicable, if the holder thereof makes available to the
Company in advance of such transfer information demonstrating compliance with
Rule 144 or Rule 144A of the Securities and Exchange Commission, or (iv) any
other legally available means of transfer.

5B.          Rule 144A.  Upon the request of any holder of Restricted
Securities, the Company reasonably promptly shall supply to such holder or its
prospective transferees all information regarding the Company required to be
delivered in connection with a transfer pursuant to Rule 144A of the Securities
and Exchange Commission.

5C.          Restrictive Legends.  Each certificate or instrument representing
Restricted Securities shall be imprinted with a legend in substantially the
following form:

“THE SECURITIES
REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”).  THE SECURITIES MAY NOT BE SOLD OR OFFERED FOR
SALE OR OTHERWISE DISTRIBUTED EXCEPT IN CONJUNCTION WITH AN EFFECTIVE
REGISTRATION

 7
 

STATEMENT FOR THE
SECURITIES UNDER THE SECURITIES ACT, OR IN COMPLIANCE WITH RULE 144 OR PURSUANT
TO ANOTHER EXEMPTION.  THE SECURITIES ARE
ALSO SUBJECT TO PROVISIONS OF A REGISTRATION RIGHTS AGREEMENT.”

Whenever any particular securities cease to be
Restricted Securities, the holder thereof shall be entitled to receive from the
Company, without expense, new securities of the like tenor not bearing a
Securities Act legend of the character set forth in Section 5C.

5D.          Legend Removal.  If any Restricted Securities become eligible
for sale pursuant to Rule 144(k), the Company shall, upon the request of the
holder of such Restricted Securities, remove the legend set forth in Section 5C
from the certificates for such Restricted Securities.  In addition, if in connection with any
transfer the holder of the Restricted Securities delivers to the Company an
opinion of Kirkland & Ellis LLP or such other counsel which (to the Company’s
reasonable satisfaction) is knowledgeable in securities law matters to the
effect that no subsequent transfer of such Restricted Securities shall require
registration under the Securities Act, then the Company promptly upon such
contemplated shall transfer deliver new certificates for such Restricted
Securities which do not bear the Securities Act legend set forth in Section 5C.

Section 6.               Representations
and Warranties of the Company.  The
Company hereby represents and warrants to each Purchaser that:

6A.          Organization; Ownership; Power;
Qualification of the Company.  The
Company is a corporation duly organized, validly existing and in good standing
under the laws of the State of Maryland and is duly qualified as a foreign
corporation to transact business and is in good standing in each jurisdiction
in which such qualification is required, whether by reason of the ownership or
leasing of property or the conduct of business, except where the failure to be
so qualified as a foreign corporation or be in good standing would not have a
Material Adverse Effect.  The Company
possesses all requisite corporate power and authority and all material
licenses, permits and authorizations necessary to own, lease and operate its
properties and to conduct its business as now conducted and presently proposed
to be conducted except such as would not reasonably be expected to have a
Material Adverse Effect.  The Company
possesses all requisite corporate power and authority and all material
licenses, permits and authorizations necessary to enter into this Agreement and
the agreements contemplated hereunder and to carry out the transactions
contemplated hereunder.

6B.          Subsidiaries.  Each of the Company’s Subsidiaries is duly
organized, validly existing as a corporation, general partnership, limited
partnership, limited liability company, closed joint stock company or similar
entity, and in good standing under the laws of the jurisdiction of its
organization and is duly qualified as a foreign corporation or other entity to
transact business and is in good standing in each jurisdiction in which such
qualification is required, whether by reason of the ownership or leasing of
property or the conduct of business, except where the failure to be so qualified
as a foreign corporation or be in good standing would not have a Material
Adverse Effect.  Each Subsidiary
possesses all requisite organizational power and authority and all material
licenses, permits and authorizations necessary to own, lease and operate its
properties and to conduct its business as now conducted and presently proposed
to be conducted except such as would not reasonably be expected to have a
Material Adverse

 8
 

Effect. 
All of the issued and outstanding shares of capital stock or other
ownership interests of each such Subsidiary are duly authorized and are validly
issued, fully paid and non-assessable (to the extent applicable) and owned by
the Company, directly or through Subsidiaries except such as would not
reasonably be expected to have a Material Adverse Effect.

6C.          Capital Stock and Related Matters.

(i)            As
of October 6, 2006, the authorized capital stock of the Company consists of
(a) 10,000,000 shares of
preferred stock, of which 5,000,000 shares are designated as Series A Cumulative
Redeemable Preferred Stock (all of which are issued and outstanding), and
(b) 100,000,000 shares of Common Stock, of which 41,329,705 shares are
issued and outstanding and 500,000 shares are reserved under the Permitted
Stock Plans (of which options for 500,000 shares of Common Stock have been
granted).  Except as set forth above or
as disclosed in the Company SEC Reports, neither the Company nor any Subsidiary
has outstanding any stock or securities convertible into or exchangeable for
any shares of its capital stock or containing any profit participation
features, nor does it have outstanding any rights or options to subscribe for
or to purchase its capital stock or any stock or securities convertible into or
exchangeable for its capital stock or any stock appreciation rights or phantom
stock plans.  Neither the Company nor any
Subsidiary is subject to any obligation (contingent or otherwise) to repurchase
or otherwise acquire or retire any shares of its capital stock or any warrants,
options or other rights to acquire its capital stock except pursuant to the
Articles of Amendment and Restatement. 
All of the outstanding shares of the Company’s capital stock are validly
issued, fully paid and nonassessable.

(ii)           There
are no statutory or, to the Company’s Knowledge, contractual shareholders’
preemptive rights or rights of refusal with respect to the issuance or sale of
the Common Stock hereunder.  The Company
has complied with all applicable federal or state securities laws in connection
with the offer, sale and issuance of the Common Stock hereunder, and such
offer, issuance and sale do not require registration under the Securities Act
or any applicable state securities laws. 
Except such as would not reasonably be expected to have a Material
Adverse Effect, the Company has complied with all applicable federal or state
securities laws in connection with the offer, sale or issuance of any of its
capital stock.  Except as disclosed in
the Company SEC Reports, there are no agreements between the Company and any of
its shareholders or, to the Company’s Knowledge, among any of the Company’s
shareholders with respect to the voting or transfer of the Company’s capital
stock or with respect to any other aspect of the Company’s affairs.

6D.          Authorization; No Breach.  The execution, delivery and performance of
each of the Transaction Documents and the offering, sale and issuance of the
Common Stock to the Purchasers have been duly authorized by all necessary
corporate action on the part of the Company. 
Each of the Transaction Documents constitutes a valid and binding
obligation of the Company, enforceable in accordance with its terms.  The offering, sale and issuance of the Common
Stock hereunder, the execution and delivery by the Company of each of the
Transaction Documents and the fulfillment of and compliance with the other
respective terms hereof and thereof by the Company, do not and will not
(i) conflict with or result in a breach of

 9
 

any of the terms, conditions or provisions
of, (ii) constitute a default under, (iii) result in the creation of
any lien, security interest, charge or encumbrance upon the Company’s or any
Subsidiary’s capital stock or assets pursuant to, (iv) give any third
party the right to modify, terminate or accelerate any obligation under or
claim any change of control or similar payments pursuant to, (v) result in
a violation of, or (vi) require any authorization, consent, approval,
exemption or other action by or notice or declaration to, or filing with, any
court or administrative or governmental body or agency pursuant to, the charter
or the Bylaws or the bylaws of any Subsidiary, or any law or statute or any
rule, regulation, order, writ, injunction or decree of any court or
administrative government body or agency to which the Company or any Subsidiary
is subject, or any material agreement, instrument, order, judgment or decree to
which the Company or any Subsidiary is subject.

6E.           SEC Reports and Financial
Statements.  To the Company’s
Knowledge:

(i)            The
Company has filed with the SEC on a timely basis all reports, schedules, forms,
statements and other documents required to be filed, as such documents may have
been amended or supplemented with the SEC since the time of filing (the “Company
SEC Documents”). No Subsidiary of the Company is required to file with the
SEC any report, schedule, form, statement or other document.  Each of the Company SEC Documents, (i) as of
the filing date of such report, complied with the requirements of the
Securities Act of 1933, as amended, and the rules and regulations promulgated
thereunder (the “Securities Act”) and the Exchange Act, as the case may
be, and, to the extent then applicable, the Sarbanes-Oxley Act of 2002 and the
rules and regulations promulgated thereunder (the “Sarbanes-Oxley Act”),
and (ii) as of its filing date (or, if amended or superseded by a subsequent
filing prior to the date hereof, on the date of such filing) did not contain
any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary in order to make the statements made
therein, in the light of the circumstances under which they were made, not
misleading. As used in this Section 6E, the term “file” shall be broadly
construed to include any manner in which a document or information is
furnished, transmitted or otherwise made available to the SEC.

(ii)           The
certifications and statements required by Rules 13a-14 and 15d-14 under the
Exchange Act and Sections 302 and 906 of the Sarbanes-Oxley Act with respect to
the applicable Company SEC Documents (collectively, the “Certifications”),
were true and correct as of the date of filing thereof.  Nothing has come to the attention of the
principal executive officer or principal financial officer of the Company that
would preclude each of them from being able to make the Certifications in the
Company’s next quarterly report on Form 10-Q when due.

(iii)          The
Company maintains disclosure controls and procedures required by Rule 13a-15 or
15d-15 under the Exchange Act.  Such
disclosure controls and procedures are effective to ensure that all material
information concerning the Company is made known on a timely basis to the
individuals responsible for the preparation of the Company’s filings with the
SEC and other public disclosure documents. 
The Company has disclosed, based on its most recent evaluation prior to
the date of this Agreement, to the Company’s auditors and the Audit Committee
of the Board

 10
 

of Directors of the Company (A) any control deficiencies in the design
or operation of internal controls that could adversely affect in any material
respect the Company’s ability to record, process, summarize and report
financial data and has identified for the Company’s auditors any material
weaknesses in internal controls and (B) any fraud, whether or not material,
that involves management or other employees of the Company or its
Subsidiaries.  The Company has delivered
or made available to the Majority Purchasers a summary of any such disclosure
made by management to the Company’s auditors or the Audit Committee of the
Company’s Board of Directors.  No
significant deficiency or material weakness was identified in management’s
assessment of internal controls as of June 30, 2006 (nor has any such
deficiency or weakness since been identified). 
Neither the Company nor any of its Subsidiaries nor, to the Knowledge of
the Company, any director, officer, employee, auditor, accountant or
representative of the Company or any of its Subsidiaries has received or
otherwise had or obtained knowledge of any complaint, allegation or claim,
whether written or oral, alleging improper accounting or auditing practices,
procedures, methodologies or methods or internal accounting control procedures
of the Company or any of its Subsidiaries, including any complaint, allegation
or claim that the Company or any of its Subsidiaries has engaged in
questionable accounting or auditing practices. No attorney representing the
Company or any of its Subsidiaries, whether or not employed by the Company or
any of its Subsidiaries, has reported evidence of a violation of securities
Laws, breach of fiduciary duty or similar violation by the Company or any of
its officers, directors, employees or agents to the Board of Directors of the
Company or any committee thereof or to any director or officer of the
Company.  Since June 30, 2006, neither
the chief executive officer nor the chief financial officer of the Company has
become aware of any fact or circumstance that is reasonably likely to result in
a substantial change to the Company’s internal controls over financial
reporting.

(iv)          The
Company is, and since enactment of the Sarbanes-Oxley Act has been, in
compliance with the provisions of the Sarbanes-Oxley Act to the extent
applicable to the Company and with the listing and other rules and regulations
of The New York Stock Exchange to the extent applicable to the Company, and has
not received any notice from The New York Stock Exchange asserting any
non-compliance with such rules and regulations. 
Except as permitted by the Exchange Act, including Sections 13(k)(2) and
(3), since the enactment of the Sarbanes-Oxley Act, neither the Company nor any
of its affiliates has made, arranged, or modified (in any material way)
personal loans to any executive officer or director of the Company. The audit
committee of the Board of Directors of the Company includes an Audit Committee
Financial Expert, as defined by Item 401(h)(2) of Regulation S-K.

(v)           The
Company has adopted a code of ethics, as defined by Item 406(b) of Regulation
S-K, for senior financial officers, applicable to its principal financial
officer, comptroller or principal accounting officer, or persons performing
similar functions. The Company has promptly disclosed, by filing a Form 8-K,
any change in or waiver of the Company’s code of ethics, as required by Section
406(b) of Sarbanes-Oxley Act. To the Knowledge of the Company, there have been
no violations of provisions of the Company’s code of ethics.

 11
 

(vi)          The
financial statements of the Company for the fiscal year ended December 31, 2005
(the “Company Financial Statements”), and all other financial statements
of the Company included in the Company SEC Documents, including in each case
the notes thereto (collectively with the Company Financial Statements, the “SEC
Financial Statements”) complied, as of their respective dates of filing
with the SEC, or with respect to unaudited financial statements, as of the date
of this Agreement, in all material respects with applicable accounting
requirements and the published rules and regulations of the SEC with respect
thereto, were prepared in accordance with the United States generally accepted
accounting principles (“GAAP”) applied on a consistent basis during the
periods covered (except as may be indicated therein or in the notes thereto or,
in the case of unaudited financial statements, as permitted by Form 10-Q of the
SEC) and fairly present in all material respects the consolidated financial
position of the Company and its Subsidiaries as of the dates thereof and the
consolidated results of their operations and cash flows for the periods then
ended (subject, in the case of unaudited statements, to normal recurring
year-end audit adjustments and other adjustments described therein).

(vii)         Neither
the Company nor any of its Subsidiaries is a party to, or has any commitment to
become a party to, any joint venture, partnership agreement or any similar
contract (including any contract relating to any transaction, arrangement or
relationship between or among the Company or any of its Subsidiaries, on the
one hand, and any unconsolidated Affiliate, including  any structured finance, special purpose or
limited purpose entity or Person, on the other hand) where the purpose or
intended effect of such arrangement is to avoid disclosure of any material transaction
involving the Company or any of its Subsidiaries in the Company’s financial
statements.

6F.           No Material Adverse Effect.  Since December 31, 2005, there has occurred
no event, circumstance or condition which has had or which could reasonably be
expected to have a Material Adverse Effect.

6G.          Absence of Certain Developments.

(i)            Except
as expressly contemplated by this Agreement, the NLASCO Agreement, in
connection with the Rights Offering or the transactions contemplated hereunder
or thereunder or as disclosed in the SEC Reports, since December 31, 2005,
neither the Company nor any of its Subsidiaries has:

(a)           issued
any notes, bonds or other debt securities or any capital stock or other equity
securities or any securities convertible, exchangeable or exercisable into any
capital stock or other equity securities except those issued pursuant to the
Permitted Stock Plans or otherwise pursuant to the terms of the amended and
restated agreement of limited partnership for Affordable Residential Communities
LP;

(b)           borrowed
any amount (except for intercompany loans) or incurred or become subject to any
material liabilities, except current liabilities incurred in the ordinary
course of business and material liabilities under contracts entered into in the
ordinary course of business;

 12

 

(c)           discharged
or satisfied any material Lien or paid any material obligation or liability,
other than current liabilities paid in the ordinary course of business;

(d)           other
than as has been publicly announced by the Company, declared or made any
payment or distribution of cash or other property to its shareholders with
respect to its capital stock or other equity securities or purchased or
redeemed any shares of its capital stock or other equity securities (including,
without limitation, any warrants, options or other rights to acquire its
capital stock or other equity securities);

(e)           except
in the ordinary course of business, mortgaged or pledged any of its properties
or assets or subjected them to any Lien, except Liens for current property
taxes not yet due and payable;

(f)            sold,
assigned or transferred any of its tangible assets, except in the ordinary
course of business, or canceled any material debts or claims;

(g)           entered
into any agreement to acquire the capital stock or other equity interests of any
Person;

(h)           suffered
any extraordinary losses or waived any rights of material value, other than in
the ordinary course of business or consistent with past practice; or

(i)            agreed,
whether orally or in writing, to do any of the foregoing.

(ii)           Neither
the Company nor any Subsidiary has at any time made any bribes, kickback
payments or other illegal payments.

6H.          Litigation, etc.  Except as disclosed in the SEC Reports or
such as are not required to be disclosed in the SEC Reports, there are no
material actions, suits, proceedings, orders, investigations or claims pending
or, to the Knowledge of the Company, threatened against or affecting the
Company or any Subsidiary (or pending or, to the Knowledge of the Company,
threatened against or affecting any of the officers, directors or employees of
the Company and its Subsidiaries with respect to their businesses or proposed
business activities), or pending or threatened by the Company or any Subsidiary
against any third party, at law or in equity, or before or by any governmental
department, commission, board, bureau, agency or instrumentality (including,
without limitation, any actions, suit, proceedings or investigations with
respect to the transactions contemplated by this Agreement); neither the
Company nor any Subsidiary is subject to any material arbitration proceedings
under collective bargaining agreements or otherwise or any material
governmental investigations or inquiries (including, without limitation,
inquiries as to the qualification to hold or receive any license or permit);
and, to the Company’s Knowledge, there is no basis for any of the
foregoing.  Neither the Company nor any
Subsidiary is subject to any material judgment, order or decree of any court or
other governmental agency, and neither the Company nor any Subsidiary has
received any opinion or

 13
 

 

memorandum or legal advice from legal counsel
to the effect that it is exposed, from a legal standpoint, to any liability or
disadvantage which may be material to its business.

6I.            Brokerage, etc.  There are no claims for brokerage
commissions, finders’ fees or similar compensation in connection with the
purchase of Common Stock by the Purchasers contemplated by this Agreement based
on any arrangement or agreement binding upon the Company or any Subsidiary and
the Company shall pay, and hold each Purchaser harmless against, any liability,
loss or expense (including, without limitation, reasonable attorneys’ fees and
out-of-pocket expenses) arising in connection with any such claim.

6J.           Governmental Consent, etc.  No permit, consent, approval or authorization
of, or declaration to or filing with, any Governmental Entity is required on
the part of the Company in connection with the execution, delivery and
performance by the Company of this Agreement (including the issuance and sale
of the Common Stock to the Purchasers hereunder) or the other agreements
contemplated hereby, or the consummation by the Company of any other
transactions contemplated hereby or thereby, or if any such consent, approval
or authorization is required, it will be obtained by the Company prior to the
Closing.

6K.          Compliance with Laws.  Except as disclosed in the SEC Reports, the
Company and each of its Subsidiaries has complied and is in material compliance
in all material respects with all applicable laws, ordinances, codes, rules,
requirements and regulations of foreign, federal, state and local governments
and all agencies thereof relating to the operation and ownership of its
business and the maintenance and operation of its properties and assets and no
notices have been received by and no claims have been filed against the Company
or any of its Subsidiaries alleging a material violation of any such laws,
ordinances, codes, rules, requirements or regulations.  The Company and each of its Subsidiaries
holds and is in material compliance with all material permits, licenses, bonds,
approvals, certificates, registrations, accreditation and other authorizations
of all foreign, federal, state and local governmental agencies required for the
conduct of its business and the occupation and ownership of its properties and
facilities.  No notices have been
received by the Company or any of its Subsidiaries alleging the failure to hold
any of the foregoing.

 14
 

 

6L.           Proxy Statement.  The proxy statement filed with the Securities
and Exchange Commission with respect to the transactions contemplated hereby
(the “Proxy Statement”), including any amendments or supplements
thereto, shall not (except for omitted information to be filed by amendment and
other changes required as a result of developments subsequent to the date of
filing), at the time filed with the Securities and Exchange Commission, and
shall not, as of the date mailed to the Company’s shareholders or at the time
of the shareholders meeting to approve the transactions contemplated hereby,
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances in which they were made, not
misleading.  The Proxy Statement will
comply as to form and content in all material respects with the requirements of
the Securities Exchange Act and the applicable rules of the Securities and Exchange
Commission thereunder.

6M.         NLASCO Representations.  The representations and warranties contained
in Section 4 of the NLASCO Agreement are true and correct in all material
respects as of the Closing Date.

6N.          Disclosure.  Neither this Agreement, any of the Exhibits
or Schedules attached hereto or delivered in connection herewith nor any of the
written statements, documents, certificates or other items prepared and
supplied to the Purchasers by or on behalf of the Company with respect to the
transactions contemplated hereby contain any untrue statement of a material
fact or omit a material fact necessary to make each statement contained herein
or therein, in light of the circumstances in which they were made, not
misleading.

6O.          Closing Date.  The representations and warranties of the
Company contained in this Section 6 and elsewhere in this Agreement and
all information contained in any exhibit, schedule or attachment hereto or in
any certificate or other writing delivered by, or on behalf of, the Company to
any Purchaser at the Closing shall be true and correct in all material respects
on the date of the Closing as though then made, except as affected by the
transactions expressly contemplated by this Agreement.

Section 7.               Definitions.  For the purposes of this Agreement, the
following terms have the meanings set forth below:

“Articles of Amendment
and Restatement” has the meaning given to such term in Section 2D
above.

“Affiliate” of any
particular Person means (i) any other Person controlling, controlled by or
under common control with such particular Person, where “control” means
the possession, directly or indirectly, of the power to direct the management
and policies of a Person whether through the ownership of voting securities,
contract or otherwise and (ii) if such Person is a partnership or limited
liability company, any partner or member thereof.

“Board” means the
Company’s board of directors.

“Closing” has the
meaning given to such term in Section 1C above.

“Closing Date” has
the meaning given to such term in Section 1C above.

 15
 

 

“Common Stock”
means the Company’s common stock, par value $0.01 per share.

“Common Stock Amount”
means the number of shares of Common Stock equal to $20,000,000 divided by
the Share Purchase Price in effect at Closing. 
For each Purchaser, the number of shares of Common Stock it will
purchase at the Closing is equal to the Common Stock Amount multiplied by a
fraction, the numerator of which is the amount of Common Stock Purchase Price
set forth across from such Purchasers name on the Schedule of Purchasers
and the denominator of which is the Common Stock Purchase Price.

“Common Stock Deemed
Outstanding” means, at any given time, the number of shares of Common Stock
actually outstanding at such time, plus the number of shares of Common Stock
deemed to be outstanding pursuant to the definition of Share Purchase Price
regardless of whether the Convertible Securities are actually exercisable at
such time.

“Common Stock Purchase
Price” has the meaning given to such term in Section 1B above.

“Company Parties”
has the meaning given to such term in Section 3M(i) above.

“Confidentiality
Agreement” means any agreement respecting the confidential treatment of
information with respect to the Company entered into between the Company and
any Purchaser or its Affiliates prior to the date hereof.

“Convertible
Securities” means any stock or securities (directly or indirectly)
convertible into or exchangeable for Common Stock.

“GAAP” means
generally accepted accounting principles, consistently applied.

“Governmental
Approvals” has the meaning given to such term in Section 2H
above.

“Governmental Entity”
means a domestic (federal, state, municipal or local) or foreign government or
governmental, regulatory or administrative subdivision, department, authority,
agency, commission, board, bureau, court of instrumentality or arbitrator of
any kind.

“Indebtedness”
means at a particular time, without duplication, (i) any indebtedness for
borrowed money or issued in substitution for or exchange of indebtedness for
borrowed money, (ii) any indebtedness evidenced by any note, bond,
debenture or other debt security, (iii) any indebtedness for the deferred
purchase price of property or services with respect to which a Person is
liable, contingently or otherwise, as obligor or otherwise (other than trade
payables and other current liabilities incurred in the ordinary course of
business), (iv) any commitment by which a Person assures a creditor
against loss (including, without limitation, contingent reimbursement
obligations with respect to letters of credit), (v) any indebtedness
guaranteed in any manner by a Person (including, without limitation, guarantees
in the form of an agreement to repurchase or reimburse), (vi) any
obligations under capitalized leases with respect to which a Person is liable,
contingently or otherwise, as obligor, guarantor or otherwise, or with respect
to which obligations a Person assures a creditor against loss, (vii) any
indebtedness secured by a Lien on a Person’s assets and (viii) any
unsatisfied obligation for

 16
 

 

“withdrawal liability” to
a “multiemployer plan” as such terms are defined under ERISA; provided
that “Indebtedness” shall not include any loans between the Company and/or its
Wholly-Owned Subsidiaries.

“Indemnified
Liabilities” has the meaning given to such term in Section 8E(i)
below.

“Indemnitees” has
the meaning given to such term in Section 8E(i) below.

“Initial Share Price”
means $9.58.

“IRC” means the
Internal Revenue Code of 1986, as amended, and any reference to any particular
IRC section shall be interpreted to include any revision of or successor to
that section regardless of how numbered or classified.

“IRS” means the
United States Internal Revenue Service.

“Latest Balance Sheet”
means the balance sheet included in the consolidated annual financial statements
of the Company and its Subsidiaries as of December 31, 2005, for the 12 month
period then ended, and included in the Company’s SEC Reports.

“Liens” means any
mortgage, pledge, security interest, encumbrance, lien or charge of any kind
(including, without limitation, any conditional sale or other title retention
agreement or lease in the nature thereof), any sale of receivables with
recourse against the Company, any Subsidiary or any Affiliate, any filing or
agreement to file a financing statement as debtor under the Uniform Commercial
Code or any similar statute other than to reflect ownership by a third party of
property leased to the Company or any Subsidiaries under a lease which is not
in the nature of a conditional sale or title retention agreement, or any
subordination arrangement in favor of another Person (other than any
subordination arising in the ordinary course of business).

“Majority Purchasers”
means, as of any date of determination, the Purchasers set forth on the Schedule
of Purchasers who would purchase a majority of the Common Stock being
offered at the Closing if the Closing were to occur on such date of
determination.

“Market Price” of
any security means, as of a given date, the average, over a period of ten days
consisting of the day as of which “Market Price” is being determined and the
nine consecutive trading days prior to such day, of the closing prices of such
security’s sales on the New York Stock Exchange, or, if there has been no sales
on such exchange on any day, the average of the highest bid and lowest asked
prices on such exchange at the end of such day.

“Material Adverse
Effect” means an event, violation, inaccuracy, circumstance or other matter
had or could reasonably be expected to have a material adverse effect on (i)
the business, condition, capitalization, assets, liabilities, operations or
financial performance of the Company and its Subsidiaries taken as a whole or
(ii) the ability of the Company to consummate the Acquisition or any of the
other transactions contemplated by this Agreement or to perform any of its
obligations under this Agreement; provided, however, that in no event shall any
of the following, alone or in combination, be deemed to constitute a Material
Adverse Effect: any

 17
 

 

material adverse change,
event, circumstance or development with respect to, or effect resulting from,
(A) changes after the date of this Agreement in the United States or global
economy or capital markets in general that do not have a disproportionate
effect on the Company and its Subsidiaries, taken as a whole, (B) changes after
the date of this Agreement in applicable law or in GAAP, (C) changes in the
market price or trading volume of the Company Common Stock (provided, however,
that the exception in this clause shall not in any way prevent or otherwise
affect a determination that any change, event, circumstance, development or
effect underlying such decrease has resulted in, or contributed to, a Company
Material Adverse Effect), and (D)
any act or threat of terrorism or war, any armed hostilities or terrorist
activities, any threat or escalation of armed hostilities or terrorist
activities or any governmental or other response or reaction to any of the
foregoing.

“Knowledge”, as it
pertains to the Company or its Subsidiaries, means the actual knowledge after
reasonable inquiry of Larry D. Willard, Lawrence E, Kreider, James F. Kimsey
and Scott L Gesell.

“Officer’s Certificate”
means a certificate signed by the Company’s president or its chief financial
officer (in his capacity as an officer of the Company and not in his personal
or any other capacity), stating that (i) the officer signing such
certificate has made or has caused to be made such investigations as are
reasonably necessary in order to permit him to verify the accuracy of the
information set forth in such certificate and (ii) to the best of such
officer’s knowledge, such certificate does not misstate any material fact and
does not omit to state any fact necessary to make the certificate not
misleading.

“Party” or “Parties”
has the meaning given to such term in the Preamble above.

“Permitted Liens”
means:

(i)            tax
liens with respect to taxes not yet due and payable or which are being
contested in good faith by appropriate proceedings and for which appropriate
reserves have been established in accordance with GAAP;

(ii)           deposits
or pledges made in connection with, or to secure payment of, utilities or
similar services, workers’ compensation, unemployment insurance, old age
pensions or other social security obligations;

(iii)          purchase
money security interests in any property acquired by the Company or any
Subsidiary to the extent permitted by this Agreement;

(iv)          interests
or title of a lessor under any lease permitted by this Agreement;

(v)           mechanics’,
materialmen’s or contractors’ liens or encumbrances or any similar lien or
restriction for amounts not yet due and payable;

(vi)          easements,
rights-of-way, restrictions and other similar charges and encumbrances of
record not interfering with the ordinary conduct of the business of

 18
 

 

the Company and
its Subsidiaries or detracting from the value of the assets of the Company and
its Subsidiaries; and

(vii)         liens
outstanding on the date hereof which secure Indebtedness and which are
described in the schedules to this Agreement.

“Permitted Stock Plans”
means the following stock option plans of the Company: the 2003 Equity
Incentive Plan and the Management Incentive Plan.

“Person” means an
individual, a partnership, a corporation, a limited liability company, an
association, a joint stock company, a trust, a joint venture, an unincorporated
organization or a Governmental Entity.

“Proxy Statement”
has the meaning given to such term in Section 6L above.

“Purchaser” or “Purchasers”
has the meaning given to such term in the Preamble above.

“Registration
Agreement” has the meaning given to such term in Section 2E above.

“Representative”
means, with respect to any Person, any of such Person’s officers, directors,
employees, agents, attorneys, accountants, consultants, equity financing
partners or financial advisors or other Person associated with, or acting for
or on behalf of, such Person.

“Restricted Securities”
means (i) the Common Stock issued hereunder, and (ii) any securities
issued with respect to the securities referred to in clause (i) above by
way of a stock dividend or stock split or in connection with a combination of
shares, recapitalization, merger, consolidation or other reorganization.  As to any particular Restricted Securities,
such securities shall cease to be Restricted Securities when they have
(a) been effectively registered under the Securities Act and disposed of
in accordance with the registration statement covering them, (b) been
distributed to the public through a broker, dealer or market maker pursuant to
Rule 144 (or any similar provision then in force) under the Securities Act or
become eligible for sale pursuant to Rule 144(k) (or any similar provision then
in force) under the Securities Act or (c) been otherwise transferred and
new certificates for them not bearing the Securities Act legend set forth in Section 5C(i)
have been delivered by the Company in accordance with Section 5D.  Whenever any particular securities cease to
be Restricted Securities, the holder thereof shall be entitled to receive from
the Company, without expense, new securities of like tenor not bearing a
Securities Act legend of the character set forth in Section 5C(i).

“Rights Offering”
has the meaning given to such term in the recitals hereto.

“SEC Reports” has
the meaning given to such term in Section 6E(i) above.

“Securities Act”
means the Securities Act of 1933, as amended, or any similar federal law then
in force.

 19
 

 

“Securities and
Exchange Commission” includes any governmental body or agency succeeding to
the functions thereof.

“Securities Exchange
Act” means the Securities Exchange Act of 1934, as amended, or any similar
federal law then in force.

“Share Purchase Price”
means the Initial Share Price; provided that if and whenever on or after the
date hereof and prior to April 30, 2007, the Company issues or sells, or is
deemed to have issued or sold, any shares of Common Stock for a consideration
per share less than the Share Purchase Price in effect immediately prior to
such time, including without limitation in the Rights Offering, then
immediately upon such issue or sale the Share Purchase Price shall be reduced
to the Share Purchase Price determined by dividing:

(A) the sum of (x) the
product derived by multiplying the Share Purchase Price in effect immediately
prior to such issue or sale times the number of shares of Common Stock Deemed
Outstanding immediately prior to such issue or sale, plus (y) the
consideration, if any, received by the Company upon such issue or sale, by

(B) the number of shares
of Common Stock Deemed Outstanding immediately after such issue or sale.

If the Company in any
manner issues or sells any Convertible Securities (directly or indirectly)
convertible into or exchangeable for Common Stock and the price per share for
which Common Stock is issuable upon conversion or exchange thereof is less than
the Share Purchase Price in effect immediately prior to the time of such issue
or sale, then the maximum number of shares of Common Stock issuable upon
conversion or exchange of such stock or securities shall be deemed to be
outstanding and to have been issued and sold by the Company at the time of the
issue or sale of such Convertible Securities for such price per share.  For the purposes of this paragraph, the “price
per share for which Common Stock is issuable upon conversion or exchange
thereof” is determined by dividing (A) the total amount received or receivable
by the Company as consideration for the issue or sale of such Convertible
Securities, plus the minimum aggregate amount of additional consideration, if
any, payable to the Company upon the conversion or exchange thereof, by (B) the
total maximum number of shares of Common Stock issuable upon the conversion or
exchange of all such Convertible Securities.

“Subsidiary”
means, with respect to any Person, any corporation, limited liability company,
partnership, association or other business entity of which (i) if a
corporation, a majority of the total voting power of shares of stock entitled
(without regard to the occurrence of any contingency) to vote in the election
of directors, managers or trustees thereof is at the time owned or controlled,
directly or indirectly, by that Person or one or more of the other Subsidiaries
of that Person or a combination thereof, or (ii) if a limited liability
company, partnership, association or other business entity, a majority of the
partnership or other similar ownership interest thereof is at the time owned or
controlled, directly or indirectly, by that Person or one or more Subsidiaries
of that Person or a combination thereof. 
Notwithstanding the foregoing, “Subsidiary” also shall include each “significant
subsidiary” of the Company, as such term is defined in Rule 1-02 of Regulation
S-X.  For purposes hereof, a Person or
Persons shall be deemed to have a majority ownership interest in a limited
liability company, partnership,

 20
 

 

association or other
business entity if such Person or Persons shall be allocated a majority of
limited liability company, partnership, association or other business entity
gains or losses or shall be or control any managing director or general partner
of such limited liability company, partnership, association or other business
entity.  For purposes of this Agreement,
if the context does not otherwise specify in respect of which Person the term “Subsidiary”
is used, the term “Subsidiary” shall refer to a Subsidiary of the Company.

“Tax” or “Taxes”
means federal, state, county, local, foreign or other income, gross receipts,
ad valorem, franchise, profits, sales or use, transfer, registration, excise,
utility, environmental, communications, real or personal property, capital
stock, license, payroll, wage or other withholding, employment, social
security, severance, stamp, occupation, alternative or add-on minimum,
estimated and other taxes of any kind whatsoever (including, without
limitation, deficiencies, penalties, additions to tax, and interest
attributable thereto) whether disputed or not.

“Tax Return” means
any return, information report or filing with respect to Taxes, including any
schedules attached thereto and including any amendment thereof.

“Transaction Documents”
means this Agreement (including all exhibits attached hereto), the Registration
Agreement, and any other agreements entered into between the Company and any
Purchaser after the date hereof and on or prior to the Closing Date and any
certificate executed and delivered on or prior to the Closing pursuant to Section
2.

“Wholly-Owned
Subsidiary” means, with respect to any Person, a Subsidiary of which all of
the outstanding capital stock or other ownership interests are owned by such
Person or another Wholly-Owned Subsidiary of such Person.

Section 8.               Miscellaneous.

8A.          Termination.

(i)            Conditions
of Termination.  This Agreement may
be terminated at any time prior to the Closing:

(a)           by
the mutual written consent of the Majority Purchasers and the Company;

(b)           by
the Majority Purchasers if there has been a material misrepresentation,
material breach of warranty or material breach of a covenant by the Company in
the representations and warranties or covenants set forth in this Agreement or
the Schedules and Exhibits attached hereto or delivered in connection herewith;
or

(c)           by
the Majority Purchasers or the Company if the transactions contemplated hereby
have not been consummated by April 30, 2007 (the “Termination Date”); provided,
however, that neither the Majority Purchasers nor the Company shall be
entitled to terminate this Agreement pursuant to this Section 8A(i)(c)
if such party(ies) has breached any representation, warranty, covenant or
agreement in this Agreement.

 21
 

 

(ii)           Effect
of Termination.   In the event of termination of this Agreement
by either the Majority Purchasers or the Company as provided by Section 8A
above, this Agreement shall forthwith become void and of no further force and
effect, except that (i) the covenants and agreements set forth in this Section 8
shall survive such termination indefinitely, and (ii) nothing in this Section 8A
shall be deemed to release any Party from any liability for any breach by such
Party of the terms and provisions of this Agreement or to impair the right of
any Party to compel specific performance by another Party of its obligations
under this Agreement.

8B.          Fees and Expenses.  Whether or not the Closing occurs, the
Company shall pay, and hold the Purchasers harmless against liability for the
payment of, their actual out-of-pocket costs and expenses (including, without
limitation, attorneys’, accountants’, consultants’ and other advisors’ fees and
expenses) arising in connection with: 
(a) the advisory services provided to the Company by the Purchasers
with respect to the NLASCO Acquisition, (b) the due diligence review of the
Company and its Subsidiaries, the preparation, negotiation and execution of the
Transaction Documents and the consummation of the transactions contemplated
hereby or thereby, (c) any amendments or waivers (whether or not the same
become effective) under or in respect of this Agreement or the agreements
contemplated hereby (including, without limitation, in connection with any
proposed merger, sale or recapitalization of the Company), (d) stamp and
other taxes which may be payable in respect of the execution and delivery of
this Agreement or the issuance, delivery or acquisition of any shares of Common
Stock, and (e) any filing with any Governmental Entity with respect to its
investment in the Company or any other filing with any Governmental Entity with
respect to the Company which mentions such Person (unless otherwise provided in
the Registration Agreement).

8C.          Remedies.  Each Purchaser shall have all rights and
remedies set forth in this Agreement and the Articles of Amendment and
Restatement and all rights and remedies which such holders have been granted at
any time under any other agreement or contract and all of the rights which such
holders have under any law.  Any Person
having any rights under any provision of this Agreement shall be entitled to
enforce such rights specifically (without posting a bond or other security), to
recover damages by reason of any breach of any provision of this Agreement and
to exercise all other rights available under applicable law.  Each of the Parties acknowledges and agrees
that the other Parties would be damaged irreparably in the event any of the
provisions of this Agreement are not performed in accordance with their
specific terms or otherwise are breached. 
Accordingly, each of the Parties agrees that the other Parties shall be
entitled to an injunction or injunctions to prevent breaches of the provisions
of this Agreement and to enforce specifically this Agreement and the terms and
provisions hereof in any action instituted in any court of the United States or
any state thereof having jurisdiction over the Parties and the matter.

8D.          Indemnification.

(i)            Indemnification
of Purchasers.  In consideration of
each Purchaser’s execution and delivery of this Agreement and acquiring the
Common Stock hereunder and in addition to all of the Company’s other
obligations under this Agreement and the other agreements contemplated hereby,
the Company shall defend, protect, indemnify and hold harmless each Purchaser
and each Person, if any, who controls any

 22
 

 

Purchaser within the meaning of Section 15 of the Securities Act of
Section 20 of the Securities Exchange Act, and all of their officers,
directors, employees and agents (including, without limitation, those retained
in connection with the transactions contemplated by this Agreement)
(collectively, the “Indemnitees”) from and against any and all actions,
causes of action, suits, claims, losses, diminution of value, costs, penalties,
fees, liabilities and damages, and reasonable actual expenses incurred in
connection therewith (irrespective of whether any such Indemnitee is a party to
the action for which indemnification hereunder is sought), and including
reasonable attorneys’ fees and disbursements and expenses incurred in the
investigation or defense of any of the same or in asserting, preserving or
enforcing any of their respective rights hereunder (the “Indemnified
Liabilities”), incurred by the Indemnitees or any of them as a result of,
or arising out of, or relating to (a) the execution, delivery, performance or
enforcement of this Agreement and each of the other Transaction Documents and
any other instrument, certificate, document or agreement executed pursuant
hereto by any of the Indemnitees, or (b) any breach of any covenant, agreement
representation or warranty of the Company under this Agreement or any other
Transaction Document, except in each case to the extent such Indemnified
Liabilities directly result from the particular Indemnitee’s gross negligence
or willful misconduct or any breach of the representations and warranties set
forth in this Agreement by such Indemnitee. 
To the extent that the foregoing undertaking by the Company may be
unenforceable for any reason, the Company shall make the maximum contribution
to the payment and satisfaction of each of the Indemnified Liabilities which is
permissible under applicable law.

(ii)           Actions
against Parties; Notification.  Each
Indemnitee shall give notice as promptly as reasonably practicable to each
indemnifying party of any action commenced against it in respect of which
indemnity may be sought hereunder, but failure to so notify an indemnifying
party shall not relieve such indemnifying party from any liability hereunder to
the extent it is not materially prejudiced as a result thereof, and in any
event shall not relieve it from any liability which it may have otherwise than
on account of this indemnity agreement.  An
indemnifying party may participate at its own expense in the defense of such
action; provided, however, that counsel to the indemnifying party
shall not (except with the consent of the Indemnitee) also be counsel to the
Indemnitee.  In no event shall the
indemnifying parties be liable for fees and expenses of more than one counsel
(in addition to any local counsel) separate from their own counsel for all
Indemnitees in connection with any one action or separate but similar or
related actions in the same jurisdiction arising out of the same general
allegations or circumstances.  No
indemnifying party shall, without the prior written consent of the Indemnitees
(such consent not to be unreasonably withheld; provided, however,
that any Indemnitee may withhold consent in its sole and absolute discretion to
any settlement (A) with respect to which the matter for indemnification relates
to or arises in connection with any criminal proceeding, action, indictment,
allegation or investigation brought against such Indemnitee, (B) if the
Indemnitee reasonably believes the settlement, compromise or consent to the
entry of any judgment would be detrimental to or injure the Indemnitee’s
reputation or future business prospects or (C) which would result in an
injunction or equitable relief against the Indemnitee), settle or compromise or
consent to the entry of any judgment with respect to any litigation, or any
investigation or proceeding by any Governmental Entity, commenced or
threatened, or any claim

 23
 

 

whatsoever in respect to which indemnification or contribution could be
sought under this Section 8D (whether or not the Indemnitees are actual
or potential parties thereto), unless such settlement, compromise or consent
(a) includes an unconditional release of each indemnified party from all
liability arising out of such litigation investigation, proceeding or claim and
(b) does not include a statement as to or an admission of fault,
culpability or a failure to act by or on behalf of any Indemnitee.

8E.           Purchaser’s Investment
Representations.  Each Purchaser
hereby represents and warrants for itself individually and not jointly and
severally, that:

(i)            Organization,
Good Standing, Power, Authority, Etc. 
Such Purchaser is validly organized and existing and in good standing
under the laws of its jurisdiction of organization and has full power and
authority to execute and deliver each of the Transaction Documents to which
such Purchaser is a party, and to perform its obligations hereunder or
thereunder.  Such Purchaser has taken all
necessary corporate or other organizational action in order to authorize the
execution and delivery of each of the Transaction Documents to which such
Purchaser is a party and the consummation of the transactions contemplated
hereby or thereby, and each such agreement is a valid and binding obligation of
such Purchaser, enforceable in accordance with its terms, except as such
enforceability may be limited by bankruptcy, insolvency, reorganization,
similar laws affecting creditors’ rights generally or general principles of
equity.

(ii)           No
Conflicts; No Consents.  Neither the
execution nor delivery of any of the Transaction Documents to which such
Purchaser is a party nor the consummation by such Purchaser of the purchase of
the Common Stock contemplated hereby will conflict with, or result in any
violation of, or constitute any default under, any provision of such Purchaser’s
organizational documents.  Such Purchaser
is not required to submit any notice, report or other filing with any
governmental authority in connection with the execution or delivery by it of
this Agreement or the consummation of the transactions contemplated
hereby.  No consent, approval or
authorization of any governmental or regulatory authority or any other party or
person is required to be obtained by such Purchaser (but in no event including
any consent, approval or authorization of any governmental or regulatory
authority necessitated by the status of the Company or its business) in order
to execute, deliver and perform its obligations under this Agreement.

(iii)          Investor
Suitability.  Such Purchaser is an “accredited
investor” as such term is defined in Rule 501 promulgated under the Securities
Act.

(iv)          Disclosure
of Information.  Such Purchaser
acknowledges that it or its representatives have been furnished with all information
regarding the Company and its business, assets, results of operations and
financial condition that the Purchaser has requested.  Such Purchaser has had an opportunity to ask
questions of and receive answers from the Company regarding the Company and its
business, assets, results of operations, and financial condition and the terms
and conditions of the issuance of the Securities; however, no representations
or warranties have been made by the Company to the Purchasers in their capacity
as Purchasers except as are set forth in this Agreement.

 24
 

 

(v)           Investment
Experience.  Such Purchaser
represents that it has such knowledge, experience and skill in evaluating and
investing in common and preferred stocks and other securities, based on actual
participation in financial, investment and business matters, so that each is
capable of evaluating the merits and risks of an investment in the Common Stock
and has such knowledge, experience and skill in financial and business maters
that each is capable of evaluating the merits and risks of the investment in
the Company and the suitability of the Common Stock as an investment and can
bear the economic risk of an investment in the Common Stock.

(vi)          Brokerage.  No broker, finder or other party is entitled
to receive from such Purchaser, any brokerage or finder’s fee or any other fee,
commission or payment as a result of the transactions contemplated by this
Agreement for which the Company could have any liability or responsibility.

(vii)         Purchase
for Own Account.  Such Purchaser is
acquiring the Restricted Securities purchased hereunder or acquired pursuant
hereto for its own account with the present intention of holding such
securities for purposes of investment, and that it has no intention of selling
such securities in a public distribution in violation of the federal securities
laws or any applicable state securities laws; provided that nothing
contained herein shall prevent any Purchaser or subsequent holders of
Restricted Securities from transferring such securities in compliance with the
provisions of Section 4 hereof.

8F.           Consent to Amendments.  Except as otherwise expressly provided
herein, the provisions of this Agreement may be amended and the Company may
take any action herein prohibited, or omit to perform any act herein required
to be performed by it, only if the Company has obtained the prior written
consent of the Majority Purchasers outstanding at the time the amendment or
waiver becomes effective or, in the case of any amendment or waiver prior to the
Closing, only if the Company has obtained the consent of the Majority
Purchasers.  No other course of dealing
between the Company and the Purchasers or any delay in exercising any rights
hereunder or under the Articles of Amendment and Restatement or Registration
Agreement shall operate as a waiver of any rights of any such Purchasers.

8G.          Survival of Representations and
Warranties.  None of the
representations and warranties contained herein shall survive the Closing of
the transactions contemplated hereby, except that the representations and
warranties contained in Section 6E shall survive the execution and
delivery of this Agreement and the Closing of the transactions contemplated
hereby, regardless of any investigation made by any Purchaser or on its behalf.

8H.          Successors and Assigns.  Except as otherwise expressly provided
herein, all covenants and agreements contained in this Agreement by or on
behalf of any of the Parties hereto shall bind and inure to the benefit of the
respective successors and assigns of the Parties hereto whether so expressed or
not.  In addition, and whether or not any
express assignment has been made, the provisions of this Agreement which are
for any Purchaser’s benefit as a purchaser or holder of Common Stock are also
for the benefit of, and enforceable by, any subsequent holder of such Common
Stock.

 25
 

 

8I.            Generally Accepted Accounting
Principles.  Where any accounting
determination or calculation is required to be made under this Agreement or the
exhibits hereto, such determination or calculation (unless otherwise provided)
shall be made in accordance with GAAP, except that if because of a change in
GAAP the Company would have to alter a previously utilized accounting method or
policy in order to remain in compliance with GAAP, such determination or
calculation shall continue to be made in accordance with the Company’s previous
accounting methods and policies.

8J.           Severability.  Whenever possible, each provision of this
Agreement shall be interpreted in such manner as to be effective and valid
under applicable law, but if any provision of this Agreement is held to be
prohibited by or invalid under applicable law, such provision shall be
ineffective only to the extent of such prohibition or invalidity, without
invalidating the remainder of this Agreement.

8K.          Counterparts.  This Agreement may be executed simultaneously
in two or more counterparts (including by means of telecopied signature pages),
any one of which need not contain the signatures of more than one party, but
all such counterparts taken together shall constitute one and the same
Agreement.

8L.           Descriptive Headings;
Interpretation.  The descriptive
headings and captions used in this Agreement and the table of contents to this
Agreement are for convenience and reference purposes only and shall not
constitute a substantive part of, or affect in any way the meaning or
interpretation of, this Agreement.  Any
capitalized terms used in any Schedule or Exhibit attached hereto or delivered
in connection herewith and not otherwise defined therein shall have the
meanings set forth in this Agreement. 
The use of the word “including” herein shall mean “including without
limitation.”  The Parties intend that
each representation, warranty and covenant contained herein shall have independent
significance.  If any Party has breached
any representation, warranty or covenant contained herein in any respect, the
fact that there exists another representation, warranty or covenant relating to
the same subject matter (regardless of the relative levels of specificity)
which the Party has not breached shall not detract from or mitigate the fact
that the Party is in breach of the first representation, warranty or covenant.

8M.         Governing Law.  All issues and questions concerning the
construction, validity, enforcement and interpretation of this Agreement and
the Exhibits and Schedules hereto shall be governed by, and construed in
accordance with, the laws of the State of Illinois, without giving effect to
any choice of law or conflict of law rules or provisions (whether of the State
of Illinois or any other jurisdiction) that would cause the application of the
laws of any jurisdiction other than the State of Illinois.

8N.          Notices.  All notices, demands or other communications
to be given or delivered hereunder shall be in writing and shall be deemed to
have been given when delivered personally to the recipient, telecopied to the
recipient (with hard copy sent by overnight courier in the manner provided
hereunder) if sent prior to 4:00 p.m. Chicago time on a business day (and
otherwise, on the immediately succeeding business day), one business day after
being sent to the recipient by reputable overnight courier service (charges
prepaid) or three business days after being mailed to the recipient by certified
or registered mail, return receipt requested and postage

 26
 

 

prepaid. 
Such notices, demands and other communications shall be sent to the
Company at the address indicated below and to the Purchasers at the addresses
indicated on the Schedule of Purchasers attached hereto:

Affordable Residential Communities,
Inc.

7887 East Belleview Avenue, Suite 200

Englewood, CO 80111

Attn:  Larry D. Willard

Telecopy No.:
(303) 383-7547

 

with a copy to:

 

Scott L. Gesell

ARC - 7887 East
Belleview Avenue, Suite 200

Denver, CO  80111

Telecopy No.: (303) 383-7506

 

or to such other address
or to the attention of such other Person as the recipient Party has specified
by prior written notice to the sending Party.

8O.          Press Releases.  None of the Parties will issue any press
release or public statement with respect to the transactions contemplated
hereby without the prior consent of the Company and the Majority Purchasers,
except as may be required by applicable law or obligations pursuant to any
listing agreement with any national securities exchange (with it being
understood, however, that the Parties will consult with each other before
issuing, and provide each other the opportunity to review and comment upon, any
such press release or public announcement). 
The Parties agree that the initial press release or releases to be
issued with respect to the transactions contemplated by this Agreement shall be
agreed upon by the Company and the Purchasers prior to the issuance thereof
(but the content thereof shall be subject to the requirements of applicable law
and any obligations pursuant to any listing agreement with any national
securities exchange).

8P.           No Strict Construction.  The Parties have participated jointly in the
negotiation and drafting of this Agreement. 
In the event an ambiguity or question of intent or interpretation
arises, this Agreement shall be construed as if drafted jointly by the Parties,
and no presumption or burden of proof shall arise favoring or disfavoring any
Party by virtue of the authorship of any of the provisions of this Agreement.

8Q.          Complete Agreement.  Except as otherwise expressly set forth
herein, this Agreement and the other agreements, certificates and instruments
expressly required to be delivered hereby embody the complete agreement and
understanding of the parties hereto and supersede and preempt any prior
understandings, agreements or representations by or among the parties, whether
written or oral, which may have related to the subject matter hereof in any
way, including the Confidentiality Agreement. 
The parties hereto acknowledge and agree there are no oral
understandings or agreements between them with respect to the subject matter
hereof.

*              *              *              *              *

 27

 

 

IN WITNESS WHEREOF, the
parties hereto have executed this Stock Purchase Agreement on the date first
written above.

	
  

  	
  AFFORDABLE
  RESIDENTIAL COMMUNITIES INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  Scott L. Gesell

  	
   

  
	
   

  	
  Its:

  	
  Executive Vice
  President

  	
   

  
	
   

  	
   

  
	
   

  	
  FLEXPOINT
  FUND, L.P.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Christopher
  Ackerman

  	
   

  
	
   

  	
  Its:

  	
  Vice President

  	
   

  

 

 

LIST OF EXHIBITS

Exhibit A   -   Registration
Agreement

Exhibit B   -   Legal
Opinion

 

SCHEDULE OF PURCHASERS

	
  Names and Addresses

  	
   

  	
  Total No. of Shares of

  Common Stock

  	
   

  	
  Share Purchase Price

  	
   

  	
  Total Purchase Price

  for Common Stock

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Flexpoint Fund, L.P.

  c/o Flexpoint Partners, LLC

  676 North Michigan Avenue

  Suite 3300

  Chicago, Illinois 60611

  Attention: Donald J. Edwards

  	
   

  	
  2,087,682.67

  	
   

  	
  $

  	
  9.58

  	
   

  	
  $

  	
  20,000,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  TOTAL

  	
   

  	
  2,087,682.67

  	
   

  	
   

  	
   

  	
  $

  	
  20,000,000

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00111-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00111-of-00352.parquet"}], [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00111-of-00352.parquet"}]]