Document:

Exhibit 10.2.2

AFFORDABLE RESIDENTIAL COMMUNITIES INC.

2003 EQUITY INCENTIVE PLAN

 

RESTRICTED STOCK AGREEMENT

 

RESTRICTED STOCK AGREEMENT,
made as of the date set forth on the Notice of Grant of Restricted Stock, by
and between Affordable Residential Communities Inc., a Maryland corporation
(the “Company”), pursuant to the Affordable Residential Communities Inc. 2003
Equity Incentive Plan (the “Plan”) and the employee or director of the Company
or an Affiliate named on the Notice of Grant of Restricted Stock (the “Participant”).  Except as otherwise expressly set forth
herein, this Agreement shall be construed in accordance with the provisions of
the Plan and any capitalized terms not otherwise defined in this Agreement
shall have the definitions set forth in the Plan.

 

WHEREAS, the Plan
administrator has authorized the grant to the Participant of the shares of
Restricted Stock as set forth in the Notice of Grant of Restricted Stock.

 

NOW, THEREFORE, in
consideration of the mutual covenants hereinafter set forth and for other good
and valuable consideration, the parties hereto have agreed and do hereby agree
as follows:

 

1.                                       Grant of Award.  Pursuant to Section 7 of the Plan, the
Company grants to the Participant, as of the effective date of grant specified
in the Notice of Grant of Restricted Stock and subject to the terms and
conditions of the Plan and subject further to the terms and conditions set
forth herein, the number of shares of Restricted Stock as shown on the Notice
of Grant of Restricted Stock.  The
Participant’s grant and record of Restricted Stock share ownership shall be
kept on the books of the Company until the restrictions on transfer have
lapsed.  At the Participant’s request,
vested shares may be evidenced by stock certificates.

2.                                   Vesting.  The shares of Restricted Stock granted to the
Participant shall vest in accordance with the vesting schedule set forth in the
Notice of Grant of Restricted Stock. 
Such vesting schedule indicates each date upon which the Participant
shall be entitled to receive shares of freely transferable Common Stock equal
to the number of vested shares of Restricted Stock, provided that, as of the
vesting date, the Participant has not incurred a termination of service with
the Company and all of its Affiliates. 
No vesting shall occur after the termination of a Participant’s
employment or service with the Company and its Affiliates for any reason.

3.                                       Rights as a
Stockholder.  The
Participant shall have all of the rights of a stockholder with respect to the
shares of Restricted Stock, including the right to vote on all matters with
respect to which the stockholders of the Company have the right to vote and the
right to receive dividends thereon.

4.                                       Restrictions on
Transfer.  Shares of
Restricted Stock may not be transferred or otherwise disposed of by the
Participant, including by way of  sale,
assignment, transfer, pledge, hypothecation or otherwise, except as permitted
by the Committee, or by will or the laws of descent and distribution.

5.                                       Approvals.  No shares of Common Stock shall be issued
under this Restricted Stock Agreement unless and until all legal requirements
applicable to the issuance of such 

 

 

shares have been complied
with to the satisfaction of the Committee. 
The Committee shall have the right to condition any issuance of shares
to the Participant on the Participant’s undertaking in writing to comply with
such restrictions on the subsequent disposition of such shares as the Committee
shall deem necessary or advisable as a result of any applicable law or regulation.

6.                                   Invalid Transfers.  No purported sale, assignment, mortgage,
hypothecation, transfer, pledge, encumbrance, gift, transfer in trust (voting
or other) or other disposition of, or creation of a security interest in or
lien on, any of the shares of Restricted Stock by any holder thereof in
violation of the provisions of this Restricted Stock Agreement shall be valid,
and the Company will not transfer any of said shares of Restricted Stock on its
books nor will any of said shares of Restricted Stock be entitled to vote, nor
will any dividends be paid thereon, unless and until there has been full
compliance with said provisions to the satisfaction of the Company.  The foregoing restrictions are in addition to
and not in lieu of any other remedies, legal or equitable, available to enforce
said provisions.

7.                                       Effect of
Termination of Employment or Service for Death, Disability, Retirement or
Without Cause.  Unless
otherwise provided in an individual employment, severance or other agreement
entered into between the Participant and the Company, in which case the
provisions of such agreement shall apply, in the event that the Participant’s
employment or service with the Company terminates for any reason prior to the
vesting of all of the shares of Restricted Stock subject hereto, any shares
subject to this Agreement as of the effective date of such termination shall be
immediately forfeited and cancelled.

8.                                       Taxes.  The Participant shall pay to the Company
promptly upon request, and in any event at the time the Participant recognizes
taxable income in respect to the shares of Restricted Stock (or, if the
Participant makes an election under Section 83(b) of the Code in connection
with such grant, on or about the date of grant), an amount equal to the federal,
state and/or local taxes the Company determines it is required to withhold
under applicable tax laws with respect to the shares of Restricted Stock.  The Participant may satisfy the foregoing
requirement by making a payment to the Company in cash or, with the consent of
the Company, by authorizing the Company to withhold cash otherwise due to the
Participant (e.g., by filing a revised form W-4 to increase payroll tax
withholdings). The Participant shall promptly notify the Company of any
election made pursuant to Section 83(b) of the Code. The Participant
understands that the Participant (and not the Company) shall be responsible for
any tax liability that may arise as a result of the transactions contemplated
by this Restricted Stock Agreement.

THE PARTICIPANT ACKNOWLEDGES
THAT IT IS THE PARTICIPANT’S SOLE RESPONSIBILITY AND NOT THE COMPANY’S TO FILE
TIMELY THE ELECTION UNDER SECTION 83(b) OF THE CODE, IN THE EVENT THAT THE
PARTICIPANT DESIRES TO MAKE THE ELECTION.

 

9.                                   Compliance with Law and
Regulations; Legend.  The award
and any obligation of the Company hereunder shall be subject to all applicable
federal, state and local laws, rules and regulations and to such approvals by
any government or regulatory agency as may be required.  The Company may require, as a condition of
the issuance and delivery of certificates evidencing Restricted Stock pursuant
to the terms hereof, that 

 

 

the certificates bear the
legend set forth immediately below, in addition to any other legends required
under federal and state securities laws or as otherwise determined by the
Committee.

The
transferability of this certificate and the shares of stock represented hereby
are subject to the restrictions, terms and conditions (including forfeiture
provisions and restrictions against transfer) contained in the Affordable
Residential Communities Inc. 2003 Equity Incentive Plan and an Agreement
entered into between the registered owner of such shares and the Company.  A copy of the Plan and Agreement is on file
in the office of the Secretary of the Company, 600 Grant Street, Suite 900,
Denver, CO 80203.

 

Such legend shall not be
removed until such shares vest pursuant to the terms hereof.

 

10.                                 Incorporation
of Plan.  This Agreement is made under
the provisions of the Plan (which is incorporated herein by reference) and
shall be interpreted in a manner consistent with it.  To the extent that this Agreement is silent
with respect to, or in any way inconsistent with, the terms of the Plan, the
provisions of the Plan shall govern and this Restricted Stock Agreement shall
be deemed to be modified accordingly.

11.                             Notices.  Any notices required or permitted hereunder
shall be addressed to the Company, at 600 Grant Street, Suite 900, Denver, CO
80203, or to the Participant at the address then on record with the Company, as
the case may be, and deposited, postage prepaid, in the United States
mail.  Either party may, by notice to the
other given in the manner aforesaid, change his/her or its address for future
notices.

12.                                 Binding
Agreement; Successors.  This
Agreement shall bind and inure to the benefit of the Company, its successors
and assigns, and the Participant and the Participant’s personal representatives
and beneficiaries.

13.                                 Governing Law.  This Agreement shall be governed by and construed
in accordance with the laws of the State of Maryland.  The Committee shall have final authority to
interpret and construe the Plan and this Agreement and to make any and all
determinations under them, and its decision shall be binding and conclusive
upon all Persons.

14.                                 Amendment.  This Agreement may be amended or modified by
the Company at any time; provided
that notice is provided to the Participant in accordance with Section 11; and provided,  further,
that no amendment or modification that is adverse to the rights of the
Participant as provided by this Agreement shall be effective unless set forth
in a writing signed by the parties hereto.

 

 

IN WITNESS WHEREOF, the Company has caused
this Agreement to be duly executed by its officer thereunder duly authorized
and the Participant has hereunto set his hand, all as of the day and year set
forth below.

 

 

AFFORDABLE RESIDENTIAL

COMMUNITIES INC.

 

 

	
   

  	
   

  
	
  By:

  	
   

  	
   

  
	
  Its:

  	
   

  	
   

  

 

 

The undersigned hereby acknowledges having
read this Agreement and the Plan and hereby agrees to be bound by all
provisions set forth herein and in the Plan.

 

 

	
   

  	
   

  
	
   

  	
   

  
	
  Date:

  	
   

  	
   

  
			

 

 

AFFORDABLE
RESIDENTIAL COMMUNITIES INC.

2003
EQUITY INCENTIVE PLAN

 

NOTICE OF GRANT OF RESTRICTED STOCK

 

This
Notice is to certify that the Participant named below has been granted the
number of shares of Restricted Common Stock set forth below under the terms and
conditions set forth in this Notice. 
This Notice is subject to and incorporates by reference the terms and
conditions of the Restricted Stock Agreement ((the “Agreement”), a copy of
which is enclosed).  Please refer to the
Restricted Stock Agreement and the 2003 Equity Incentive Plan document for an
explanation of the terms and conditions of this grant and a full description of
your rights and obligations.  You must
sign the Agreement in order for this Notice and grant to be effective.  Please sign and date the Agreement on the
last page and return it promptly in the enclosed envelope.

 

	
  Name of Participant:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Number of Restricted Shares:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Per Share Value on Grant Date:

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Grant Date:

  	
   

  	
   

  
					

 

	
  Vesting Schedule:   

  	
   

  	
   Shares vest on Grant Date   

  	
   

  	
   

  

 

	
  (Date(s) on which Restricted

  

 

	
  Stock Restrictions Lapse)   

  	
   

  	
   Shares vest on   

  	
   

  	
   

  

 

	
   

  
	
  Additional Terms:

  	
  See the Restricted Stock
  Agreement.Exhibit 10.5

 

REGISTRATION
RIGHTS AGREEMENT

 

dated as of
August 9, 2005

 

among

 

Affordable
Residential Communities LP,

Affordable
Residential Communities Inc.

 

and

 

Merrill
Lynch, Pierce, Fenner & Smith Incorporated

 

 

REGISTRATION
RIGHTS AGREEMENT

 

This Registration Rights Agreement (the “Agreement”) is made and entered into this 9th day of August, 2005, among Affordable
Residential Communities LP, a Delaware limited partnership (the “Company”), Affordable Residential
Communities Inc., a Maryland corporation (the “Parent”) and Merrill Lynch,
Pierce, Fenner & Smith Incorporated (the “Initial Purchaser”).

 

This Agreement is made pursuant to the Purchase Agreement, dated as of August 3,
2005, among the Company, Parent and the Initial Purchaser (the “Purchase Agreement”), which provides for
the sale by the Company to the Initial Purchaser of an aggregate of $87,000,000
principal amount at maturity ($100,000,000 principal amount at maturity if the
Initial Purchaser exercises their option in full) of the Company’s 71/2% Senior
Exchangeable Notes due 2025 (the “Securities”).
In order to induce the Initial Purchaser to enter into the Purchase Agreement,
the Company has agreed to provide to the Initial Purchaser and its direct and
indirect transferees the registration rights set forth in this Agreement. The
execution of this Agreement is a condition to the closing under the Purchase
Agreement.

 

In consideration of the foregoing, the parties hereto agree as follows:

 

1.             Definitions.

 

As used in this Agreement, the following capitalized defined terms
shall have the following meanings:

 

“1933 Act” shall mean the
Securities Act of 1933, as amended from time to time.

 

“1934 Act” shall mean the
Securities Exchange Act of l934, as amended from time to time.

 

“1939 Act” shall mean the
Trust Indenture Act of 1939, as amended from time to time.

 

“Closing Date” shall mean
the Closing Time as defined in the Purchase Agreement.

 

“Common Stock” shall mean
any shares of common stock, $.01 par value, of Parent and any other shares of common
stock as may constitute “Common Stock” for purposes of the Indenture.

 

“Company” shall have the
meaning set forth in the preamble and shall also include the Company’s
successors.

 

“Depositary” shall mean
The Depository Trust Company, or any other depositary appointed by the Company,
provided, however, that such depositary must have an
address in the Borough of Manhattan, in the City of New York.

 

“Holder” shall mean an
Initial Purchaser, for so long as it owns any Registrable Securities, and each
of its successors, assigns and direct and indirect transferees who become
registered owners of Registrable Securities under the Indenture.

 

“Indenture” shall mean
the Indenture relating to the Securities, dated as of August 9, 2005,
between the Company and US Bank National Association, as trustee, as the same
may be amended, supplemented, waived or otherwise modified from time to time in
accordance with the terms thereof.

 

“Initial Purchaser” shall
have the meaning set forth in the preamble.

 

“Majority Holders” shall
mean the Holders of a majority of the outstanding Registrable Securities
(assuming conversion of all Securities into Common Stock); provided that whenever the consent or
approval of Holders of a specified percentage of Registrable Securities is required
hereunder, Registrable Securities held by the Company, Parent or any of their
Affiliates (as defined in the Indenture) shall be disregarded in determining
whether such consent or approval was given by the Holders of such required
percentage amount.

 

“Person” shall mean an
individual, partnership (general or limited), corporation, limited liability
company, trust or unincorporated organization, or a government or agency or
political subdivision thereof.

 

 

“Prospectus” shall mean
the prospectus included in a Shelf Registration Statement, including any
preliminary prospectus, and any such prospectus as amended or supplemented by
any prospectus supplement, including any such prospectus supplement with
respect to the terms of the offering of any portion of the Registrable
Securities covered by a Shelf Registration Statement, and by all other
amendments and supplements to a prospectus, including post-effective
amendments, and in each case including all material incorporated by reference
therein.

 

“Purchase Agreement”
shall have the meaning set forth in the preamble.

 

“Registrable Securities”
shall mean all or any of the Securities issued from time to time under the
Indenture in registered form, and the shares of Common Stock issuable upon
conversion of such Securities; provided,
however, that any such Securities
shall cease to be Registrable Securities when (i) a Shelf Registration
Statement with respect to such Securities shall have been declared effective
under the 1933 Act and such Securities shall have been disposed of pursuant to
such Shelf Registration Statement, (ii) such Securities have been or may
be sold to the public pursuant to Rule l44 (or any similar provision then
in force, but not Rule 144A) under the 1933 Act, (iii) such
Securities shall have ceased to be outstanding or (iv) such Securities may
be sold or transferred, other than by the Company, Parent or any of their
Affiliates, pursuant to Rule 144(k) under the 1933 Act.

 

“Registration Expenses”
shall mean any and all expenses incident to performance of or compliance by the
Company and Parent with this Agreement, including without limitation: (i) all
SEC, stock exchange or National Association of Securities Dealers, Inc.
(the “NASD”) registration and
filing fees, including, if applicable, the fees and expenses of any “qualified
independent underwriter” (and its counsel) that is required to be retained by
any holder of Registrable Securities in accordance with the rules and
regulations of the NASD, (ii) all fees and expenses incurred in connection
with compliance with state securities or blue sky laws and compliance with the rules of
the NASD (including reasonable fees and disbursements of counsel for any
underwriters or Holders in connection with blue sky qualification of any of the
Registrable Securities and any filings with the NASD), (iii) all expenses
of the Company or Parent in preparing or assisting in preparing, word
processing, printing and distributing any Shelf Registration Statement, any
Prospectus or any amendments or supplements thereto, (iv) all fees and
expenses incurred in connection with the listing, if any, of any of the
Registrable Securities on any securities exchange or exchanges, (v) the
fees and disbursements of counsel for the Company and Parent and of the
independent public accountants of the Company and Parent, including the
expenses of any special audits or “comfort” letters required by or incident to
such performance and compliance, (vi) the reasonable fees and expenses of
the Trustee, and any escrow agent or custodian, (vii) the reasonable fees
and expenses of a single counsel to the Holders in connection with the Shelf
Registration, which counsel shall be selected by the Majority Holders, and (viii) any
fees and expenses of any special experts retained by the Company or Parent in
connection with any Shelf Registration Statement, but excluding any
underwriting discounts and commissions and transfer taxes, if any, relating to
the sale or disposition of Registrable Securities by a Holder.

 

“SEC” shall mean the
Securities and Exchange Commission or any successor agency or government body
performing the functions currently performed by the United States Securities
and Exchange Commission.

 

“Shelf Registration”
shall mean a registration effected pursuant to Section 2.1 hereof.

 

“Shelf Registration Statement”
shall mean a “shelf” registration statement of the Company and Parent pursuant
to the provisions of Section 2.1 of this Agreement which covers all of the
Registrable Securities on an appropriate form under Rule 415 under the 1933
Act, or any similar rule that may be adopted by the SEC, and all
amendments and supplements to such registration statement, including
post-effective amendments, in each case including the Prospectus contained
therein, all exhibits thereto and all material incorporated by reference
therein.

 

2

 

“Trustee” shall mean the
trustee with respect to the Securities under the Indenture.

 

2.             Registration
Under the 1933 Act.

 

2.1. 
Shelf Registration.

 

(a)   The Company and Parent
shall, at their cost, no later than 90 days after the Closing Date, file
with the SEC, and thereafter shall use their best efforts to cause to be
declared effective as promptly as practicable but no later than 180 days
after the Closing Date, a Shelf Registration Statement relating to the offer
and sale of the Registrable Securities by the Holders that have provided the
information pursuant to Section 2.1(d).

 

(b)   The Company and Parent
shall, at their cost, use their best efforts, subject to Section 2.5, to
keep the Shelf Registration Statement continuously effective in order to permit
the Prospectus forming part thereof to be usable by Holders for a period that
will terminate when all Registrable Securities covered by the Shelf
Registration Statement have been sold pursuant to the Shelf Registration
Statement or cease to be outstanding or otherwise to be Registrable Securities
(the “Effectiveness Period”).

 

(c)   Notwithstanding any other
provisions hereof, the Company and Parent shall use their best efforts to
ensure that (i) any Shelf Registration Statement and any amendment thereto
and any Prospectus forming part thereof and any supplement thereto complies in
all material respects with the 1933 Act and the rules and regulations
thereunder, (ii) any Shelf Registration Statement and any amendment
thereto does not, when it becomes effective, contain an untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading and (iii) any
Prospectus forming part of any Shelf Registration Statement, and any supplement
to such Prospectus (as amended or supplemented from time to time), does not
include an untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading.

 

(d)   Notwithstanding any other
provision hereof, no Holder of Registrable Securities may include any of its
Registrable Securities in the Shelf Registration Statement pursuant to this
Agreement unless the Holder furnishes to the Company and Parent a fully
completed notice and questionnaire in the form attached as Annex A to the
Offering Memorandum (the “Questionnaire”)
and such other information in writing as the Company and Parent may reasonably
request in writing for use in connection with the Shelf Registration Statement
or Prospectus included therein and in any application to be filed with or under
state securities laws. In order to be named as a selling securityholder in the
Prospectus at the time of effectiveness of the Shelf Registration Statement,
each Holder must, before the effectiveness of the Shelf Registration Statement
and no later than the 20th day after the issuance of a press release by the
Company and Parent announcing the initial filing of the Registration Statement
(or the filing of the first amendment to the Shelf Registration Statement in
the event the Company and Parent promptly file the Shelf Registration Statement
following the date of this Agreement), furnish the completed Questionnaire and
such other information that the Company and Parent may reasonably request in
writing, if any, to the Company and Parent in writing and the Company and
Parent will include the information from the completed Questionnaire and such
other information, if any, in the Shelf Registration Statement and the
Prospectus in a manner so that upon effectiveness of the Shelf Registration
Statement the Holder will be permitted to deliver the Prospectus to purchasers
of the Holder’s Registrable Securities. From and after the date that the
Registration Statement is first declared effective by the SEC, upon receipt of
a completed Questionnaire and such other information that the Company and Parent
may reasonably request in writing, if any, the Company and Parent will use
their best efforts to file within 20 Business Days any amendments or
supplements to the Shelf Registration Statement necessary for such Holder to be
named as a selling securityholder in the Prospectus contained therein to permit
such Holder to deliver the Prospectus to purchasers of

 

3

 

the
Holder’s Securities (subject to the Company’s and Parent’s right to suspend the
Shelf Registration Statement as described in Section 2.5 below); provided that the Company and Parent shall
not be required to file more than one such amendment to the Shelf Registration
Statement in any calendar quarter for all such Holders. Holders that do not deliver
a completed written Questionnaire and such other information, as provided for
in this Section 2.1(d), will not be named as selling securityholders in
the Prospectus. Each Holder named as a selling securityholder in the Prospectus
agrees to promptly furnish to the Company and Parent all information required
to be disclosed in order to make information previously furnished to the
Company and Parent by the Holder not materially misleading and any other
information regarding such Holder and the distribution of such Holder’s
Registrable Securities as the Company and Parent may from time to time
reasonably request in writing.

 

(e)   Each Holder agrees not to
sell any Registrable Securities pursuant to the Shelf Registration Statement
without delivering, or causing to be delivered, a Prospectus to the purchaser
thereof and to notify the Company and Parent not later than three Business Days
prior to any proposed sale by such Holder pursuant to the Shelf Registration
Statement of the amount of Registrable Securities intended to be sold pursuant
to the Shelf Registration Statement which notice shall be effective for five
Business Days; if the Holder has not sold the Registrable Securities at the end
of the five Business Days period, it may submit another notice to the Company
and Parent. Absent any further notices, the Company and Parent may assume that
all of the amount of such Holder’s Registrable Securities set forth in the
notice have been sold; provided that the Company and Parent shall use their
best efforts to confirm that such Registrable Securities have been so sold
prior to making such assumption.

 

The Company and Parent shall not permit any securities other than
Registrable Securities to be included in the Shelf Registration Statement. The
Company and Parent further agree, if necessary, to supplement or amend the
Shelf Registration Statement, as required by Section 2.3(b) below,
and to furnish to the Holders of Registrable Securities copies of any such
supplement or amendment promptly after its being used or filed with the SEC.

 

2.2.  Expenses.  The Company and Parent shall pay all
Registration Expenses in connection with the registration pursuant to Section 2.1.
Each Holder shall pay all underwriting discounts and commissions and transfer
taxes, if any, relating to the sale or disposition of such Holder’s Registrable
Securities pursuant to the Shelf Registration Statement.

 

2.3.  Effectiveness.  (a) The Company and Parent will be
deemed not to have used their best efforts to cause the Shelf Registration
Statement to become, or to remain, effective during the requisite period if the
Company or Parent voluntarily takes any action that would, or fails to take any
action which failure would result in any such Shelf Registration Statement not
being declared effective or the Holders of Registrable Securities covered
thereby not being able to offer and sell such Registrable Securities during
that period as and to the extent contemplated hereby, unless such action is
required by applicable law.

 

(b)   A Shelf Registration Statement
pursuant to Section 2.1 hereof will not be deemed to have become effective
unless it has been declared effective by the SEC; provided, however, that if,
after it has been declared effective, the offering of Registrable Securities
pursuant to a Shelf Registration Statement is interfered with by any stop
order, injunction or other order or requirement of the SEC or any other
governmental agency or court, such Shelf Registration Statement will be deemed
not to have been effective during the period of such interference, until the
offering of Registrable Securities pursuant to such Shelf Registration
Statement may legally resume.

 

2.4.  Interest.  In the event that (a) a Shelf
Registration Statement is not filed with the SEC on or before the 90th calendar
day following the Closing Date, (b) a Shelf Registration Statement is not
declared effective on or prior to the 180th calendar day following the Closing
Date, (c) after effectiveness, subject to Section 2.5, the Shelf
Registration Statement fails to be effective or usable by the Holders without
being succeeded within five Business Days by a post-effective amendment or a

 

4

 

report
filed with the SEC pursuant to the 1934 Act that cures the failure to be effective
or usable, or (d) the Prospectus has ceased to be effective or useable as
described in clause (c) for a period of 30 consecutive days
(each such event being a “Registration
Default”), additional interest, as liquidated damages (“Liquidated Damages”), will accrue at a
rate per annum of 0.25% of the principal amount of the Securities for the first
90-day period from day following the Registration Default, and thereafter at a
rate per annum of 0.50% of the principal amount of the Securities, provided that
in no event shall Liquidated Damages accrue at a rate per annum exceeding 0.50%
of the issue price of the Securities, provided further that no Liquidated
Damages shall accrue after the Effectiveness Period. Upon the cure of all
Registration Defaults then continuing, the accrual of Liquidated Damages will
automatically cease and the interest rate borne by the Securities will revert
to the original interest rate at such time. Holders who have exchanged
Securities into Common Stock will not be entitled to receive any Liquidated
Damages with respect to such Common Stock or the issue price of the Securities
exchanged.

 

The Company shall notify the Trustee within ten Business Days after
each and every date on which an event occurs in respect of which Liquidated Damages
are required to be paid. Liquidated Damages shall be paid by depositing with
the Trustee, in trust, for the benefit of the Holders of Registrable
Securities, on or before the applicable semiannual interest payment date,
immediately available funds in sums sufficient to pay the Liquidated Damages
then due. The Liquidated Damages due shall be payable on each interest payment
date to the record Holder of Registrable Securities entitled to receive the
interest payment to be paid on such date as set forth in the Indenture. Each
obligation to pay Liquidated Damages shall be deemed to accrue from and
including the day following the Registration Default to but excluding the day
on which the Registration Default is cured.

 

A Registration Default under clause (a) above shall be cured
on the date that the Registration Statement is filed with the SEC. A
Registration Default under clause (b) above shall be cured on the
date that the Registration Statement is declared effective by the SEC. A
Registration Default under clauses (c) or (d) above shall be cured on
the date an amended Registration Statement is declared effective by the SEC or
the Company and Parent otherwise declare the Registration Statement and the
Prospectus useable, as applicable.

 

2.5. 
Suspension.  The
Company and Parent may suspend the use of any Prospectus, without incurring or
accruing any obligation to pay Liquidated Damages pursuant to Section 2.4
hereof, for a period not to exceed 30 calendar days in any three-month
period, or an aggregate of 90 calendar days in any 12-month period (each,
a “Suspension Period”), if the
Board of Directors of Parent shall have determined in good faith that because
of valid business reasons (not including avoidance of the Company’s and Parent’s
obligations hereunder), including without limitation proposed or pending
corporate developments and similar events or because of filings with the SEC,
it is in the best interests of the Company and Parent to suspend such use, and
prior to suspending such use the Company and Parent provide the Holders with
written notice of such suspension, which notice need not specify the nature of
the event giving rise to such suspension. Each Holder shall keep confidential
any communications received by it from the Company or Parent regarding the
suspension of the use of the Prospectus, except as required by applicable law.

 

3.             Registration
Procedures.

 

In connection with the obligations of the Company and Parent with
respect to the Shelf Registration, the Company and Parent shall:

 

(a)   prepare and file with the
SEC a Shelf Registration Statement, within the relevant time period specified
in Section 2, on the appropriate form under the 1933 Act, which form (i) shall
be selected by the Company and Parent, (ii) shall be available for the
sale of the Registrable Securities by the selling Holders thereof, (iii) shall
comply as to form in all material respects with the requirements of the

 

5

 

applicable
form and include or incorporate by reference all financial statements required
by the SEC to be filed therewith or incorporated by reference therein, and (iv) shall
comply in all material respects with the applicable requirements of
Regulation S-T under the 1933 Act, if any, and use their best efforts to
cause such Shelf Registration Statement to become effective and remain
effective in accordance with Section 2 hereof;

 

(b)   prepare and file with the
SEC such amendments and post-effective amendments to the Shelf Registration
Statement as may be necessary under applicable law to keep the Shelf
Registration Statement effective for the Effectiveness Period, subject to Section 2.5;
and cause each Prospectus to be supplemented by any required prospectus
supplement, and as so supplemented to be filed pursuant to Rule 424 (or
any similar provision then in force) under the 1933 Act and comply during the
Effectiveness Period with the provisions of the 1933 Act, the 1934 Act and the rules and
regulations thereunder required to enable the disposition of all Registrable
Securities covered by the Shelf Registration Statement in accordance with the
intended method or methods of distribution by the selling Holders thereof;

 

(c)   (i) notify each Holder
of Registrable Securities of the filing, by issuing a press release, of a Shelf
Registration Statement with respect to the Registrable Securities; (ii) furnish
to each Holder of Registrable Securities that has provided the information
required by Section 2.1(d), counsel to such Holder and to each underwriter
of an underwritten offering of Registrable Securities, if any, without charge,
as many copies of each Prospectus, including each preliminary Prospectus, and
any amendment or supplement thereto and such other documents as such Holder or
underwriter may reasonably request, including financial statements and
schedules and, if the Holder so requests, all exhibits in order to facilitate
the unrestricted sale or other disposition of the Registrable Securities; and (iii) subject
to Section 2.5 hereof and to any notice by the Company and Parent in
accordance with Section 3(e) hereof of the existence of any fact of
the kind described in Sections 3(e)(ii), (iii), (iv), (v) and (vi) hereof,
hereby consent to the use of the Prospectus or any amendment or supplement
thereto by each of the selling Holders of Registrable Securities that has
provided the information required by Section 2.1(d) in connection
with the offering and sale of the Registrable Securities;

 

(d)   use their best efforts to
register or qualify the Registrable Securities under all applicable state
securities or “blue sky” laws of such jurisdictions as any Holder of
Registrable Securities covered by a Shelf Registration Statement and each
underwriter of an underwritten offering of Registrable Securities shall
reasonably request, and do any and all other acts and things which may be
reasonably necessary or advisable to enable each such Holder and underwriter to
consummate the disposition in each such jurisdiction of such Registrable
Securities owned by such Holder; provided,
however, that neither the Company
nor Parent shall be required to (i) qualify as a foreign corporation or as
a dealer in securities in any jurisdiction where it would not otherwise be
required to qualify but for this Section 3(d), or (ii) take any
action which would subject it to general service of process or taxation in any
such jurisdiction where it is not then so subject;

 

(e)   notify promptly each Holder
of Registrable Securities under a Shelf Registration that has provided the
information required by Section 2.1(d) and, if requested by such
Holder, confirm such advice in writing promptly (i) when a Shelf
Registration Statement has become effective and when any post-effective
amendments thereto become effective, (ii) of any request by the SEC or any
state securities authority for post-effective amendments and supplements to a
Shelf Registration Statement and Prospectus or for additional information after
the Shelf Registration Statement has become effective, (iii) of the
issuance by the SEC or any state securities authority of any stop order
suspending the effectiveness of a Shelf Registration Statement or the
initiation of any proceedings for that purpose, (iv) of the happening of
any event or the discovery of any facts during the period a Shelf Registration Statement
is effective which makes any statement of a material fact made in such Shelf
Registration Statement or the related Prospectus untrue or which requires the
making of any changes in such Shelf Registration Statement or Prospectus in
order to make the statements therein not misleading, (v) of the

 

6

 

receipt
by the Company or Parent of any notification with respect to the suspension of
the qualification of the Registrable Securities for sale in any jurisdiction or
the initiation or threatening of any proceeding for such purpose and (vi) of
any determination by the Company and Parent that a post-effective amendment to
such Shelf Registration Statement would be appropriate;

 

(f)    furnish special counsel for
the Holders of Registrable Securities copies of any comment letters received
from the SEC or any other request by the SEC or any state securities authority
for amendments or supplements to a Shelf Registration Statement and Prospectus
or for additional information;

 

(g)   use their best efforts to
obtain the withdrawal of any order suspending the effectiveness of a Shelf
Registration Statement at the earliest possible moment;

 

(h)   cooperate with the selling
Holders of Registrable Securities to facilitate the timely preparation and
delivery of certificates representing Registrable Securities to be sold and not
bearing any restrictive legends (other than as required by the Company’s
organizational documents or Parent’s certificate of incorporation or bylaws or applicable
law); and enable such Registrable Securities to be in such denominations
(consistent with the provisions of the Indenture) and registered in such names
as the selling Holders or the underwriters, if any, may reasonably request at
least three Business Days prior to the closing of any sale of Registrable
Securities;

 

(i)    upon the occurrence of any
event or the discovery of any facts, each as contemplated by
Sections 3(e)(ii), (iii), (iv), (v) and (vi) hereof, as promptly
as practicable after the occurrence of such an event, use their best efforts to
prepare a supplement or post-effective amendment to the Shelf Registration
Statement or the related Prospectus or any document incorporated therein by
reference or file any other required document so that, as thereafter delivered
to the purchasers of the Registrable Securities, such Prospectus will not
contain at the time of such delivery any untrue statement of a material fact or
omit to state a material fact necessary to make the statements therein, in light
of the circumstances under which they were made, not misleading or will remain
so qualified. The Company and Parent agree promptly to notify each Holder that
has provided the information required by Section 2.1(d) of such
determination and to furnish each Holder such number of copies of the
Prospectus as amended or supplemented, as such Holder may reasonably request;

 

(j)    no less than three Business
Days prior to the filing of any Shelf Registration Statement, any Prospectus,
any amendment to a Shelf Registration Statement or amendment or supplement to a
Prospectus (other than amendments and supplements that do nothing more than
name Holders and provide information with respect thereto), provide copies of
such document to the Initial Purchaser on behalf of such Holders;

 

(k)   provide the Trustee with
printed certificates for the Registrable Securities in a form eligible for
deposit with the Depositary;

 

(l)    (i) cause the Indenture
to be qualified under the 1939 Act in connection with the registration of the
Registrable Securities, (ii) cooperate with the Trustee and the Holders to
effect such changes to the Indenture as may be required for the Indenture to be
so qualified in accordance with the terms of the 1939 Act, and (iii) execute,
and use their best efforts to cause the Trustee to execute, all documents as
may be required to effect such changes, and all other forms and documents
required to be filed with the SEC to enable the Indenture to be so qualified in
a timely manner;

 

(m)  enter into such customary
agreements and take all other customary and appropriate actions in order to
expedite or facilitate the disposition of such Registrable Securities including
but not limited to:

 

(i)    obtain opinions of counsel
to the Company and Parent and updates thereof addressed to each selling Holder
and the underwriters, if any, covering the matters set forth in the opinion of
such counsel delivered on the Closing Date;

 

7

 

(ii)   obtain “comfort” letters and
updates thereof from the Company’s and Parent’s independent certified public
accountants (and, if necessary, any other independent certified public
accountants of any subsidiary of the Company or Parent or of any business
acquired by the Company or Parent for which financial statements are, or are
required to be, included in the Shelf Registration Statement) addressed to the
underwriters, if any, and use their best efforts to have such letter addressed
to the selling Holders of Registrable Securities (to the extent consistent with
Statement on Auditing Standards No. 72 of the American Institute of
Certified Public Accounts), such letters substantially in the form and covering
the matters covered in the comfort letter delivered on the Closing Date; and

 

(iii)  if an underwriting agreement
is entered into, cause the same to set forth indemnification provisions and
procedures substantially equivalent to the indemnification provisions and
procedures set forth in Section 4 hereof with respect to the underwriters
and all other parties to be indemnified pursuant to said Section or, at
the request of any underwriters, in the form customarily provided to such
underwriters in similar types of transactions;

 

(n)   if reasonably requested in
connection with a disposition of Registrable Securities, make available for
inspection during business hours by representatives of the Holders of the
Registrable Securities, any underwriters participating in any disposition
pursuant to a Shelf Registration Statement, and any counsel or accountant retained
by any of the foregoing, all financial and other records, pertinent corporate
documents and properties of the Company and Parent reasonably requested by any
such persons, and cause the respective officers, directors, employees, and any
other agents of the Company and Parent to supply all information reasonably
requested by any such representative, underwriter, special counsel or
accountant in connection with a Shelf Registration Statement, and make such
representatives of the Company and Parent available for discussion of such
documents as shall be reasonably requested by the Initial Purchaser, in each
case as is customary for “due diligence” investigations; providedthat, to the extent the Company
and Parent, in their reasonable discretion, agree to disclose non-public
information, such persons shall first agree in writing with the Company and
Parent that any such non-public information shall be kept confidential by such
persons and shall be used solely for the purposes of exercising rights under
this Agreement and such person shall not engage in trading any securities of
the Company and Parent until such material non-public information becomes
properly publicly available, unless (i) disclosure of such information is
required by court or administrative order or is necessary to respond to
inquiries of regulatory authorities, (ii) disclosure of such information
is required by law (including any disclosure requirements pursuant to federal
securities laws in connection with the filing of any Registration Statement or
the use of any Prospectus referred to in this Agreement), (iii) such
information becomes generally available to the public other than as a result of
a disclosure or failure to safeguard by any such person or (iv) such
information becomes available to any such person from a source other than the
Company or Parent and such source is not bound by a confidentiality agreement,
and provided further, that the
foregoing inspection and information gathering shall, to the greatest extent
possible, be coordinated on behalf of all the Holders and the other parties
entitled thereto by special counsel to the Holders;

 

(o)   a reasonable time prior to
filing the Shelf Registration Statement, any Prospectus forming a part thereof,
any amendment to the Shelf Registration Statement or amendment or supplement to
such Prospectus (other than amendments and supplements that do nothing more
than name Holders and provide information with respect thereto), provide copies
of such document to the Holders of Registrable Securities that have provided
the information required by Section 2.1(d), to the Initial Purchaser, to
special counsel for the Holders and to the underwriter or underwriters of an
underwritten offering of Registrable Securities, if any, make such changes in
any such document prior to the filing thereof as the Initial Purchaser, the
counsel to the Holders or the underwriter or underwriters reasonably request
within three Business Days of delivery of such copies and not file any such
document in a form to which the Majority Holders, the Initial Purchaser on
behalf of the Holders of

 

8

 

Registrable
Securities, counsel for the Holders of Registrable Securities or any
underwriter shall not have previously been advised and furnished a copy of or
to which the Majority Holders, the Initial Purchaser on behalf of the Holders
of Registrable Securities, counsel to the Holders of Registrable Securities or
any underwriter shall reasonably object within three Business Days of delivery
of such copies, and make the representatives of the Company and Parent
available for discussion of such document as shall be reasonably requested by
the Holders of Registrable Securities, the Initial Purchaser on behalf of such
Holders, counsel for the Holders of Registrable Securities or any underwriter;

 

(p)   use their best efforts to
cause all Registrable Securities to be listed on any securities exchange or
inter-dealer quotation system on which similar securities issued by the Company
and Parent are then listed if requested by the Majority Holders, or if
requested by the underwriter or underwriters of an underwritten offering of
Registrable Securities, if any;

 

(q)   otherwise comply with all
applicable rules and regulations of the SEC and make available to its
security holders, as soon as reasonably practicable, an earnings statement
covering at least 12 months which shall satisfy the provisions of Section 11(a) of
the 1933 Act and Rule 158 thereunder; and

 

(r)    cooperate and assist in any
filings required to be made with the NASD and in the performance of any due
diligence investigation by any underwriter and its counsel (including any “qualified
independent underwriter” that is required to be retained in accordance with the
rules and regulations of the NASD).

 

Without limiting Section 2.1(d), the Company and Parent may (as a
condition to such Holder’s participation in the Shelf Registration) require
each Holder of Registrable Securities to furnish to the Company and Parent such
information regarding the Holder and the proposed distribution by such Holder
of such Registrable Securities as the Company and Parent may from time to time
reasonably request in writing.

 

Each Holder agrees that, upon receipt of any notice from the Company
and Parent of the happening of any event or the discovery of any facts, each of
the kind described in Section 3(e)(ii), (iii), (iv), (v) and (vi) hereof,
such Holder will forthwith discontinue disposition of Registrable Securities
pursuant to the Prospectus included in the Shelf Registration Statement until
such Holder’s receipt of the copies of the supplemented or amended Prospectus
contemplated by Section 3(j) hereof or written notice from the
Company and Parent that the Shelf Registration Statement is again effective and
no amendment or supplement is needed, and, if so directed by the Company and
Parent, such Holder will deliver to the Company and Parent (at their expense)
all copies in such Holder’s possession, other than permanent file copies then
in such Holder’s possession, of the Prospectus covering such Registrable
Securities current at the time of receipt of such notice.

 

In the event that a Registration Default has occurred and is
continuing, the Company and Parent shall not file any Registration Statement
with respect to any securities (within the meaning of Section 2(1) of
the 1933 Act) of the Company or Parent other than Registrable Securities.

 

If any of the Registrable Securities covered by any Shelf Registration
Statement are to be sold in an underwritten offering, the underwriter or
underwriters and manager or managers that will manage such offering will be
selected by the Majority Holders of such Registrable Securities included in
such offering and shall be acceptable to the Company and Parent. No Holder of
Registrable Securities may participate in any underwritten registration
hereunder unless such Holder (a) agrees to sell such Holder’s Registrable
Securities on the basis provided in any underwriting arrangements approved by
the persons entitled hereunder to approve such arrangements and (b) completes
and executes all questionnaires, powers of attorney, indemnities, underwriting
agreements and other documents required under the terms of such underwriting
arrangements.

 

9

 

4.             Indemnification;
Contribution.

 

(a)   The Company agrees to
indemnify and hold harmless the Initial Purchaser, each Holder who has provided
information to the Company and Parent in accordance with Section 2.1(d) hereof,
each Person who participates as an underwriter (any such Person being an “Underwriter”) and each Person, if any, who
controls any Holder or Underwriter within the meaning of Section 15 of the
1933 Act or Section 20 of the 1934 Act as follows:

 

(i)    against any and all loss,
liability, claim, damage and expense whatsoever, as incurred, arising out of
any untrue statement or alleged untrue statement of a material fact contained
in any Shelf Registration Statement (or any amendment or supplement thereto)
pursuant to which Registrable Securities were registered under the 1933 Act,
including all documents incorporated therein by reference, or the omission or
alleged omission therefrom of a material fact required to be stated therein or
necessary to make the statements therein not misleading, or arising out of any
untrue statement or alleged untrue statement of a material fact contained in
any Prospectus (or any amendment or supplement thereto) or the omission or
alleged omission therefrom of a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading;

 

(ii)   against any and all loss,
liability, claim, damage and expense whatsoever, as incurred, to the extent of
the aggregate amount paid in settlement of any litigation, or any investigation
or proceeding by any governmental agency or body, commenced or threatened, or
of any claim whatsoever based upon any such untrue statement or omission, or
any such alleged untrue statement or omission; provided
that (subject to Section 4(d) below) any such settlement is effected
with the written consent of the Company and Parent; and

 

(iii)  against any and all
out-of-pocket expense whatsoever, as incurred (including the reasonable fees
and disbursements of counsel chosen by any indemnified party), reasonably
incurred in investigating, preparing or defending against any litigation, or
any investigation or proceeding by any governmental agency or body, commenced
or threatened, or any claim whatsoever based upon any such untrue statement or
omission, or any such alleged untrue statement or omission, to the extent that
any such expense is not paid under subparagraph (i) or (ii) above;

 

provided, however, that this indemnity agreement shall not apply to
any loss, liability, claim, damage or expense to the extent arising out of any
untrue statement or omission or alleged untrue statement or omission made in
reliance upon and in conformity with written information furnished to the
Company or Parent by or on behalf of any Holder or Underwriter expressly for
use in a Shelf Registration Statement (or any amendment thereto) or any
Prospectus (or any amendment or supplement thereto); provided, further,
that this indemnity provision shall not apply to any loss, liability, claim,
damage or expense if the Holder fails to deliver at or prior to the written
confirmation of sale the most recent Prospectus furnished to such Holder by the
Company or Parent and such Prospectus, as amended or supplemented as of the
time of such confirmation of sale, including any amendment or supplement filed
with the SEC that is incorporated by reference in the Prospectus), corrects
such untrue statement or omission or alleged untrue statement or omission of a
material fact and delivery thereof was required by law.

 

(b)   Each Holder who has provided
information to the Company and Parent in accordance with Section 2.1(d) hereof,
severally, but not jointly, agrees to indemnify and hold harmless the Company,
Parent the Initial Purchaser, each Underwriter and the other selling Holders
who have provided information to the Company and Parent in accordance with Section
2.1(d) hereof, and each of their respective directors and officers, and each
Person, if any, who controls the Company, Parent, the Initial Purchaser, any
Underwriter or any other selling Holder within the meaning of Section 15 of the
1933 Act or Section 20 of the 1934 Act, against any and all loss, liability,
claim, damage and expense

 

10

 

described
in the indemnity contained in Section 4(a) hereof, as incurred, but
only with respect to untrue statements or omissions, or alleged untrue
statements or omissions, made in the Shelf Registration Statement (or any
amendment thereto) or any Prospectus included therein (or any amendment or
supplement thereto) in reliance upon and in conformity with written information
with respect to such Holder furnished to the Company and Parent by or on behalf
of such Holder expressly for use in the Shelf Registration Statement (or any
amendment thereto) or such Prospectus (or any amendment or supplement thereto);
provided, however, that no such Holder shall be
liable for any claims hereunder in excess of the amount of net proceeds
received by such Holder from the sale of Registrable Securities pursuant to
such Shelf Registration Statement.

 

(c)   Each indemnified party 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. Counsel to defend such action shall be selected by the
indemnifying party. An indemnified party may participate at its own expense in
the defense of any such action; provided,
however, that counsel to the
indemnified party shall not (except with the consent of the indemnifying party)
also be counsel to the indemnifying party. Except as set forth below, the
indemnifying parties shall not be liable for fees and expenses of more than one
counsel (in addition to any local counsel) separate from their own counsel for
all indemnified parties 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. Notwithstanding the indemnifying party’s
election to appoint counsel to represent an indemnified party in an action, the
indemnified party shall have the right to employ separate counsel (including
local counsel), and the indemnifying party shall bear the reasonable fees, costs
and expenses of such separate counsel if (i) the use of counsel chosen by
the indemnifying party to represent the indemnified party would present such
counsel with a conflict of interest, (ii) the actual or potential
defendants in, or targets of, any such action include both the indemnified
party and the indemnifying party and the indemnified party shall have
reasonably concluded that there may be legal defenses available to other
indemnified parties which are different from or additional to those available
to the indemnifying party, (iii) the indemnifying party shall not have
employed counsel satisfactory to the indemnified party to represent the
indemnified party within a reasonable time after notice of the institution of
such action or (iv) the indemnifying party shall authorize the indemnified
party to employ separate counsel at the expense of the indemnifying party. No
indemnifying party shall, without the prior written consent of the indemnified
parties, settle or compromise or consent to the entry of any judgment with
respect to any litigation, or any investigation or proceeding by any
governmental agency or body, commenced or threatened, or any claim whatsoever
in respect of which indemnification or contribution could be sought under this Section or
Section 8 hereof (whether or not the indemnified parties are actual or
potential parties thereto), unless such settlement, compromise or consent (i) includes
an unconditional release of each indemnified party from all liability arising
out of such litigation, investigation, proceeding or claim and (ii) does
not include a statement as to or an admission of fault, culpability or a
failure to act by or on behalf of any indemnified party.

 

(d)   If the indemnification
provided for in this Section 4 is for any reason unavailable to or
insufficient to hold harmless an indemnified party in respect of any losses,
liabilities, claims, damages or expenses referred to therein, then each
indemnifying party shall contribute to the aggregate amount of such losses, liabilities,
claims, damages and expenses incurred by such indemnified party, as incurred,
in such proportion as is appropriate to reflect the relative fault of the
indemnifying party or parties on one hand and the indemnified party or party on
the other hand in connection with the statements or omissions which resulted in
such losses, liabilities, claims, damages or expenses, as well as any other
relevant equitable considerations.

 

11

 

The relative fault of Company and Parent, on the one hand and the
Holders and the Initial Purchaser on the other hand shall be determined by
reference to, among other things, whether any such untrue or alleged untrue
statement of a material fact or omission or alleged omission to state a
material fact relates to information supplied by the Company and Parent, or by
the Holder or the Initial Purchaser and the parties’ relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission.

 

The Company, Parent, the Holders and the Initial Purchaser agree that
it would not be just and equitable if contribution pursuant to this Section 4
were determined by pro rata allocation or by any other method of allocation
which does not take account of the equitable considerations referred to above
in this Section 4. The aggregate amount of losses, liabilities, claims,
damages and expenses incurred by an indemnified party and referred to above in
this Section 4 shall be deemed to include any out-of-pocket legal or other
expenses reasonably incurred by such indemnified party in investigating,
preparing or defending against any litigation, or any investigation or
proceeding by any governmental agency or body, commenced or threatened, or any
claim whatsoever based upon any such untrue or alleged untrue statement or
omission or alleged omission.

 

Notwithstanding the provisions of this Section 4, the Initial
Purchaser shall not be required to contribute any amount in excess of the
amount by which the total price at which the Securities sold by it were offered
exceeds the amount of any damages which such Initial Purchaser has otherwise
been required to pay by reason of such untrue or alleged untrue statement or
omission or alleged omission.

 

No Person guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the 1933 Act) shall be entitled to contribution from
any Person who was not guilty of such fraudulent misrepresentation.

 

For purposes of this Section 4, each Person, if any, who controls
the Initial Purchaser or a Holder within the meaning of Section 15 of the
1933 Act or Section 20 of the 1934 Act shall have the same rights to
contribution as the Initial Purchaser or such Holder, and each director of
Parent, and each Person, if any, who controls the Company or Parent within the
meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act
shall have the same rights to contribution as the Company and Parent.

 

5.             Miscellaneous.

 

5.1. 
Rule 144 and Rule 144A.  For so long as the Company or Parent is
subject to the reporting requirements of Section 13 or 15(d) of the
1934 Act, the Company and Parent covenant that they will file the reports
required to be filed by them under Section 13(a) or 15(d) of the
1934 Act and the rules and regulations adopted by the SEC thereunder. If
the Company or Parent ceases to be so required to file such reports, the
Company and Parent covenant that they will upon the request of any Holder of
Registrable Securities (a) make publicly available such information as is
necessary to permit sales pursuant to Rule 144 under the 1933 Act, (b) deliver
such information to a prospective purchaser as is necessary to permit sales
pursuant to Rule 144A under the 1933 Act and take such further action as
any Holder of Registrable Securities may reasonably request for such purpose,
and (c) take such further action that is reasonable in the circumstances,
in each case, to the extent required from time to time to enable such Holder to
sell its Registrable Securities without registration under the 1933 Act within
the limitation of the exemptions provided by (i) Rule 144 under the
1933 Act, as such Rule may be amended from time to time, (ii) Rule 144A
under the 1933 Act, as such Rule may be amended from time to time, or (iii) any
similar rules or regulations hereafter adopted by the SEC. Upon the
request of any Holder of Registrable Securities, the Company or Parent, as the
case may be, will deliver to such Holder a written statement as to whether it
has complied with such requirements. Notwithstanding the foregoing, nothing in
this Section 5.1 shall be deemed to require the Company or Parent to
register any of its securities (other than the Common Stock) under the 1934
Act.

 

12

 

5.2. 
No Inconsistent Agreements. 
Neither the Company nor Parent has entered into and neither the Company
nor Parent will after the date of this Agreement enter into any agreement which
is inconsistent with the rights granted to the Holders of Registrable
Securities in this Agreement or otherwise conflicts with the provisions hereof.
The rights granted to the Holders hereunder do not and will not for the term of
this Agreement in any way conflict with the rights granted to the holders of
any of the Company’s or Parent’s other issued and outstanding securities under
any such agreements.

 

5.3. 
Amendments and Waivers. 
The provisions of this Agreement, including the provisions of this
sentence, may not be amended, modified or supplemented, and waivers or consents
to departures from the provisions hereof may not be given unless the Company
and Parent have obtained the written consent of Holders of at least a majority
of the outstanding Registrable Securities (with Holders of Securities deemed to
be the Holders, for purposes of this Section 5.3, of the number of
outstanding shares of Common Stock into which such Registrable Securities are
or could be exchangeable on the date that consent would be required) affected
by such amendment, modification, supplement, waiver or departure.
Notwithstanding the foregoing, this Agreement may be amended by a written
agreement among the Company, Parent and the Initial Purchaser, without the
consent of the Holders of the Registrable Securities, in order to cure any
ambiguity or to correct or supplement any provision contained herein, provided that no such amendment shall
adversely affect the interest of the Holders of Registrable Securities. Each
Holder of Registrable Securities outstanding at the time of any amendment,
modification, waiver or consent pursuant to this Section 5.3, shall be
bound by such amendment, modification, waiver or consent, whether or not any
notice or writing indicating such amendment, modification, waiver or consent is
delivered to such Holder.

 

5.4. 
Notices.  All notices
and other communications provided for or permitted hereunder shall be made in
writing by hand delivery, registered first-class mail, facsimile, or any
courier guaranteeing overnight delivery (a) if to a Holder, at the most
current address given by such Holder to the Company and Parent in a
Questionnaire or by means of a notice given in accordance with the provisions
of this Section 5.4, which address initially is the address set forth in
the Purchase Agreement with respect to the Initial Purchaser; and (b) if
to the Company or Parent, initially at the Company’s address set forth in the Purchase
Agreement, and thereafter at such other address of which notice is given in
accordance with the provisions of this Section 5.4.

 

All such notices and communications shall be deemed to have been duly
given: at the time delivered by hand, if personally delivered; two Business
Days after being deposited in the mail, postage prepaid, if mailed; when
receipt is acknowledged, if sent by facsimile; and on the next Business Day if
timely delivered to an overnight courier.

 

Copies of all such notices, demands, or other communications shall be
concurrently delivered by the person giving the same to the Trustee under the
Indenture, at the address specified in the Indenture.

 

5.5. 
Successor and Assigns. 
This Agreement shall inure to the benefit of and be binding upon the
successors, assigns and transferees of each of the parties, including, without
limitation and without the need for an express assignment, subsequent Holders; provided that nothing herein shall be
deemed to permit any assignment, transfer or other disposition of Registrable
Securities in violation of the terms of the Purchase Agreement or the
Indenture. If any transferee of any Holder shall acquire Registrable
Securities, in any manner, whether by operation of law or otherwise, such
Registrable Securities shall be held subject to all of the terms of this
Agreement, and by taking and holding such Registrable Securities such person
shall be conclusively deemed to have agreed to be bound by and to perform all
of the terms and provisions of this Agreement, including the restrictions on
resale set forth in this Agreement and, if applicable, the Purchase Agreement,
and such person shall be entitled to receive the benefits hereof.

 

13

 

5.6. 
Third Party Beneficiaries. 
The Initial Purchaser (even if the Initial Purchaser is not a Holder of
Registrable Securities) shall be a third party beneficiary to the agreements
made hereunder between the Company and Parent, on the one hand, and the
Holders, on the other hand, and shall have the right to enforce such agreements
directly to the extent they deem such enforcement necessary or advisable to
protect their rights or the rights of Holders hereunder. Each Holder of
Registrable Securities shall be a third party beneficiary to the agreements
made hereunder between the Company and Parent, on the one hand, and the Initial
Purchaser, on the other hand, and shall have the right to enforce such
agreements directly to the extent it deems such enforcement necessary or
advisable to protect its rights hereunder.

 

5.7. 
Specific Enforcement. 
Without limiting the remedies available to the Initial Purchaser and the
Holders, the Company and Parent acknowledges that any failure by the Company
and Parent to comply with its obligations under Section 2.1 hereof may
result in material irreparable injury to the Initial Purchaser or the Holders
for which there is no adequate remedy at law, that it may not be possible to
measure damages for such injuries precisely and that, in the event of any such
failure, the Initial Purchaser or any Holder may seek such relief as may be
required to specifically enforce the Company’s and Parent’s obligations under Section 2.1
hereof.

 

5.8. 
Restriction on Resales. 
Until the expiration of two years after the original issuance of
the Securities, neither Company nor Parent will, and will cause its Affiliates
not to, resell any Securities which are “restricted securities” (as such term
is defined under Rule 144(a)(3) under the 1933 Act) that have been
reacquired by any of them.

 

5.9. 
Counterparts.  This
Agreement may be executed in any number of counterparts and by the parties
hereto in separate counterparts, each of which when so executed shall be deemed
to be an original and all of which taken together shall constitute one and the
same agreement.

 

5.10.  Headings.  The headings in this Agreement are for
convenience of reference only and shall not limit or otherwise affect the
meaning hereof.

 

5.11.  GOVERNING LAW.  THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAW OF THE STATE OF NEW YORK WITHOUT REGARD TO
THE PRINCIPLES OF CONFLICT OF LAWS THEREOF.

 

5.12.  Severability.  In the event that any one or more of the
provisions contained herein, or the application thereof in any circumstance, is
held invalid, illegal or unenforceable, the validity, legality and
enforceability of any such provision in every other respect and of the
remaining provisions contained herein shall not be affected or impaired
thereby.

 

5.13.  Entire Agreement.  This Agreement is intended by the parties as
a final expression of their agreement and intended to be a complete and
exclusive statement of the agreement and understanding of the parties hereto in
respect of the subject matter contained herein. There are no restrictions,
promises, warranties or undertakings, other than those set forth or referred to
herein with respect to the registration rights granted by the Company or Parent
with respect to the Registrable Securities. This Agreement supersedes all prior
agreements and understandings between the parties with respect to such subject
matter.

 

14

 

IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.

 

	
   

  	
  AFFORDABLE
  RESIDENTIAL COMMUNITIES LP

  
	
   

  	
   

  
	
   

  	
  By:
  

  	
  Affordable
  Residential Communities Inc.,

  its general partner

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Scott
  Gesell

  Executive Vice President

  
	
   

  	
   

  
	
   

  	
  AFFORDABLE
  RESIDENTIAL COMMUNITIES INC.

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Scott
  Gesell

  Executive Vice President

  

 

Confirmed
and accepted as

of the date first above written:

 

MERRILL
LYNCH, PIERCE, FENNER & SMITH

INCORPORATED

 

	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  

 

15

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