Exhibit 10.1
EXECUTION
VERSION
NOTE PURCHASE AGREEMENT
by and between
COMSTOCK HOMEBUILDING COMPANIES, INC.
and
KODIAK WAREHOUSE LLC
 
Dated as of May 4, 2006
 

 

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TABLE OF CONTENTS

                      Page
1.
  Definitions. This Purchase Agreement, the Indenture and the Notes are
collectively referred to herein as the “Operative Documents.” All other
capitalized terms used but not defined in this Purchase Agreement shall have the
respective meanings ascribed thereto in the Indenture.     1  
 
           
2
  Purchase and Sale of the Notes.     1  
 
           
3.
  Conditions. The obligations of the parties under this Purchase Agreement are
subject to the following conditions:     2  
 
           
4.
  Representations and Warranties of the Company. The Company represents and
warrants to, and agrees with the Purchaser, as of the date hereof and as of the
Closing Date, as follows:     3  
 
           
5.
  Representations and Warranties of the Purchaser. The Purchaser represents and
warrants to, and agrees with, the Company as follows:     11  
 
           
6.
  Covenants and Agreements of the Company. The Company covenants and agrees with
the Purchaser as follows:     12  
 
           
7.
  Payment of Expenses. The Company agrees to pay all costs and expenses incident
to the performance of the obligations of the Company under this Purchase
Agreement, whether or not the transactions contemplated herein are consummated
or this Purchase Agreement is terminated, including all costs and expenses
incident to (i) the fees and expenses of qualifying the Notes under the
securities laws of the several jurisdictions as provided in Section 6(b),
(iii) the fees and expenses of the counsel, the accountants and any other
experts or advisors retained by the Company, (iv) the fees and all reasonable
expenses of the Trustee and any other trustee or paying agent appointed under
the Operative Documents, including the fees and disbursements of counsel for
such trustees or paying agent, which fees shall not exceed a $2,000 acceptance
fee, $4,000 in administrative fees annually and the fees and expenses of Potter
Anderson & Corroon LLP, (v) the fees and expenses of Winston & Strawn LLP,
special counsel retained by the Purchaser, not to exceed $30,000 and (vi) a due
diligence fee in an amount equal to $12,500 payable as the Purchaser directs.  
  15  
 
           
8.
  Indemnification. (a) The Company agrees to indemnify and hold harmless the
Purchaser, the Purchaser’s Affiliates and Kodiak Capital Management Company LLC
(collectively, the “Indemnified Parties”), each person, if any, who “controls”
any of the Indemnified Parties within the meaning of either the Securities Act
or the Exchange Act, and the Indemnified Parties’ respective directors,
officers, employees and agents, against any and all losses, claims, damages or
liabilities, joint or several, to which the Indemnified Parties or any of them
may become subject under the Securities Act, the Exchange Act or other federal
or state statutory law or regulation, at common law or otherwise, insofar as
such losses, claims, damages or liabilities (or        

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                      Page
 
  actions in respect thereof) arise out of, are based upon or connected with
(i) any untrue statement or alleged untrue statement of a material fact
contained in any information or documents furnished or made available to the
Purchaser by or on behalf of the Company, (ii) the omission or alleged omission
to state therein a material fact required to be stated therein or necessary to
make the statements therein not misleading, (iii) the breach or alleged breach
of any representation, warranty or agreement of the Company contained herein or
(iv) the execution and delivery by the Company of this Purchase Agreement or any
of the other Operative Documents and/or the consummation of the transactions
contemplated hereby and thereby, and agrees to reimburse each such Indemnified
Party, as incurred, for any legal or other expenses reasonably incurred by it in
connection with investigating or defending any such loss, claim, damage,
liability or action. The indemnity agreements contained in this Section 8 are in
addition to any liability which the Company may otherwise have.     15  
 
           
9.
  Termination; Representations and Indemnities to Survive. This Purchase
Agreement shall be subject to termination in the absolute discretion of the
Purchaser, by notice given to the Company prior to delivery of and payment for
the Notes, if prior to such time (i) a downgrading shall have occurred in the
rating accorded the Company’s debt securities by any “nationally recognized
statistical rating organization,” as that term is used by the Commission in
Rule 15c3-l(c)(2)(vi)(F) under the Exchange Act, or such organization shall have
publicly announced that it has under surveillance or review, with possible
negative implications, its rating of the Company’s debt securities, (ii) the
Company shall be unable to sell and deliver to the Purchaser at least Thirty
Million Dollars ($30,000,000) in aggregate principal amount of the Notes,
(iii) a suspension or material limitation in trading in securities generally
shall have occurred on the New York Stock Exchange, (iv) a suspension or
material limitation in trading in any of the Company’s securities shall have
occurred on the exchange or quotation system upon which the Company’ securities
are traded, if any, (v) a general moratorium on commercial business activities
shall have been declared either by federal or Delaware authorities or (vi) there
shall have occurred any outbreak or escalation of hostilities, or declaration by
the United States of a national emergency or war or other calamity or crisis the
effect of which on financial markets is such as to make it, in the Purchaser’s
judgment, impracticable or inadvisable to proceed with the offering or purchase
of the Notes. The respective agreements, representations, warranties,
indemnities and other statements of the Company or its officers or trustees and
of the Purchaser set forth in or made pursuant to this Purchase Agreement will
remain in full force and effect, regardless of any investigation made by or on
behalf of the Purchaser or the Company or any of the their respective officers,
directors or controlling persons, and will survive delivery of and payment for
the Notes. The provisions of Sections 7 and 8 shall survive the termination or
cancellation of this Purchase Agreement.     16  
 
           
10.
  Amendments. This Purchase Agreement may not be modified, amended, altered or
supplemented, except upon the execution and delivery of a written agreement by
each of the parties hereto.     17  

 

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                      Page
11.
  Notices. All communications hereunder shall be in writing and effective only
on receipt, and shall be mailed, delivered by hand or courier or sent by
facsimile and confirmed:     17  
 
           
12.
  Parties in Interest; Successors and Assigns. This Purchase Agreement will
inure to the benefit of and be binding upon the parties hereto and their
respective successors and permitted assigns. Nothing expressed or mentioned in
this Purchase Agreement is intended or shall be construed to give any person
other than the parties hereto and the affiliates, directors, officers,
employees, agents and controlling persons referred to in Section 8 and their
successors, assigns, heirs and legal representatives, any right or obligation
hereunder. None of the rights or obligations of the Company under this Purchase
Agreement may be assigned, whether by operation of law or otherwise, without the
Purchaser’s prior written consent. The rights and obligations of the Purchaser
under this Purchase Agreement may be assigned by the Purchaser without the
Company’s consent; provided, that the assignee assumes the obligations of the
Purchaser under this Purchase Agreement.     18  
 
           
13.
  Applicable Law. This Purchase Agreement will be governed by and construed and
enforced in accordance with the law of the State of New York without reference
to principles of conflicts of law (other than Section 5-1401 of the General
Obligations Law).     18  
 
           
14.
  Submission to Jurisdiction. ANY LEGAL ACTION OR PROCEEDING BY OR AGAINST ANY
PARTY HERETO OR WITH RESPECT TO OR ARISING OUT OF THIS PURCHASE AGREEMENT MAY BE
BROUGHT IN OR REMOVED TO THE COURTS OF THE STATE OF NEW YORK, IN AND FOR THE
COUNTY OF NEW YORK, OR OF THE UNITED STATES OF AMERICA FOR THE SOUTHERN DISTRICT
OF NEW YORK (IN EACH CASE SITTING IN THE BOROUGH OF MANHATTAN). BY EXECUTION AND
DELIVERY OF THIS PURCHASE AGREEMENT, EACH PARTY ACCEPTS, FOR ITSELF AND IN
RESPECT OF ITS PROPERTY, GENERALLY AND UNCONDITIONALLY, THE JURISDICTION OF THE
AFORESAID COURTS (AND COURTS OF APPEALS THEREFROM) FOR LEGAL PROCEEDINGS ARISING
OUT OF OR IN CONNECTION WITH THIS PURCHASE AGREEMENT.     18  
 
           
15.
  Counterparts and Facsimile. This Purchase Agreement may be executed by any one
or more of the parties hereto in any number of counterparts, each of which shall
be deemed to be an original, but all such counterparts shall together constitute
one and the same instrument. This Purchase Agreement may be executed by any one
or more of the parties hereto by facsimile.     19  

SCHEDULES AND EXHIBITS

         
Schedule 4(1)
  —   List of Significant Subsidiaries; Certain Prohibitions Against the Payment
of Distributions, the Repayment of Debt or the Transfer of Assets
 
       
Schedule 4(p)
  —   Legal Proceedings

 

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Schedule 4(u)
  —   Certain Documents Subject to Future Filing as Exhibits to 1934 Act Reports
 
       
Schedule 4(x)
  —   Claims Against Real Property
 
       
Schedule 4(ee)
  —   Environmental Matters
 
       
Exhibit A
  —   Form of Company Counsel’s Opinion Pursuant to Section 3(b)(i)
 
       
Exhibit B
  —   Form of General Counsel Opinion or Officers’ Certificate Pursuant to
Section 3(b)(ii)
 
       
Exhibit C
  —   Form of Tax Counsel Opinion Pursuant to Section 3(c)
 
       
Exhibit D
  —   Form of Trustee Counsel Opinion Pursuant to Section 3(d)
 
       
Exhibit E
  —   Form of Officer’s Financial Certificate Pursuant to Section 6(h)

 

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NOTE PURCHASE AGREEMENT
     This NOTE PURCHASE AGREEMENT, dated as of May 4, 2006 (this “Purchase
Agreement”), is entered into by and between Comstock Homebuilding Companies,
Inc., a Delaware corporation (the “Company”), and Kodiak Warehouse LLC, a
Delaware limited liability company, or its assignee (the “Purchaser”).
W I T N E S S E T H:
     WHEREAS, the Company proposes to issue and sell to the Purchaser Thirty
Million Dollars ($30,000,000) in aggregate principal amount of the Company’s
junior subordinated notes, bearing interest at a fixed rate of 9.72% per annum
through the interest payment date in June, 2011 and thereafter at a variable
rate, reset quarterly, equal to LIBOR (as defined in the Indenture (as defined
below)) plus 4.20% per annum (the “Notes”); and
     WHEREAS, the Notes will be issued pursuant to a Junior Subordinated
Indenture, dated as of the Closing Date (the “Indenture”), between the Company
and Wells Fargo Bank, N.A., as indenture trustee (in such capacity, the
“Trustee”).
     NOW, THEREFORE, in consideration of the foregoing and the mutual agreements
and subject to the terms and conditions herein set forth, the parties hereto
agree as follows:
          1. Definitions. This Purchase Agreement, the Indenture and the Notes
are collectively referred to herein as the “Operative Documents.” All other
capitalized terms used but not defined in this Purchase Agreement shall have the
respective meanings ascribed thereto in the Indenture.
          2. Purchase and Sale of the Notes.
          (a) The Company agrees to sell to the Purchaser, and the Purchaser
agrees to purchase from the Company, Thirty Million Dollars ($30,000,000) in
aggregate principal amount of the Notes for an amount (the “Purchase Price”)
equal to Thirty Million Dollars ($30,000,000). The Purchaser shall be
responsible for the rating agency costs and expenses.
          (b) Delivery or transfer of, and payment for, the Notes shall be made
at 10:00 A.M. Chicago time (11:00 A.M. New York City time), on May 4, 2006 or
such later date (not later than June 4, 2006) as the parties may designate (such
date and time of delivery and payment for the Notes being herein called the
“Closing Date”). The Notes shall be transferred and delivered to the Purchaser
against the payment of the Purchase Price to the Company made by wire transfer
in immediately available funds on the Closing Date to a U.S. account designated
in writing by the Company at least two Business Days prior to the Closing Date.
          (c) Delivery of the Notes shall be made at such location, and in such
names and denominations, as the Purchaser shall designate at least two Business
Days in advance of the Closing Date. The Company agrees to have the Notes
available for inspection and checking by the Purchaser in Chicago, Illinois, not
later than 1:00 P.M., Chicago time (2:00 P.M. New York City time), on the
Business Day prior to the Closing Date. The closing for the purchase and sale

 

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of the Notes (the “Closing”) shall occur at the offices of Winston & Strawn LLP,
35 West Wacker Drive, Chicago, Illinois 60601, or such other place as the
parties hereto shall agree.
          3. Conditions. The obligations of the parties under this Purchase
Agreement are subject to the following conditions:
          (a) The representations and warranties contained herein shall be
accurate as of the date of delivery of the Notes.
          (b) (i) Greenberg Traurig LLP, counsel for the Company (the “Company
Counsel”), shall have delivered an opinion, dated the Closing Date, addressed to
the Purchaser, its successors and assigns and the Trustee, in substantially the
form set out in Exhibit A hereto and (ii) the Company shall have furnished to
the Purchaser the opinion of the Company’s General Counsel or a certificate
signed by the Company’s Chief Executive Officer, President or an Executive Vice
President and the Company’s Chief Financial Officer, Treasurer or Assistant
Treasurer, dated the Closing Date, addressed to the Purchaser, in substantially
the form set out in Exhibit B hereto. In rendering their opinion, the Company
Counsel may rely as to factual matters upon certificates or other documents
furnished by officers and directors of the Company and by government officials
(provided, however, that copies of any such certificates or documents are
delivered to the Purchaser) and by and upon such other documents as such counsel
may, in their reasonable opinion, deem appropriate as a basis for the Company
Counsel’s opinion. The Company Counsel may specify the jurisdictions in which
they are admitted to practice and that they are not admitted to practice in any
other jurisdiction and are not experts in the law of any other jurisdiction.
Such Company Counsel opinions shall not state that they are to be governed or
qualified by, or that they are otherwise subject to, any treatise, written
policy or other document relating to legal opinions, including, without
limitation, the Legal Opinion Accord of the ABA Section of Business Law (1991).
          (c) The Purchaser shall have been furnished the opinion of Winston &
Strawn LLP, special tax counsel for the Purchaser, dated the Closing Date,
addressed to the Purchaser and the Trustee, addressing the matters set out in
Exhibit C hereto (subject to customary assumptions and qualifications).
          (d) The Purchaser shall have received the opinion of Potter Anderson &
Corroon LLP, special counsel for the Trustee, dated the Closing Date, addressed
to the Purchaser and its successors and assigns, in substantially the form set
out in Exhibit D hereto.
          (e) The Company shall have furnished to the Purchaser a certificate of
the Company, signed by the Chief Executive Officer, President or an Executive
Vice President, and Chief Financial Officer or Treasurer of the Company, dated
the Closing Date, as to clauses (i) and (ii) below:
          (i) the representations and warranties of the Company in this Purchase
Agreement are true and correct on and as of the Closing Date with the same
effect as if made on the Closing Date, and the Company has complied with all the
agreements and satisfied all the conditions on its part to be performed or
satisfied at or prior to the Closing Date; and

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          (ii) since the date of the Financial Statements (as defined in
Section 4(r)), there has been no occurrence that has or would prospectively
result in a material adverse change in or had or would prospectively result in a
material adverse effect on the condition (financial or otherwise), earnings,
business, liabilities or assets of the Company and its subsidiaries, whether or
not arising from transactions occurring in the ordinary course of business (a
“Material Adverse Effect”).
          (f) Subsequent to the execution of this Purchase Agreement, there
shall not have been any change in or affecting the condition (financial or
otherwise), earnings, business, liabilities or assets of the Company and its
subsidiaries, whether or not occurring in the ordinary course of business, the
effect of which is, in the Purchaser’s judgment, so material and adverse as to
make it impractical or inadvisable to proceed with the purchase of the Notes.
          (g) The purchase of and payment for the Notes as described in this
Purchase Agreement shall (a) not be prohibited by any applicable law or
governmental regulation, (b) not subject the Purchaser to any penalty or, in the
reasonable judgment of the Purchaser, other onerous conditions under or pursuant
to any applicable law or governmental regulation and (c) be permitted by the
laws and regulations of the jurisdictions to which the Purchaser is subject.
          (h) The Company shall have received all consents, permits and other
authorizations, and made all such filings and declarations, as may be required
on or before the Closing Date from any person or entity pursuant to any law,
statute, regulation or rule (federal, state, local and foreign), or pursuant to
any agreement, order or decree to which the Company is a party or to which it is
subject, in connection with the transactions contemplated by this Purchase
Agreement.
          (i) Prior to the Closing Date, the Company shall have furnished to the
Purchaser and its counsel such further information, certificates and documents
as the Purchaser or its counsel may reasonably request.
          If any of the conditions specified in this Section 3 shall not have
been fulfilled when and as required by this Purchase Agreement, or if any of the
opinions, certificates and documents mentioned above or elsewhere in this
Purchase Agreement shall not be reasonably satisfactory in form and substance to
the Purchaser or its counsel, this Purchase Agreement and all the Purchaser’s
obligations hereunder may be canceled at, or at any time prior to, the Closing
Date by the Purchaser. Notice of such cancellation shall be given to the Company
in writing or by telephone or facsimile confirmed in writing.
          Each certificate signed by any officer of the Company and delivered to
the Purchaser or the Purchaser’s counsel in connection with the Operative
Documents and the transactions contemplated hereby and thereby shall be deemed
to be a representation and warranty of the Company and not by such officer in
any individual capacity.
          4. Representations and Warranties of the Company. The Company
represents and warrants to, and agrees with the Purchaser, as of the date hereof
and as of the Closing Date, as follows:

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          (a) Neither the Company nor any of its “Affiliates” (as defined in
Rule 501(b) of Regulation D (“Regulation D”) under the Securities Act (as
defined below)), nor any person acting on its or their behalf, has, directly or
indirectly, made offers or sales of any security, or solicited offers to buy any
security, under circumstances that would require the registration of any of the
Notes under the Securities Act of 1933, as amended (the “Securities Act”).
          (b) Neither the Company nor any of its Affiliates, nor any person
acting on its or their behalf, has (i) offered for sale or solicited offers to
purchase the Notes or (ii) engaged in any form of “general solicitation” or
“general advertising” (within the meaning of Regulation D) in connection with
any offer or sale of any of the Notes.
          (c) The Notes (i) are not and have not been listed on a national
securities exchange registered under Section 6 of the Securities Exchange Act of
1934, as amended (the “Exchange Act”), or quoted on a U.S. automated
inter-dealer quotation system and (ii) are not of an open-end investment
company, unit investment trust or face-amount certificate company that is, or is
required to be, registered under Section 8 of the Investment Company Act of
1940, as amended (the “Investment Company Act”), and the Notes otherwise satisfy
the eligibility requirements of Rule 144A(d)(3) promulgated pursuant to the
Securities Act (“Rule 144A(d)(3)”).
          (d) Neither the Company nor any of its Affiliates, nor any person
acting on its or their behalf, has engaged, or will engage, in any “directed
selling efforts” within the meaning of Regulation S under the Securities Act
with respect to the Notes.
          (e) The Company is not, and, immediately following consummation of the
transactions contemplated hereby and the other Operative Documents and the
application of the net proceeds therefrom, will not be, an “investment company”
or an entity “controlled” by an “investment company,” in each case within the
meaning of Section 3(a) of the Investment Company Act.
          (f) The Company has not paid or agreed to pay to any person or entity,
directly or indirectly, any fees or other compensation for soliciting another to
purchase any of the Notes, except for the fee the Company has agreed to pay to
TBC Securities, LLC pursuant to the letter agreement between the Company and TBC
Securities, LLC, dated March 31, 2006.
          (g) The Indenture has been duly authorized by the Company and, on the
Closing Date, will have been duly executed and delivered by the Company and,
assuming due authorization, execution and delivery thereof by the Trustee, will
be a legal, valid and binding obligation of the Company, enforceable against the
Company in accordance with its terms, subject to applicable bankruptcy,
insolvency and similar laws affecting creditors’ rights generally and to general
principles of equity (the “Enforceability Exceptions”).
          (h) The Notes have been duly authorized by the Company and, on the
Closing Date, will have been duly executed and delivered to the Trustee for
authentication in accordance with the Indenture and, when authenticated in the
manner provided for in the Indenture and delivered to the Purchaser against
payment therefor in accordance with this Purchase Agreement, will constitute
legal, valid and binding obligations of the Company entitled to the benefits of
the

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Indenture, enforceable against the Company in accordance with their terms,
subject to the Enforceability Exceptions.
          (i) This Purchase Agreement has been duly authorized, executed and
delivered by the Company and is a legal, valid and binding obligation of the
Company, enforceable against the Company in accordance with its terms, subject
to the Enforceability Exceptions and the effect of any applicable public policy
against the enforcement of the indemnification provisions of this Purchase
Agreement set forth in Section 8.
          (j) Neither the issue and sale of the Notes, nor the execution and
delivery of and compliance with the Operative Documents by the Company, nor the
consummation of the transactions contemplated hereby or thereby, or the use of
the proceeds therefrom, (i) will conflict with or constitute a violation or
breach of the charter or bylaws or similar organizational documents of the
Company or any subsidiary of the Company or any applicable law, statute, rule,
regulation, judgment, order, writ or decree of any government, governmental
authority, agency or instrumentality or court, domestic or foreign
(collectively, the “Governmental Entities”), or of any arbitrator, in each case
having jurisdiction over the Company or any of its subsidiaries or their
respective properties or assets, (ii) will conflict with or constitute a
violation or breach of, or a default or Repayment Event (as defined below)
under, or result in the creation or imposition of any pledge, security interest,
claim, lien or other encumbrance of any kind (each, a “Lien”) upon any property
or assets of the Company or any of its subsidiaries pursuant to, any contract,
indenture, mortgage, loan agreement, note, lease or other agreement or
instrument to which (A) the Company or any of its subsidiaries is a party or by
which it or any of them may be bound, or (B) any of the property or assets of
the Company or any of its subsidiaries is subject, except, in the case of this
clause (ii), for such conflicts, violations, breaches, defaults, Repayment
Events or Liens which (X) would not, singly or in the aggregate, adversely
affect the consummation of the transactions contemplated by the Operative
Documents and (Y) would not, singly or in the aggregate, have a Material Adverse
Effect or (iii) require the consent, approval, authorization or order of any
court or Governmental Entity. As used herein, a “Repayment Event” means any
event or condition which gives the holder of any note, debenture or other
evidence of indebtedness (or any person acting on such holder’s behalf) the
right to require the repurchase, redemption or repayment of all or a portion of
such indebtedness by the Company or any of its subsidiaries prior to its
scheduled maturity.
          (k) The Company has been duly incorporated and is validly existing as
a corporation in good standing under the laws Delaware, with all requisite
corporate power and authority to own, lease and operate its properties and
conduct the business it transacts and proposes to transact, and is duly
qualified to transact business and is in good standing as a foreign corporation
in each jurisdiction where the nature of its activities requires such
qualification, except where the failure of the Company to be so qualified would
not, singly or in the aggregate, have a Material Adverse Effect.
          (1) The Company has no subsidiaries that are material to its business,
financial condition or earnings other than those subsidiaries listed in
Schedule 4(1) hereto (collectively, the “Significant Subsidiaries”). Each
Significant Subsidiary has been duly organized and is validly existing as a
corporation, limited liability company, limited partnership or statutory trust
in good standing under the laws of the jurisdiction in which it is chartered,

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organized or formed, with all requisite power and authority to own, lease and
operate its properties and conduct the business it transacts and proposes to
transact. Each Significant Subsidiary is duly qualified to transact business and
is in good standing as a foreign corporation, limited liability company, limited
partnership or statutory trust in each jurisdiction where the nature of its
activities requires such qualification, except where the failure to be so
qualified would not, singly or in the aggregate, have a Material Adverse Effect.
Except as set forth on Schedule 4(1) hereto, no subsidiary of the Company is
currently prohibited, directly or indirectly, under any agreement or other
instrument to which it is a party or is subject, from paying any dividends to
the Company, from making any other distribution on such subsidiary’s capital
stock or other Equity Interests, from repaying to the Company any loans or
advances to such subsidiary from the Company or from transferring any of such
subsidiary’s properties or assets to the Company or any other subsidiary of the
Company.
          (m) The Company and each of the Company’s subsidiaries hold all
necessary approvals, authorizations, orders, licenses, consents, registrations,
qualifications, certificates and permits (collectively, the “Governmental
Licenses”) of and from Governmental Entities necessary to conduct their
respective businesses as now being conducted, and neither the Company nor any of
the Company’s subsidiaries has received any notice of proceedings relating to
the revocation or modification of any such Government License, except where the
failure to be so licensed or approved or the receipt of an unfavorable decision,
ruling or finding, would not, singly or in the aggregate, have a Material
Adverse Effect; all of the Governmental Licenses are valid and in full force and
effect, except where the invalidity or the failure of such Governmental Licenses
to be in full force and effect, would not, singly or in the aggregate, have a
Material Adverse Effect; and the Company and its subsidiaries are in compliance
with all applicable laws, rules, regulations, judgments, orders, decrees and
consents, except where the failure to be in compliance would not, singly or in
the aggregate, have a Material Adverse Effect.
          (n) All of the issued and outstanding Equity Interests of the Company
and each of its subsidiaries are validly issued, fully paid and nonassessable;
all of the issued and outstanding Equity Interests of each subsidiary of the
Company is owned by the Company, directly or through subsidiaries, free and
clear of any Lien, claim or equitable right; and none of the issued and
outstanding Equity Interests of the Company or any subsidiary of the Company was
issued in violation of any preemptive or similar rights arising by operation of
law, under the charter, by-laws, certificate of formation, limited liability
company agreement, certificate of limited partnership, agreement of limited
partnership or similar organizational document of such entity or under any
agreement to which the Company or any of its subsidiaries is a party.
          (o) Neither the Company nor any of its subsidiaries is (i) in
violation of its respective charter, by-laws, certificate of formation, limited
liability company agreement, certificate of limited partnership, agreement of
limited partnership or similar organizational document or (ii) in default in the
performance or observance of any obligation, agreement, covenant or condition
contained in any contract, indenture, mortgage, loan agreement, note, lease or
other agreement or instrument to which the Company or any such subsidiary is a
party or by which it or any of them may be bound or to which any of the property
or assets of any of them is subject, except, in the case of clause (ii), where
such violation or default would not, singly or in the aggregate, have a Material
Adverse Effect.

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          (p) Except as set forth on Schedule 4(p) hereto, there is no action,
suit or proceeding before or by any Governmental Entity or arbitrator, now
pending or, to the knowledge of the Company, threatened against or affecting the
Company or any of the Company’s subsidiaries, except for such actions, suits or
proceedings that, if adversely determined, would not, singly or in the
aggregate, adversely affect the consummation of the transactions contemplated by
the Operative Documents or have a Material Adverse Effect; and the aggregate of
all pending legal or governmental proceedings to which the Company or any of its
subsidiaries is a party or of which any of their respective properties or assets
is subject, including ordinary routine litigation incidental to the Company’s
and its subsidiaries’ business, are not expected to result in a Material Adverse
Effect.
          (q) The accountants of the Company who certified the Financial
Statements are independent public accountants of the Company and its
subsidiaries within the meaning of the Securities Act, and the rules and
regulations of the Securities and Exchange Commission (the “Commission”)
thereunder.
          (r) The audited consolidated financial statements (including the notes
thereto) and schedules of the Company and its consolidated subsidiaries for the
three (3) fiscal years ended December 31, 2005 (the “Financial Statements”)
provided to the Purchaser are the most recent available audited and unaudited
consolidated financial statements of the Company and its consolidated
subsidiaries, respectively, and fairly present in all material respects, in
accordance with U.S. generally accepted accounting principles (“GAAP’’), the
financial position of the Company and its consolidated subsidiaries, and the
results of operations and changes in financial condition as of the dates and for
the periods therein specified. Such consolidated financial statements and
schedules have been prepared in accordance with GAAP consistently applied
throughout the periods involved (except as otherwise noted therein).
          (s) Neither the Company nor any of its subsidiaries has any material
liability, whether known or unknown, whether asserted or unasserted, whether
absolute or contingent, whether accrued or unaccrued, whether liquidated or
unliquidated, and whether due or to become due, including any liability for
taxes (and there is no past or present fact, situation, circumstance, condition
or other basis for any present or future action, suit, proceeding, hearing,
charge, complaint, claim or demand against the Company or its subsidiaries that
could give rise to any such liability), except for (i) liabilities set forth in
the Financial Statements and (ii) normal fluctuations in the amount of the
liabilities referred to in clause (i) above occurring in the ordinary course of
business of the Company and its subsidiaries since the date of the most recent
balance sheet included in such Financial Statements.
          (t) Since the date of the Financial Statements, there has not been
(A) any Material Adverse Effect or (B) any dividend or distribution of any kind
declared, paid or made by the Company on any class of its capital stock.
          (u) The documents of the Company filed with the Commission in
accordance with the Exchange Act, from and including the commencement of the
fiscal year covered by the Company’s most recent Annual Report on Form 10-K, at
the time they were or hereafter are filed by the Company with the Commission
(collectively, the “1934 Act Reports”), complied and will comply in all material
respects with the requirements of the Exchange Act and the rules and

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regulations of the Commission thereunder (the “1934 Act Regulations”), and, at
the date of this Purchase Agreement and on the Closing Date, do not and will not
include 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, in
the light of the circumstances under which they were made, not misleading; and
other than such instruments, agreements, contracts and other documents as are
filed as exhibits to the Company’s Annual Report on Form 10-K, Quarterly Reports
on Form 10-Q or Current Reports on Form 8-K, there are no instruments,
agreements, contracts or other documents of a character described in Item 601 of
Regulation S-K promulgated by the Commission to which the Company or any of its
subsidiaries is a party, and which the Company is required to file, other than
such as are permitted to be filed with the Company’s next periodic report under
the 1934 Act Regulations, and set forth on Schedule 4(u) attached hereto. The
Company is in compliance with all currently applicable requirements of the
Exchange Act and the currently applicable rules and regulations promulgated
thereunder that were added by or resulted from the Sarbanes-Oxley Act of 2002.
          (v) No labor dispute with the employees of the Company or any of its
subsidiaries exists or, to the knowledge of the executive officers of the
Company, is imminent, except those which would not, singly or in the aggregate,
have a Material Adverse Effect.
          (w) No filing with, or authorization, approval, consent, license,
order, registration, qualification or decree of, any Governmental Entity, other
than those that have been made or obtained, is necessary or required for the
performance by the Company of its obligations under the Operative Documents or
the consummation by the Company of the transactions contemplated by the
Operative Documents.
          (x) Except as set forth on Schedule 4(x), the Company and each
Significant Subsidiary have (a) good and marketable title in fee simple to all
real property owned by them, (b) good and marketable title to all real
property-related interests owned by them and (c) good and marketable title to
all personal property owned by them, in each case free and clear of all Liens
and defects, except such as do not materially affect the value of such property
and do not interfere with the use made and proposed to be made by the Company
and the Significant Subsidiaries; and all of the leases and subleases under
which the Company or any subsidiary of the Company holds properties are in full
force and effect, except where the failure of such leases and subleases to be in
full force and effect would not, singly or in the aggregate, have a Material
Adverse Effect, and none of the Company or any subsidiary of the Company has any
notice of any claim of any sort that has been asserted by anyone adverse to the
rights of the Company or any subsidiary of the Company under any such leases or
subleases, or affecting or questioning the rights of such entity to the
continued possession of the leased or subleased premises under any such lease or
sublease, except for such claims that would not, singly or in the aggregate,
have a Material Adverse Effect.
          (y) The Company and each of the Significant Subsidiaries have timely
and duly filed all Tax Returns (as defined below) required to be filed by them,
and all such Tax Returns are true, correct and complete in all material
respects. The Company and each of the Significant Subsidiaries have timely and
duly paid in full all material Taxes required to be paid by them (whether or not
such amounts are shown as due on any Tax Return). To the knowledge of the
Company, there are no federal, state or other Tax audits or deficiency
assessments

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proposed or pending with respect to the Company or any of the Significant
Subsidiaries. As used herein, the terms “Tax” or “Taxes” mean (i) all federal,
state, local and foreign taxes, and other assessments of a similar nature
(whether imposed directly or through withholding), including any interest,
additions to tax or penalties applicable thereto imposed by any Governmental
Entity, and (ii) all liabilities in respect of such amounts arising as a result
of being a member of any affiliated, consolidated, combined, unitary or similar
group, as a successor to another person or by contract. As used herein, the term
“Tax Returns” means all federal, state, local and foreign Tax returns,
declarations, statements, reports, schedules, forms and information returns and
any amendments thereto filed or required to be filed with any Governmental
Entity.
          (z) Interest payable by the Company on the Notes is deductible by the
Company for United States federal income tax purposes. There are no rulemaking
or similar proceedings before the United States Internal Revenue Service or
comparable federal, state, local or foreign government bodies which involve or
affect the Company or any of its subsidiaries, which, if the subject of an
action unfavorable to the Company or any such subsidiary, could result in a
Material Adverse Effect.
          (aa) The books, records and accounts of the Company and its
subsidiaries accurately and fairly reflect, in reasonable detail, the
transactions in, and dispositions of, the assets of, and the results of
operations of, the Company and its subsidiaries. The Company and each of its
subsidiaries maintains a system of internal accounting controls sufficient to
provide reasonable assurances that (i) transactions are executed in accordance
with management’s general or specific authorizations, (ii) transactions are
recorded as necessary to permit preparation of financial statements in
accordance with GAAP and to maintain asset accountability, (iii) access to
assets is permitted only in accordance with management’s general or specific
authorization and (iv) the recorded accountability for assets is compared with
the existing assets at reasonable intervals and appropriate action is taken with
respect to any differences.
          (bb) The Company and the Significant Subsidiaries are insured by
insurers of recognized financial responsibility against such losses and risks
and in such amounts in all material respects as are customary in the businesses
in which they are engaged. All policies of insurance and fidelity or surety
bonds insuring the Company or any of the Significant Subsidiaries or the
Company’s or Significant Subsidiaries’ respective businesses, assets, employees,
officers and directors are in full force and effect. The Company and each of the
subsidiaries are in compliance with the terms of such policies and instruments
in all material respects. Neither the Company nor any Significant Subsidiary has
reason to believe that it will not be able to renew its existing insurance
coverage in all material respects as and when such coverage expires or to obtain
similar coverage from similar insurers as may be necessary to continue its
business at a cost that would not have a Material Adverse Effect. Within the
past twelve months, neither the Company nor any Significant Subsidiary has been
denied any insurance coverage which it has sought or for which it has applied.
          (cc) The Company and its subsidiaries or any person acting on behalf
of the Company and its subsidiaries including, without limitation, any director,
officer, agent or employee of the Company or its subsidiaries has not, directly
or indirectly, while acting on behalf of the Company and its subsidiaries
(i) used any corporate funds for unlawful contributions, gifts, entertainment or
other unlawful expenses relating to political activity, (ii)

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made any unlawful payment to foreign or domestic government officials or
employees or to foreign or domestic political parties or campaigns from
corporate funds, (iii) violated any provision of the Foreign Corrupt Practices
Act of 1977, as amended, or (iv) made any other unlawful payment.
          (dd) The information provided by the Company pursuant to this Purchase
Agreement, the other Operative Documents and the transactions contemplated
hereby and thereby does not, as of the date hereof, and will not as of the
Closing Date, contain any untrue statement of a material fact or omit to state
any material fact necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
          (ee) Except as set forth on Schedule 4(ee) hereto, (i) the Company and
its subsidiaries have been and are in material compliance with applicable
Environmental Laws (as defined below), (ii) none of the Company, any of its
subsidiaries or, to the best of the Company’s knowledge, any other owners of any
of the real properties currently or previously owned, leased or operated by the
Company or any of its subsidiaries (collectively, the “Properties”) at any time
or any other party, has at any time “released” (as such term is defined in
CERCLA (as defined below)) or otherwise disposed of a material quantity of
Hazardous Materials (as defined below) on, to, in, under or from the Properties,
(iii) neither the Company nor any of its subsidiaries has used or intends to use
the Properties or any subsequently acquired properties, other than in material
compliance with applicable Environmental Laws, (iv) neither the Company nor any
of its subsidiaries has received any notice of, or has any knowledge of any
occurrence or circumstance which, with notice or passage of time or both, would
give rise to a material claim under or pursuant to any Environmental Law with
respect to the Properties or their respective assets or arising out of the
conduct of the Company or its subsidiaries, (v) none of the Properties are
included or, to the best of the Company’s knowledge, proposed for inclusion on
the National Priorities List issued pursuant to CERCLA by the United States
Environmental Protection Agency or, to the best of the Company’s knowledge,
proposed for inclusion on any similar list or inventory issued pursuant to any
other Environmental Law or issued by any other Governmental Entity, (vi) none of
the Company, any of its subsidiaries or agents or, to the best of the Company’s
knowledge, any other person or entity for whose conduct any of them is or may be
held responsible, has generated, manufactured, refined, transported, treated,
stored, handled, disposed, transferred, produced or processed any Hazardous
Material at any of the Properties, except in material compliance with all
applicable Environmental Laws, and has not transported or arranged for the
transport of any Hazardous Material from the Properties to another property,
except in material compliance with all applicable Environmental Laws, (vii) no
lien has been imposed on the Properties by any Governmental Entity in connection
with the presence on or off such Property of any Hazardous Material or with
respect to an Environmental Law, and (viii) none of the Company, any of its
subsidiaries or, to the best of the Company’s knowledge, any other person or
entity for whose conduct any of them is or may be held responsible, has entered
into or been subject to any consent decree, compliance order, or administrative
order with respect to material liabilities or violations at the Properties or
any facilities or improvements or any operations or activities thereon.
          As used herein, “Hazardous Material” shall include, without
limitation, any flammable materials, explosives, radioactive materials,
hazardous materials, hazardous substances, hazardous wastes, toxic substances or
related materials, asbestos, petroleum,

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petroleum products and any hazardous material as defined by any federal, state
or local environmental law, statute, ordinance, rule or regulation, including,
without limitation, the Comprehensive Environmental Response, Compensation, and
Liability Act of 1980, as amended, 42 U.S.C. §§ 9601-9675 (“CERCLA”), the
Hazardous Materials Transportation Act, as amended, 49 U.S.C. §§ 5101-5127, the
Resource Conservation and Recovery Act, as amended, 42 U.S.C. §§ 6901-6992k, the
Emergency Planning and Community Right-to-Know Act of 1986, as amended, 42
U.S.C. §§ 11001-11050, the Toxic Substances Control Act, as amended, 15 U.S.C.
§§ 2601-2692, the Federal Insecticide, Fungicide and Rodenticide Act, as
amended, 7 U.S.C. §§ 136-136y, the Clean Air Act, as amended, 42 U.S.C. §§
7401-7642, the Clean Water Act, as amended (Federal Water Pollution Control
Act), 33 U.S.C. §§ 1251-1387, the Safe Drinking Water Act, as amended, 42 U.S.C.
§§ 300f-300j-26, and the Occupational Safety and Health Act, as amended, 29
U.S.C. §§ 651-678, and any analogous state laws, as any of the above may be
amended from time to time and in the regulations promulgated pursuant to each of
the foregoing (including environmental statutes and laws not specifically
defined herein) (individually, an “Environmental Law” and collectively, the
“Environmental Laws”) or by any Governmental Entity.
          (ff) In the ordinary course of its business, the Company periodically
reviews the effect of Environmental Laws on the business, operations and
properties of the Company and its subsidiaries, and periodically identifies and
evaluates associated costs and liabilities (including, without limitation, any
capital or operating expenditures required for clean-up, closure of properties
or compliance with Environmental Laws or any permit, license or approval, any
related constraints on operating activities and any potential liabilities to
third parties). On the basis of such reviews and the amount of its established
reserves, the Company has reasonably concluded that such associated costs and
liabilities would not, individually or in the aggregate, result in a Material
Adverse Effect.
          5. Representations and Warranties of the Purchaser. The Purchaser
represents and warrants to, and agrees with, the Company as follows:
          (a) The Purchaser is aware that the Notes have not been and will not
be registered under the Securities Act and may not be offered or sold within the
United States or to “U.S. persons” (as defined in Regulation S under the
Securities Act) except in accordance with Rule 903 of Regulation S under the
Securities Act or pursuant to an exemption from the registration requirements of
the Securities Act.
          (b) The Purchaser is an “accredited investor,” as such term is defined
in Rule 501 (a) of Regulation D under the Securities Act.
          (c) Neither the Purchaser, nor any of the Purchaser’s Affiliates, nor
any person acting on the Purchaser’s or the Purchaser’s Affiliate’s behalf has
engaged, or will engage, in any form of “general solicitation” or “general
advertising” (within the meaning of Regulation D promulgated under the
Securities Act) in connection with any offer or sale of the Notes.
          (d) The Purchaser understands and acknowledges that (i) no public
market exists for any of the Notes and that it is unlikely that a public market
will ever exist for the Notes, (ii) the Purchaser is purchasing the Notes for
its own account, for investment and not with

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a view to, or for offer or sale in connection with, any distribution thereof in
violation of the Securities Act or other applicable securities laws, subject to
any requirement of law that the disposition of its property be at all times
within its control and subject to its ability to resell such Notes pursuant to
an effective registration statement under the Securities Act or pursuant to an
exemption therefrom or in a transaction not subject thereto, and the Purchaser
agrees to the legends and transfer restrictions applicable to the Notes
contained in the Indenture, and (iii) the Purchaser has had the opportunity to
ask questions of, and receive answers and request additional information from,
the Company and is aware that it may be required to bear the economic risk of an
investment in the Notes.
          (e) The Purchaser is a limited liability company duly formed, validly
existing and in good standing under the laws of the State of Delaware with all
requisite limited liability company power and authority to execute, deliver and
perform the Operative Documents to which it is a party, to make the
representations and warranties specified herein and therein and to consummate
the transactions contemplated herein.
          (f) This Purchase Agreement has been duly authorized, executed and
delivered by the Purchaser and no filing with, or authorization, approval,
consent, license, order, registration, qualification or decree of, any
governmental body, agency or court having jurisdiction over the Purchaser, other
than those that have been made or obtained, is necessary or required for the
performance by the Purchaser of its obligations under this Purchase Agreement or
to consummate the transactions contemplated herein.
          6. Covenants and Agreements of the Company. The Company covenants and
agrees with the Purchaser as follows:
          (a) During the period from the date of this Purchase Agreement to the
Closing Date, the Company shall use its best efforts and take all action
necessary or appropriate to cause its representations and warranties contained
in Section 4 to be true as of the Closing Date, after giving effect to the
transactions contemplated by this Purchase Agreement, as if made on and as of
the Closing Date.
          (b) The Company will arrange for the qualification of the Notes for
sale under the laws of such jurisdictions as the Purchaser may designate and
will maintain such qualifications in effect so long as required for the sale of
the Notes. The Company will promptly advise the Purchaser of the receipt by the
Company of any notification with respect to the suspension of the qualification
of the Notes for sale in any jurisdiction or the initiation or threatening of
any proceeding for such purpose.
          (c) The Company will not, nor will it permit any of its Affiliates to,
nor will the Company permit any person acting on its behalf (other than the
Purchaser and its Affiliates) to, directly or indirectly, resell any Notes that
have been acquired by any of them.
          (d) The Company will not, nor will it permit any of its Affiliates or
any person acting on its behalf (other than the Purchaser and its Affiliates)
to, engage in any “directed selling efforts” within the meaning of Regulation S
under the Securities Act with respect to the Notes.

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          (e) The Company will not, nor will it permit any of its Affiliates or
any person acting on its behalf to, directly or indirectly, (i) sell, offer for
sale or solicit offers to buy or otherwise negotiate in respect of any security
(as defined in the Securities Act) that would or could be integrated with the
sale of the Notes in any manner that would require the registration of the Notes
under the Securities Act or (ii) make offers or sales of any security, or
solicit offers to buy any security, under circumstances that would require the
registration of any of the Notes under the Securities Act.
          (f) The Company will not, nor will it permit any of its Affiliates or
any person acting on its behalf (other than the Purchaser and its Affiliates)
to, engage in any form of “general solicitation” or “general advertising”
(within the meaning of Regulation D) in connection with any offer or sale of the
any of the Notes.
          (g) So long as any of the Notes are outstanding, (i) the Notes shall
not be listed on a national securities exchange registered under Section 6 of
the Exchange Act or quoted in a U.S. automated inter-dealer quotation system,
(ii) the Company shall not be an open-end investment company, unit investment
trust or face-amount certificate company that is, or is required to be,
registered under Section 8 of the Investment Company Act, and, the Notes shall
otherwise satisfy the eligibility requirements of Rule 144A(d)(3) and (iii) the
Company shall not engage, nor permit any of its subsidiaries to engage, in any
activity that would cause it or any such subsidiary to be an “investment
company” under the provisions of the Investment Company Act.
          (h) The Company shall furnish to (i) the holder, and subsequent
holders, of the Notes, (ii) Kodiak Capital Management Company LLC, 2107 Wilson
Boulevard, Suite 450, Arlington, Virginia 22201, Attention: Robert M. Hurley, or
such other address as designated by Kodiak Capital Management Company LLC) and
(iii) any beneficial owner of the Notes reasonably identified to the Company
(which identification may be made by either such beneficial owner or by Kodiak
Capital Management Company LLC), a duly completed and executed officer’s
financial certificate in the form attached hereto as Exhibit E, including the
financial statements referenced in such Exhibit, which certificate and financial
statements shall be so furnished by the Company not later than forty-five
(45) days after the end of each of the first three fiscal quarters of each
fiscal year of the Company and not later than ninety (90) days after the end of
each fiscal year of the Company, or, if applicable, such shorter respective
periods as may then be required by the Commission for the filing by the Company
of Quarterly Reports on Form 10-Q and Annual Reports on Form 10-K.
          (i) During any period in which the Company is not subject to and in
compliance with Section 13 or 15(d) of the Exchange Act, or the Company is not
exempt from such reporting requirements pursuant to and in compliance with
Rule 12g3-2(b) under the Exchange Act, the Company shall provide to each holder
of the Notes and to each prospective purchaser (as designated by such holder) of
the Notes, upon the request of such holder or prospective purchaser, any
information required to be provided by Rule 144A(d)(4) under the Securities Act,
if applicable. Any information provided by the Company pursuant to this
Section 6(i) will not, at the date thereof, contain any untrue statement of a
material fact or omit to state any material fact necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading. If the Company is required to register under the

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Exchange Act, such reports filed in compliance with Rule 12g3-2(b) shall be
sufficient information as required above. This covenant is intended to be for
the benefit of the Purchaser, the holders of the Notes, and the prospective
purchasers designated by the Purchaser and such holders, from time to time, of
the Notes.
          (j) The Company covenants and agrees with Purchaser that the Company
will not, without the prior written consent of Purchaser, offer, sell, contract
to sell, grant any option to purchase or otherwise dispose of, directly or
indirectly, (i) any Notes or junior subordinated notes or trust preferred
securities or (ii) any other securities convertible into, or exercisable or
exchangeable for, any Notes or junior subordinated notes or trust preferred
securities unless the aggregate amount of Notes outstanding together with such
Notes or junior subordinated notes, trust preferred securities or other
securities proposed to be offered, sold, contracted for sale, granted or
otherwise disposed of does not exceed twenty-five percent (25%) of the aggregate
of (x) the Company’s Consolidated Tangible Net Worth (after taking into account
such Notes, junior subordinated notes, trust preferred securities or other
securities proposed to be offered, sold, granted or otherwise disposed of). For
purposes hereof, “Consolidated Tangible Net Worth” shall mean (i) the
consolidated net worth of the Company and its consolidated subsidiaries minus
(ii) the consolidated intangibles of the Company and its consolidated
subsidiaries including, without limitation, goodwill, trademarks, trade names,
copyrights, patents, patent applications, licenses, and rights in any of the
foregoing and other items treated as intangibles in accordance with generally
accepted accounting principles, as reported in the Company’s balance sheet
contained in its most recent 1934 Act Report.
          (k) The Company will not identify any of Indemnified Parties (as
defined below) in a press release or any other public statement without the
consent of such Indemnified Party.
          (l) The Purchaser shall have the right under this Purchase Agreement
and the Indenture to request the substitution of new notes for all or a portion
of the Notes held by the Purchaser (the “Replacement Notes”). The Replacement
Notes shall bear terms identical to the Notes with the sole exception of
interest payment dates (and corresponding redemption date and maturity date),
which will be specified by the Purchaser. In no event will the interest payment
dates (and corresponding redemption date and maturity date) on the Replacement
Notes vary by more than sixty (60) calendar days from the original interest
payment dates (and corresponding redemption date and maturity date) under the
Notes. The Company agrees to cooperate with all reasonable requests of the
Purchaser in connection with any of the foregoing; provided, that no action
requested of the Company in connection with such cooperation shall materially
increase the obligations or materially decrease the rights of the Company
pursuant to such documents.
          (m) Notwithstanding anything to the contrary otherwise contained
herein or in any other Operative Document, prior to earlier of (i) the date
eighteen (18) months from the date hereof and (ii) the occurrence of a
Change-in-Control (as defined in the Indenture), the Company shall not offer to
issue any other Debt (as such term is defined in the Indenture) which ranks pari
passu with the Notes (including the Notes, any junior subordinated notes, trust
preferred securities or securities convertible into, or exercisable or
exchangeable for the same) to any other Person, unless the Company shall first
offer to Purchaser the opportunity to purchase such Debt, and shall first
provide to Purchaser a written notice thereof stating the proposed terms and

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conditions (the “Offered Terms”). The Purchaser shall have the right to accept
the Offered Terms by written notice to the Company given within ten (10) days
after the Purchaser’s receipt of the Offered Terms. If the Purchaser does not
accept the Offered Terms within such period, the Purchaser shall be deemed to
have rejected the Offered Terms and the Company may consummate such issuance of
Debt during the sixty (60) month period beginning on the date of the expiration
of the applicable period; provided, that such issuance of Debt shall be
consummated on substantially the same terms as the Offered Terms and shall
otherwise be in accordance with the terms hereof, including Section 6(j). If
such issuance of Debt is not consummated within such sixty (60) month period,
the provisions of this Section 6(m) shall again apply in respect of any issuance
of Debt which ranks pari passu with the Notes whether made during such sixty
(60) month period or thereafter.
          7. Payment of Expenses. The Company agrees to pay all costs and
expenses incident to the performance of the obligations of the Company under
this Purchase Agreement, whether or not the transactions contemplated herein are
consummated or this Purchase Agreement is terminated, including all costs and
expenses incident to (i) the fees and expenses of qualifying the Notes under the
securities laws of the several jurisdictions as provided in Section 6(b), (iii)
the fees and expenses of the counsel, the accountants and any other experts or
advisors retained by the Company, (iv) the fees and all reasonable expenses of
the Trustee and any other trustee or paying agent appointed under the Operative
Documents, including the fees and disbursements of counsel for such trustees or
paying agent, which fees shall not exceed a $2,000 acceptance fee, $4,000 in
administrative fees annually and the fees and expenses of Potter Anderson &
Corroon LLP, (v) the fees and expenses of Winston & Strawn LLP, special counsel
retained by the Purchaser, not to exceed $30,000 and (vi) a due diligence fee in
an amount equal to $12,500 payable as the Purchaser directs.
          If the sale of the Notes provided for in this Purchase Agreement is
not consummated because any condition set forth in Section 3 to be satisfied by
the Company is not satisfied, because this Purchase Agreement is terminated
pursuant to Section 9 or because of any failure, refusal or inability on the
part of the Company to perform all obligations and satisfy all conditions on its
part to be performed or satisfied hereunder other than by reason of a default by
the Purchaser, the Company will reimburse the Purchaser upon demand for all
reasonable out-of-pocket expenses (including the fees and expenses of the
Purchaser’s counsel specified in clause (v) and the due diligence fee specified
in clause (vi), in each case, of the immediately preceding paragraph) that shall
have been incurred by the Purchaser in connection with the proposed purchase and
sale of the Notes.
          8. Indemnification. (a) The Company agrees to indemnify and hold
harmless the Purchaser, the Purchaser’s Affiliates and Kodiak Capital Management
Company LLC (collectively, the “Indemnified Parties”), each person, if any, who
“controls” any of the Indemnified Parties within the meaning of either the
Securities Act or the Exchange Act, and the Indemnified Parties’ respective
directors, officers, employees and agents, against any and all losses, claims,
damages or liabilities, joint or several, to which the Indemnified Parties or
any of them may become subject under the Securities Act, the Exchange Act or
other federal or state statutory law or regulation, at common law or otherwise,
insofar as such losses, claims, damages or liabilities (or actions in respect
thereof) arise out of, are based upon or connected with (i) any untrue statement
or alleged untrue statement of a material fact contained in any information or

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documents furnished or made available to the Purchaser by or on behalf of the
Company, (ii) the omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading, (iii) the breach or alleged breach of any representation, warranty
or agreement of the Company contained herein or (iv) the execution and delivery
by the Company of this Purchase Agreement or any of the other Operative
Documents and/or the consummation of the transactions contemplated hereby and
thereby, and agrees to reimburse each such Indemnified Party, as incurred, for
any legal or other expenses reasonably incurred by it in connection with
investigating or defending any such loss, claim, damage, liability or action.
The indemnity agreements contained in this Section 8 are in addition to any
liability which the Company may otherwise have.
          (b) Promptly after receipt by an Indemnified Party under this
Section 8 of notice of the commencement of any action, such Indemnified Party
will, if a claim in respect thereof is to be made against the Company under this
Section 8, promptly notify the Company in writing of the commencement thereof;
but the failure so to notify the Company (i) will not relieve the Company from
liability under paragraph (a) above unless and to the extent that such failure
results in the forfeiture by the Company of material rights and defenses and
(ii) will not, in any event, relieve the Company from any obligations to any
Indemnified Party other than the indemnification obligation provided in
paragraph (a) above. The Purchaser shall be entitled to appoint counsel to
represent the Indemnified Party in any action for which indemnification is
sought. The Company may participate at its own expense in the defense of any
such action; provided, that counsel to the Company shall not (except with the
consent of the Indemnified Party) also be counsel to the Indemnified Party. In
no event shall the Company be liable for fees and expenses of more than one
counsel (in addition to any local counsel) separate from its 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, unless an Indemnified Party believes that his, her
or its interests are not aligned with the interests of another Indemnified Party
or that a conflict of interest might result. The Company will not, without the
prior written consent of the Indemnified Parties, settle or compromise or
consent to the entry of any judgment with respect to any pending or threatened
claim, action, suit or proceeding in respect of which indemnification may be
sought hereunder (whether or not the Indemnified Parties are actual or potential
parties to such claim, action, suit or proceeding) unless such settlement,
compromise or consent includes an unconditional release of each Indemnified
Party from all liability arising out of such claim, action, suit or proceeding.
          9. Termination; Representations and Indemnities to Survive; This
Purchase Agreement shall be subject to termination in the absolute discretion of
the Purchaser, by notice given to the Company prior to delivery of and payment
for the Notes, if prior to such time (i) a downgrading shall have occurred in
the rating accorded the Company’s debt securities by any “nationally recognized
statistical rating organization,” as that term is used by the Commission in Rule
15c3-l(c)(2)(vi)(F) under the Exchange Act, or such organization shall have
publicly announced that it has under surveillance or review, with possible
negative implications, its rating of the Company’s debt securities, (ii) the
Company shall be unable to sell and deliver to the Purchaser at least Thirty
Million Dollars ($30,000,000) in aggregate principal amount of the Notes,
(iii) a suspension or material limitation in trading in securities generally
shall have occurred on the New York Stock Exchange, (iv) a suspension or
material limitation in trading in any of the Company’s securities shall have
occurred on the exchange or quotation system upon

16

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which the Company’ securities are traded, if any, (v) a general moratorium on
commercial business activities shall have been declared either by federal or
Delaware authorities or (vi) there shall have occurred any outbreak or
escalation of hostilities, or declaration by the United States of a national
emergency or war or other calamity or crisis the effect of which on financial
markets is such as to make it, in the Purchaser’s judgment, impracticable or
inadvisable to proceed with the offering or purchase of the Notes. The
respective agreements, representations, warranties, indemnities and other
statements of the Company or its officers or trustees and of the Purchaser set
forth in or made pursuant to this Purchase Agreement will remain in full force
and effect, regardless of any investigation made by or on behalf of the
Purchaser or the Company or any of the their respective officers, directors or
controlling persons, and will survive delivery of and payment for the Notes. The
provisions of Sections 7 and 8 shall survive the termination or cancellation of
this Purchase Agreement.
          10. Amendments. This Purchase Agreement may not be modified, amended,
altered or supplemented, except upon the execution and delivery of a written
agreement by each of the parties hereto.
          11. Notices. All communications hereunder shall be in writing and
effective only on receipt, and shall be mailed, delivered by hand or courier or
sent by facsimile and confirmed:
          If to the Purchaser, to:
c/o Kodiak Capital Management Company, LLC
2107 Wilson Boulevard
Suite 450
Arlington, Virginia 22201
Attention: Robert M. Hurley
Facsimile: (703) 351-7901
          with a copy to:
Winston & Strawn LLP
35 West Wacker Drive
Chicago, Illinois 60601
Attention: Wayne D. Boberg
Facsimile: (312) 558-5700
          if to the Company, to:
Comstock Homebuilding Companies, Inc.
11465 Sunset Hills Road
Suite 510
Reston, Virginia 20190
Facsimile: (703) 760-1520
Attention: Bruce Labovitz, Chief Financial Officer

17

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          with a copy to:
Greenberg Traurig, LLP
800 Connecticut Avenue, NW
Suite 500
Washington, D.C. 20006
Facsimile: (202) 331-3101
Attention: Stephen A. Riddick, Esq.
          All such notices and communications shall be deemed to have been duly
given (i) at the time delivered by hand, if personally delivered, (ii) five
(5) Business Days after being deposited in the mail, postage prepaid, if mailed,
(iii) the next Business Day after being telecopied or (iv) the next Business Day
after timely delivery to a courier, if sent by overnight air courier
guaranteeing next-day delivery. From and after the Closing, the foregoing notice
provisions shall be superseded by any notice provisions of the Operative
Documents under which notice is given. The Purchaser and the Company, and their
respective counsel, may change their respective notice addresses, from time to
time, by written notice to all of the foregoing persons.
          12. Parties in Interest; Successors and Assigns. This Purchase
Agreement will inure to the benefit of and be binding upon the parties hereto
and their respective successors and permitted assigns. Nothing expressed or
mentioned in this Purchase Agreement is intended or shall be construed to give
any person other than the parties hereto and the affiliates, directors,
officers, employees, agents and controlling persons referred to in Section 8 and
their successors, assigns, heirs and legal representatives, any right or
obligation hereunder. None of the rights or obligations of the Company under
this Purchase Agreement may be assigned, whether by operation of law or
otherwise, without the Purchaser’s prior written consent. The rights and
obligations of the Purchaser under this Purchase Agreement may be assigned by
the Purchaser without the Company’s consent; provided, that the assignee assumes
the obligations of the Purchaser under this Purchase Agreement.
          13. Applicable Law. This Purchase Agreement will be governed by and
construed and enforced in accordance with the law of the State of New York
without reference to principles of conflicts of law (other than Section 5-1401
of the General Obligations Law).
          14. Submission to Jurisdiction. ANY LEGAL ACTION OR PROCEEDING BY OR
AGAINST ANY PARTY HERETO OR WITH RESPECT TO OR ARISING OUT OF THIS PURCHASE
AGREEMENT MAY BE BROUGHT IN OR REMOVED TO THE COURTS OF THE STATE OF NEW YORK,
IN AND FOR THE COUNTY OF NEW YORK, OR OF THE UNITED STATES OF AMERICA FOR THE
SOUTHERN DISTRICT OF NEW YORK (IN EACH CASE SITTING IN THE BOROUGH OF
MANHATTAN). BY EXECUTION AND DELIVERY OF THIS PURCHASE AGREEMENT, EACH PARTY
ACCEPTS, FOR ITSELF AND IN RESPECT OF ITS PROPERTY, GENERALLY AND
UNCONDITIONALLY, THE JURISDICTION OF THE AFORESAID COURTS (AND COURTS OF APPEALS
THEREFROM) FOR LEGAL PROCEEDINGS ARISING OUT OF OR IN CONNECTION WITH THIS
PURCHASE AGREEMENT.

18

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          15. Counterparts and Facsimile. This Purchase Agreement may be
executed by any one or more of the parties hereto in any number of counterparts,
each of which shall be deemed to be an original, but all such counterparts shall
together constitute one and the same instrument. This Purchase Agreement may be
executed by any one or more of the parties hereto by facsimile.
[signature page follows]

19

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     IN WITNESS WHEREOF, the parties hereto have executed this Note Purchase
Agreement as of the day and year first written above.

                      COMSTOCK HOMEBUILDING COMPANIES, INC.
 
                    By:   /s/ Bruce Labovitz                       Name: Bruce
Labovitz         Title:   Chief Financial Officer    
 
                    KODIAK WAREHOUSE LLC    
 
               
 
  By:   Kodiak Funding, LP             Its: Sole Member    
 
               
 
      By:   Kodiak Funding Company, Inc.    
 
          Its: General Partner    
 
                    By:   /s/ Robert M. Hurley                       Name:
Robert M. Hurley         Title: Chief Financial Officer    

 

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Schedule 4(1)
List of Significant Subsidiaries

          State of lncorporation Name   or Organization
1. Buckhead Overlook, LLC
  Georgia
2. Comstock Acquisitions, L.C.
  Virginia
3. Comstock Station View, L.C.
  Virginia
4. Comstock Aldie, L.C.
  Virginia
5. Comstock Barrington Park, L.C.
  Virginia
6. Comstock Bellemeade, L.C.
  Virginia
7. Comstock Belmont Bay 5, L.C.
  Virginia
8. Comstock Belmont Bay 89, L.C.
  Virginia
9. Comstock East Capitol, L.L.C.
  Virginia
10. Comstock Blooms Mill II, L.C.
  Virginia
11. Comstock Brandy Station, L.C.
  Virginia
12. Comstock Carter Lake, L.C.
  Virginia
13. Comstock Cascades, L.C.
  Virginia
14. Comstock Communities, L.C.
  Virginia
15. Comstock Countryside, L.C.
  Virginia
16. Comstock Culpeper, L.C.
  Virginia
17. Comstock Delta Ridge II, L.L.C.
  Virginia
18. Comstock Emerald Farm, L.C.
  Virginia
19. Comstock Fairfax I, L.C.
  Virginia
20. Comstock Flynn’s Crossing, L.C.
  Virginia
21. Comstock Hamlets of Blue Ridge, L.C.
  Virginia
22. Comstock Holland Road, L.L.C.
  Virginia
23. Comstock Homes of North Carolina, L.L.C.
  North Carolina
24. Comstock Homes of Raleigh, L.L.C.
  North Carolina
25. Comstock Homes of Washington, L.C.
  Virginia
26. Comstock Investors III, L.P.
  Virginia
27. Comstock Investors V, L.C.
  Virginia
28. Comstock Investors VI, L.C.
  Virginia
29. Comstock Kelton II, L.C.
  Virginia
30. Comstock Lake Pelham, L.C.
  Virginia
31. Comstock Landing, L.L.C.
  Virginia
32. Comstock Loudoun Condos 1, L.C.
  Virginia
33. Comstock North Carolina, L.L.C.
  North Carolina
34. Comstock Penderbrook, L.C.
  Virginia
35. Comstock Potomac Yard, L.C.
  Virginia
36. Comstock Ryan Park, L.C.
  Virginia
37. Comstock Sherbrooke, L.C.
  Virginia
38. Comstock Summerland, L.C.
  Virginia
39. Comstock Wakefield, L.L.C.
  Virginia
40. Comstock Wakefield II, L.L.C.
  Virginia
41. Highland Avenue Properties, LLC
  Georgia
42. Highland Station Partners, LLC
  Georgia
43. Mathis Partners, LLC
  Georgia

 

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44. North Shore Investors, L.L.C.
  Virginia
45. North Shore Raleigh, L.L.C.
  Virginia
46. North Shore Raleigh II, L.L.C.
  Virginia
47. Parker-Chandler Homes, Inc.
  Georgia
48. Parker Chandler Homes/Florida, LLC
  Florida
49. Parker Chandler Homes/North Carolina, LLC
  North Carolina
50. Parker Chandler Homes/South Carolina, LLC
  South Carolina
51. Parker Chandler Realty, LLC
  Georgia
52. PCH Development, LLC
  Georgia
53. PCH James Road, LLC
  Georgia
54. Post Preserve, LLC
  Georgia
55. Raleigh Resolution, L.L.C.
  Virginia
56. Settlement Title Services, L.L.C.
  Virginia
57. TCG Debt Fund II, L.C.
  Virginia
58. TCG Fund I, L.C.
  Virginia
59. Tribble Road Development, LLC
  Georgia

Certain Prohibitions Against the Payment of
Distributions, the Repayment of Debt or
the Transfer of Assets
[to follow, if any]

2

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Schedule 4(p)
Legal Proceedings
None.

 

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Schedule 4(u)
Certain Documents Subject to Future
Filing as Exhibits to 1934 Act Reports
None.

 

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Schedule 4(x)
Claims Against Real Property
The Company is involved in a disagreement with its 50% joint venture partner in
the North Shore project located in Raleigh, North Carolina, whereby the
Company’s joint venture partner has filed a lis pendens asserting a right to the
Company’s membership interest in the joint venture.

 

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Schedule 4(ee)
Environmental Matters
None.

 

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Exhibit A
FORM OF COMPANY COUNSEL’S OPINION
          Pursuant to Section 3(b)(i) of the Note Purchase Agreement, Greenberg
Traurig LLP, special counsel for the Company, shall deliver an opinion to the
effect that:
          (i) the Company and each Significant Subsidiary is validly existing as
a corporation, limited liability company, limited partnership or statutory trust
in good standing under the laws of the jurisdiction in which it is chartered or
organized; each of the Company and the Significant Subsidiaries has full
corporate, limited liability company, limited partnership or statutory trust
power and authority to own or lease its properties and to conduct its business
as such business is currently conducted in all material respects; all
outstanding shares of capital stock, equity or membership interests of the
Significant Subsidiaries have been duly authorized and validly issued, and are
fully paid and nonassessable and owned of record and beneficially, directly or
indirectly by the Company; the Company has the corporate, limited liability
company, limited partnership or statutory trust power and authority to
(A) execute and deliver, and to perform its obligations under, the Operative
Documents to which it is a party and (B) issue and perform its obligations under
the Notes;
          (ii) neither the issue and sale of the Notes, nor the execution and
delivery of and compliance with the Operative Documents by the Company nor the
consummation of the transactions contemplated thereby will constitute a breach
or violation of the charter, by-laws, certificate of formation, limited
liability company agreement, certificate of limited partnership or agreement of
limited partnership, as applicable, of the Company;
          (iii) the Indenture has been duly authorized, executed and delivered
by the Company and, assuming it has been duly authorized, executed and delivered
by the Trustee, constitutes a legal, valid and binding obligation of the
Company, enforceable against the Company in accordance with its terms, subject
to applicable bankruptcy, insolvency and similar laws affecting creditors’
rights generally and to general principles of equity;
          (iv) the Notes have been duly authorized and executed by the Company
and delivered to the Trustee for authentication in accordance with the Indenture
and, when authenticated by the Trustee in accordance with the provisions of the
Indenture and delivered to the Purchaser against payment therefor, will
constitute legal, valid and binding obligations of the Company entitled to the
benefits of the Indenture and enforceable against the Company in accordance with
their terms, subject to applicable bankruptcy, insolvency and similar laws
affecting creditors’ rights generally and to general principles of equity;
          (v) the Company is not, and, following the issuance of the Notes and
the consummation of the transactions contemplated by the Operative Documents and
the application of the proceeds therefrom, the Company will not be, an
“investment

A-1

--------------------------------------------------------------------------------

 

company” or, to such counsel’s knowledge, an entity “controlled” by an
“investment company,” in each case within the meaning of Section 3(a) of the
Investment Company Act of 1940, as amended;
          (vi) assuming the truth and accuracy of the representations and
warranties of the Purchaser in the Purchase Agreement, it is not necessary in
connection with the offer, sale and delivery of the Notes to register the Notes
under the Securities Act of 1933, as amended, under the circumstances
contemplated in the Purchase Agreement, or to require qualification of the
Indenture under the Trust Indenture Act of 1939, as amended;
          (vii) the Purchase Agreement has been duly authorized, executed and
delivered by the Company and constitutes a legal, valid and binding obligation
of the Company, enforceable against the Company in accordance with its terms,
subject to applicable bankruptcy, insolvency and similar laws affecting
creditors’ rights generally and to general principles of equity and the effect
of any applicable public policy against the enforcement of the indemnification
provisions of the Purchase Agreement set forth in Section 8 thereof;
          (viii) the execution and delivery by the Company of, and the
performance by the Company of its obligations under, the Operative Documents and
the consummation of the transactions contemplated by the Purchase Agreement and
the other Operative Documents, do not and will not (A) result in the creation or
imposition of any lien, claim, charge, encumbrance or restriction upon any
property or assets of the Company or the Significant Subsidiaries, or
(B) conflict with, constitute a breach or violation of, or constitute a default
under, with or without notice or lapse of time or both, any of the terms,
provisions or conditions of (x) the charter, by-laws or similar organizational
documents of the Company or any Significant Subsidiary, or (y) any material
contract, indenture, mortgage, deed of trust, loan or credit agreement, note,
lease, franchise, license or any other agreement or instrument to which the
Company or any Significant Subsidiary is a party or by which any of them or any
of their respective properties may be bound or (z) any order, decree, judgment,
franchise, license, permit, rule or regulation known to such counsel of any
court, arbitrator, government, or governmental agency or instrumentality,
domestic or foreign, having jurisdiction over the Company or any Significant
Subsidiary or any of their respective properties;
          (ix) except for filings, registrations or qualifications that may be
required by applicable federal securities laws, no authorization, approval,
consent or order of, or filing, registration or qualification with, any person
(including, without limitation, any court, governmental body or authority) is
required under the laws of the State of Delaware in connection with the
transactions contemplated by the Operative Documents (including the offer and
sale of the Notes); and
          (x) to such counsel’s knowledge, (A) no action, suit or proceeding at
law or in equity is pending or threatened to which the Company or any
Significant Subsidiary is or may be a party, and (B) no action, suit or
proceeding is pending or threatened against or affecting the Company or the
Significant Subsidiaries or any of

A-2

--------------------------------------------------------------------------------

 

their respective properties, before or by any court or governmental official,
commission, board or other administrative agency, authority or body, or any
arbitrator, wherein an unfavorable decision, ruling or finding could reasonably
be expected to have a material adverse effect on (x) the consummation of the
transactions contemplated by the Operative Documents or the issuance and sale of
the Notes as contemplated therein or (y) the condition (financial or otherwise),
earnings, business, liabilities, assets or results of operations of the Company
and the Significant Subsidiaries on a consolidated basis.
          In rendering such opinions, such counsel may (A) provide for customary
assumptions and qualifications and (B) rely as to matters of fact, to the extent
deemed appropriate, on certificates of responsible officers of the Company and
public officials.

A-3

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Exhibit B
FORM OF GENERAL COUNSEL OPINION
OR OFFICERS’ CERTIFICATE
     Pursuant to Section 3(b)(ii) of the Note Purchase Agreement, General
Counsel for the Company shall deliver an opinion, or the [CHIEF EXECUTIVE
OFFICER/PRESIDENT/EXECUTIVE VICE PRESIDENT] and the [CHIEF FINANCIAL
OFFICER/TREASURER/ASSISTANT TREASURER] of the Company shall provide an Officers’
Certificate, to the effect that:
          (i) all of the issued and outstanding shares of capital stock, equity
or membership interests of each Significant Subsidiary are owned of record by
the Company;
          (ii) no consent, approval, authorization or order of any court or
Governmental Entity is required for the issue and sale of the Notes, the
execution and delivery of and compliance with the Operative Documents by the
Company or the consummation of the transactions contemplated in the Operative
Documents, except such approvals (specified in such certificate) as have been
obtained;
          (iii) to the knowledge of such officers, there is no action, suit or
proceeding before or by any government, governmental instrumentality, arbitrator
or court, domestic or foreign, now pending or threatened against or affecting
the Company or any Significant Subsidiary that could adversely affect the
consummation of the transactions contemplated by the Operative Documents or
could have a Material Adverse Effect; and
          (iv) the execution and delivery by the Company of, and the performance
by the Company of its obligations under, the Operative Documents and the
consummation by the Company of the transactions contemplated by the Operative
Documents, (i) will not result in any violation of the charter or bylaws of the
Company, the charter, bylaws or similar organizational documents of the
Company’s subsidiaries, and (ii) will not conflict with, or result in a breach
of any of the terms or provisions of, or constitute a default (or an event
which, with notice or lapse of time or both, would constitute a default) under,
or result in the creation or imposition of any lien, charge and encumbrance upon
any assets or properties of the Company or any Significant Subsidiary under,
(a) any agreement, indenture, mortgage or instrument that the Company or any
Significant Subsidiary of the Company is a party to or by which it may be bound
or to which any of its assets or properties may be subject, or (b) any existing
applicable law, rule or administrative regulation of any court or governmental
agency or authority having jurisdiction over the Company or any Significant
Subsidiary of the Company or any of their respective assets or properties,
except in case of (ii), where any such violation, conflict, breach, default,
lien, charge or encumbrance, would not have a material adverse effect on the
assets, liabilities, properties, business, results of operations or condition
(financial or otherwise) of the Company and its subsidiaries, taken as whole.

B-1

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Exhibit C
FORM OF TAX COUNSEL OPINION
     Pursuant to Section 3(c) of the Note Purchase Agreement, Winston & Strawn
LLP, special tax counsel for the Purchaser shall deliver an opinion to the
effect that, for United States federal income tax purposes, the Notes will
constitute indebtedness of the Company.
     In rendering such opinion, such counsel may (A) provide for customary
assumptions and qualifications, (B) state that its opinion is limited to the
federal income tax laws of the United States and (C) rely as to matters of fact,
to the extent deemed appropriate, on certificates of responsible officers of the
Company and public officials.

C-1

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Exhibit D
FORM OF TRUSTEE COUNSEL OPINION
     Pursuant to Section 3(d) of the Note Purchase Agreement, special counsel
for the Trustee shall deliver an opinion to the effect that:
          (i) Wells Fargo Bank, N.A. is a national banking association with
trust powers, duly and validly existing under the laws of the United States of
America, with corporate power and authority to execute, deliver and perform its
obligations under the Indenture and to authenticate and deliver the Notes, and
is duly eligible and qualified to act as Trustee under the Indenture pursuant to
Section 6.1 thereof;
          (ii) the Indenture has been duly authorized, executed and delivered by
Wells Fargo Bank, N.A. and constitutes the valid and binding obligation of Wells
Fargo Bank, N.A., enforceable against it in accordance with its terms except
(A) as may be limited by bankruptcy, fraudulent conveyance, fraudulent transfer,
insolvency, reorganization, liquidation, receivership, moratorium or other
similar laws now or hereafter in effect relating to creditors’ rights generally,
and by general equitable principles, regardless of whether considered in a
proceeding in equity or at law and (B) that the remedy of specific performance
and injunctive and other forms of equitable relief may be subject to equitable
defenses and to the discretion of the court before which any proceeding therefor
may be brought;
          (iii) neither the execution or delivery by Wells Fargo Bank, N.A. of
the Indenture, the authentication and delivery of the Notes by Wells Fargo Bank,
N.A. pursuant to the terms of the Indenture, nor the performance by Wells Fargo
Bank, N.A. of its obligations under the Indenture (A) requires the consent or
approval of, the giving of notice to or the registration or filing with, any
Governmental Entity or agency under any existing law of the State of New York
governing the banking or trust powers of Wells Fargo Bank, N.A. or (B) violates
or conflicts with the Charter or By-laws of Wells Fargo Bank, N.A. or any law or
regulation of the State of New York governing the banking or trust powers of
Wells Fargo Bank, N.A.; and
          (iv) the Notes have been duly authenticated and delivered by Wells
Fargo Bank, N.A..
     In rendering such opinions, such counsel may (A) provide for customary
assumptions and qualifications, (B) state that its opinion is limited to the
laws of the State of New York and (C) rely as to matters of fact, to the extent
deemed proper, on certificates of responsible officers of Wells Fargo Bank,
N.A., the Company and public officials.

D-1

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Exhibit E
FORM OF OFFICER’S FINANCIAL CERTIFICATE
     The undersigned, the [CHAIRMAN/VICE CHAIRMAN/CHIEF EXECUTIVE
OFFICER/PRESIDENT/ VICE PRESIDENT/CHIEF FINANCIAL OFFICER/TREASURER] of
[COMPANY] (the “Company”), hereby certifies, pursuant to Section 6(h) of the
Note Purchase Agreement, dated as of May 4, 2006, by and between the Company and
Kodiak Warehouse LLC, that, as of [DATE], [YEAR], the Company and its
subsidiaries had the following ratios and balances:
As of [QUARTERLY/ANNUAL FINANCIAL DATE], [YEAR]

         
Senior secured indebtedness for borrowed money (“Debt”)
  $                       
 
       
Senior unsecured Debt
  $                       
 
       
Subordinated Debt
  $                       
 
       
Total Debt
  $                       
 
       
Ratio of (x) senior secured and unsecured Debt to (y) total Debt
                         %

[FOR FISCAL YEAR END: Attached hereto are the audited consolidated financial
statements (including the balance sheet, income statement and statement of cash
flows, and notes thereto, together with the report of the independent
accountants thereon) of the Company and its consolidated subsidiaries for the
three years ended [DATE], [YEAR].]
[FOR FISCAL QUARTER END: Attached hereto are the unaudited consolidated and
consolidating financial statements (including the balance sheet and income
statement) of the Company and its consolidated subsidiaries for the fiscal
quarter ended [DATE], [YEAR].]
The financial statements fairly present in all material respects, in accordance
with U.S. generally accepted accounting principles (“GAAP”), the financial
position of the Company and its consolidated subsidiaries, and the results of
operations and changes in financial condition as of the date, and for the
[QUARTER] [YEAR] ended [DATE], [YEAR], and such financial statements have been
prepared in accordance with GAAP consistently applied throughout the period
involved (expect as otherwise noted therein).
There has been no monetary default with respect to any indebtedness owed by the
Company and/or its subsidiaries (other than those defaults cured within thirty
(30) days of the occurrence of the same) [except as set forth below:].
Attached hereto is a current organizational chart of the Company and its
subsidiaries as of the date hereof.
[signature page follows]

E-1

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     IN WITNESS WHEREOF, the undersigned has executed this Officer’s Financial
Certificate as of this [DAY] of [MONTH], [YEAR].

                      COMSTOCK HOMEBUILDING COMPANIES, INC.    
 
               
 
  By:                          
 
                    Name:        
 
               
 
                    Title:        
 
               
 
                        Comstock Homebuilding Companies, Inc.             11465
Sunset Hills Road             Suite 510             Reston, Virginia 20190      
      (703) 883-1700    

E-2