Exhibit 10.33

 

PURCHASE AGREEMENT BETWEEN

COMSTOCK POTOMAC YARD, L.C. AND

COMSTOCK ASSET MANAGEMENT, L.C.

November 12, 2004

 

TABLE OF CONTENTS

 

Paragraph

 

 

 

 

Article I - Commercial Units, Purchase Price, Payment

 

 

 

 

1.01

Commercial Units

 

1.02

Purchase Price

 

1.03

Payment

 

 

 

 

Article II - Deposit

 

 

 

 

2.01

Amount

 

2.02

Reserved

 

 

 

 

Article III - Title

 

 

 

 

3.01

Title

 

 

 

 

Article IV - Feasibility and Engineering

 

 

 

 

4.01

Feasibility Study Period

 

4.02

Seller Documents

 

 

 

 

Article V - Pre-Conditions of Settlement

 

 

 

 

5.01

Pre-Conditions

 

 

 

 

Article VI - Closing and Possession

 

 

 

 

6.01

Preclosing Inspection

 

6.02

Conveyance

 

6.03

Deed of Conveyance

 

6.04

Taxes and Assessments

 

6.05

Future Encumbrances

 

6.06

FIRPTA

 

6.07

Performance

 

6.08

Temporary Use and Occupancy

 

 

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Paragraph

 

 

 

 

Article VII - Declaration of Condominium

 

 

 

 

7.01

Declaration of Condominium

 

 

 

 

Article VIII - Purchaser’s Improvements

 

 

 

 

8.01

Improvements

 

8.02

Maintenance of Construction Site

 

8.03

Purchaser’s Construction Activities

 

8.04

Compliance with Laws

 

 

 

 

Article IX - Default

 

 

 

 

9.01

Purchaser

 

9.02

Seller

 

 

 

 

Article X - Agents and Commission

 

 

 

 

10.01

Liability

 

 

 

 

Article XI - Condemnation

 

 

 

 

11.01

Notice and Award

 

 

 

 

Article XII - Seller’s Representations

 

 

 

 

12.01

General

 

12.02

Specific

 

12.03

Mechanic’s Liens

 

12.04

Indemnification

 

12.05

Affidavit

 

12.06

Survival

 

 

 

 

Article XIII - Purchaser’s Representations

 

 

 

 

13.01

General

 

13.02

Indemnification

 

13.03

Survival

 

 

 

 

Article XIV - Miscellaneous

 

 

 

 

14.01

Notice

 

14.02

Survival

 

 

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Paragraph

 

 

 

 

14.03

Assignment

 

14.04

Construction of Agreement

 

14.05

Duration and Acceptance of Offer

 

14.06

Continuing Rights and Obligations

 

14.07

Validity

 

14.08

Litigation

 

14.09

Effective Date

 

 

 

 

Exhibit A

Description of the Project

 

Exhibit B-1

Description of Commercial Unit #1-#5

 

Exhibit C

Temporary Use and Occupancy Agreement

 

Exhibit D

Deposit Deed of Trust

 

Exhibit E

Unit Finishing Specifications

 

 

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PURCHASE AGREEMENT

 

THIS PURCHASE AGREEMENT, entered into this 12th day of November, 2004 (the
“Effective Date”) between COMSTOCK POTOMAC YARD, L.C., a Virginia limited
liability company, hereinafter known as “Seller”, and COMSTOCK ASSET MANAGEMENT,
L.C., a Virginia limited liability company, hereinafter known as “Purchaser”.

 

WHEREAS, the Seller is the owner of a certain parcel of real property located in
Arlington County, Virginia containing 4.8313 acres, more or less, known as
Potomac Yard- Landbay “F”, as more particularly identified on Exhibit A attached
hereto (the “Project”); and

 

WHEREAS, the Seller has submitted a Condominium Registration Application (the
“Application”) to the Commonwealth of Virginia Real Estate Board (the “Board”)
which, upon approval, would allow for the development and sale of the Project as
a condominium (“Condominium”) containing both residential units (“Residential
Units”) and retail commercial units (“Commercial Units”); and

 

WHEREAS, the Condominium will be developed in no less than two (2) major phases,
one phase being referred to as the “West Tower” which will contain up to two
hundred forty four (244) Residential Units and up to two (2) Commercial Units
(Commercial Unit #1 and Commercial Unit #2.  The second major phase being
referred to as the “East Tower”, will contain up to two hundred twenty eight
(228) Residential Units and up to three (3) Commercial Units (Commercial Unit
#3, Commercial Unit #4 and Commercial Unit #5).  Commercial Units #1-5 are more
particularly identified on Exhibit B hereto; and

 

WHEREAS, Seller is primarily a residential builder and lacks the personnel to
adequately and professionally lease and administer retail space and in
consideration of Purchaser providing the Seller with a deposit which may be
utilized to satisfy in part Seller’s equity requirements for the Project,
Purchaser has been given, after recordation of the appropriate declaration of
condominium (“Declaration of Condominium”) forming the Condominium, the right to
occupy and lease on a temporary basis the five (5) Commercial Units and
thereafter to purchase the five (5) Commercial Units from the Seller upon the
terms and conditions as are more specifically hereinafter set forth.

 

NOW, THEREFORE, WITNESSETH: For and in consideration of the mutual promises and
covenants herein contained and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, Seller hereby grants
to Purchaser the right to purchase and the Purchaser hereby agrees to purchase
in fee simple the Commercial Units on the following terms and conditions:

 

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ARTICLE I

COMMERCIAL UNITS, PURCHASE PRICE, PAYMENT

 

1.01                           Commercial Units.     Purchaser agrees to
purchase the Commercial Units and Seller agrees to sell and convey all of
Seller’s right, title and interest in and to the Commercial Units together with
any and all improvements, appurtenances, rights, privileges and easements
benefiting, belonging, or pertaining to the Commercial Units (all of which shall
be deemed part of the Commercial Units for the purposes of this Agreement),
pursuant to the terms and conditions hereof.

 

1.02                           Purchase Price.     Subject to all of the terms
and conditions of this Agreement, Seller agrees to sell and Purchaser agrees to
purchase the Commercial Units for a total price (the “Purchase Price”) of
FOURTEEN MILLION FIVE HUNDRED THOUSAND AND NO\100THS DOLLARS ($14,500,000.00). 
For tax valuation and assessment purposes only, the Purchase Price has been
allocated to each Commercial Unit based on the approximate square footage
contained within each Commercial Unit as it relates to the total square footage
of all of the Commercial Units.  The allocable Purchase Price for the Commercial
Units are as follows:

 

Commercial Unit #1

 

41,000 square feet

 

$

9,034,500.00

 

Commercial Unit #2

 

11,427 square feet

 

$

2,518,000.00

 

Commercial Unit #3

 

10,197 square feet

 

$

2,247,500.00

 

Commercial Unit #4

 

1,370 square feet

 

$

301,500.00

 

Commercial Unit #5

 

1,809 square feet

 

$

398,500.00

 

Total

 

65,803 square feet

 

$

14,500,000.00

 

 

The parties hereto agree and acknowledge the square footages of the Commercial
Units may increase or decrease when constructed and the Purchase Price shall not
increase or decrease based on such fluctuations unless specifically agreed to by
the parties in writing.

 

1.03                           Payment.     The applicable portion of the
Purchase Price shall be paid by Purchaser in cash, certified check, bank
cashier’s check or by wire transfer of funds at settlement and closing on each
Commercial Unit.

 

ARTICLE II

DEPOSIT

 

2.01                           Amount.

 

a.                                       On or before the later of (i) the
expiration of the Feasibility Study Period (as hereinafter defined); or
(ii) concurrent with the release of the existing deed of trust recorded as a
second lien against the Project and securing a loan to the Seller from Comstock
Capital Partners, L.C. (the “Junior Loan”); the Purchaser shall deliver to
Premier Title, Inc. (the “Escrow Agent”), cash in the sum of EIGHT MILLION AND
NO/100THS DOLLARS ($8,000,000.00), hereinafter referred to as the “Deposit”. 
The Deposit shall be released by the Escrow Agent to the Seller upon the
Seller’s execution and recordation a temporary deed of trust encumbering the
Project in favor of Purchaser, the form of which is attached hereto as
Exhibit        (the “Deposit Deed of Trust”), which Deposit Deed of Trust shall
secure the return of the Deposit to Purchaser

 

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in the event of any occurrence which gives rise to Purchaser’s right to a refund
of the Deposit pursuant to the terms of this Agreement pending the Seller’s
closing of a permanent acquisition and construction loan for the Project (the
Project Loan”).  Purchaser agrees the lien of such Deposit Deed of Trust is
fully subordinate to any existing liens on the Project and concurrent with the
closing of the Project Loan, Purchaser shall deliver to Escrow Agent in escrow,
a release of the Deposit Deed of Trust.

 

b.                                      Should the Purchaser fail to timely
deliver the Deposit to the Seller, the Seller shall have the right, upon written
notice to the Purchaser, to terminate this Agreement whereupon the parties shall
have no further obligation one to the other hereunder, except for Purchaser’s
indemnification obligations pursuant to Paragraph 4.01 hereof.

 

2.02.                        Release.     The Deposit, unless previously
returned to the Purchaser or released to the Seller pursuant to the default
terms of this Agreement, shall be credited to the Purchase Price at settlement
and closing.

 

ARTICLE III

TITLE

 

3.01                           Title.     The Seller covenants that it is, or
will be, the fee simple owner of the Commercial Units, subject to all
instruments forming the chain of title to the Commercial Units, that it has full
legal, beneficial, and equitable ownership of the Commercial Units and that it
has the right and power to convey the Commercial Units.  The Commercial Units
are to be sold and conveyed free of liens, and title is to be good of record,
merchantable and insurable.  Title shall be fully insurable under a full
coverage owner’s title policy issued by a recognized title insurance company of
Purchaser’s choice, at standard rates and without requirement or exception
subject, however, to the Declaration of Condominium, to all standard pre-printed
exceptions and to any easements, covenants, rights-of-way or declaration of
covenants of record.  On or before sixty (60) days after the Effective Date,
Purchaser will cause an examination of title to the Commercial Units to be made
(the “Title Examination”).  Purchaser shall advise Seller in writing on or
before such sixty (60) day period (hereinafter referred to as the “Title
Notice”) of any item other than the Permitted Exceptions that, in Purchaser’s
sole discretion, will impede, hinder use of, or unreasonably interfere with
Purchaser’s intended buildout and use of the Commercial Units (hereinafter
referred to as “Objections”).  Any item contained in the Title Examination not
set forth on the Title Notice shall be considered a Permitted Exception.  If any
such Objection shall be of such a nature that it can be corrected by proper and
efficient action, including legal action, by Seller, then Seller, at Seller’s
sole option, may take appropriate action, legal or otherwise, to promptly cure
said defect.  Seller shall advise Purchaser in writing within five (5) business
days of receipt of the Title Notice of any Objections which Seller determines it
will be unwilling and/or unable to so cure at or prior to the initial settlement
and closing; and it shall be a condition precedent to such closing that all
Objections that Seller is obligated to cure shall be cured by Seller at or prior
to such closing.  In the event Seller advises Purchaser of its unwillingness
and/or inability to so cure one or more Objections, Purchaser may, at its

 

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option, within five (5) days from receipt of Seller’s response, elect to either
(i) waive such Objections and proceed with this Agreement; or (ii) terminate
this Agreement.

 

Notwithstanding anything to the contrary above, any deeds of trust, judgments,
unpaid state or federal taxes, inheritances taxes, unpaid real estate taxes, or
any other liens against the Commercial Units that can be cured by the payment of
money shall be first paid and released of record by the settlement agent or
attorney at settlement (if not sooner paid and released of record by Seller),
utilizing the proceeds paid by Purchaser at settlement.

 

The state of title at date of each settlement and closing shall be the same as
is disclosed by the Title Examination, except for recordation of the Declaration
of Condominium and those other matters which are approved by Purchaser, or
Seller shall be in default and Purchaser may exercise its remedies pursuant to
this paragraph or Paragraph 9.02 hereof.

 

ARTICLE IV

FEASIBILITY AND ENGINEERING

 

4.01.                        Feasibility Study Period.     Purchaser and its
agents, representatives employees and consultants have had the right, during
normal business hours to enter upon the Project for the purpose of performing
environmental and engineering surveys and to make feasibility, zoning, marketing
and economic tests and studies of the Commercial Units in order to determine
whether the Commercial Units to be constructed at the Project are suitable for
Purchaser’s needs and Purchaser has largely satisfied its due diligence inquiry.

 

As such, in the event the final results of the aforesaid architectural,
engineering, zoning, feasibility, marketing and other tests and studies
performed by or on behalf of Purchaser are not, in Purchaser’s sole, exclusive,
and nonereviewable discretion, satisfactory to Purchaser, Purchaser may at any
time prior to Project Loan Closing (the “Feasibility Study Period”) upon written
notice to Seller, terminate this Agreement, after which event neither party
shall have any further liability to the other hereunder except as required by
this Paragraph.

 

In the event Purchaser, its agents, representatives, employees or consultants,
enter upon the Project for the purpose contained herein, Purchaser agrees to
promptly pay for all expenses thereof and further agrees to indemnify Seller
from and against any and all loss, damage or claim resulting from the negligence
or willful acts of this Purchaser, its agents, representatives, employees or
consultants.

 

4.02                           Seller Documents.     In addition to any other
documents Seller is obligated to deliver to Purchaser under this Agreement,
Seller shall, upon written request by Purchaser, deliver to Purchaser without
cost to Purchaser, within seven (7) days after the written request, copies of
any of the following which are in Seller’s possession or control (collectively,
“Documents”):  (a)  title report for the Project; (b) the architectural and

 

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engineering plans (“Plans”) for the construction of the Commercial Units as cold
dark shells (as hereinafter defined); (c)  level one environmental assessment
for the Project; (d) the Declaration of Condominium, and (e) a complete copy of
the $100 million dollar environmental coverage policy of insurance issued by the
Chubb Group of insurance companies and under which Seller has been identified as
a named insurance through an appropriate endorsement or rider and Purchaser
shall be added to that policy as a named insured.  Should the Seller fail to
timely deliver the Documents to the Purchaser, the Feasibility Study Period
shall be extended day for day until such time as all of the Documents have been
delivered to the Purchaser.

 

ARTICLE V

PRE-CONDITIONS OF SETTLEMENT

 

5.01                           Pre-Conditions.     Should all settlements not be
completed on or before three years from the date of Project Loan Closing, as a
result of any of the following pre-conditions of settlement (“Preconditions”)
not being satisfied, Purchaser, at its sole discretion, may by written notice to
Seller (i) terminate this Agreement; or (ii) waive such pre-condition and
proceed to settlement on the remaining Commercial Units. Should this Agreement
be terminated pursuant to this paragraph, the Purchaser shall return any portion
of the Deposit not credited against previous settlements to the Purchaser and
thereafter the parties shall have no further obligation pursuant to this
Agreement, except for the indemnification obligations set forth in Paragraph
4.01 and as otherwise provided in Paragraph 14.06.  The Pre-Conditions are as
follows:

 

a.                                       The Application shall have been
approved by the Board and the Declaration of Condominium shall have been
recorded among the land records of Arlington County, Virginia creating the
Commercial Units as separate and individual units within the Project.  In
connection with this requirement, Seller is entitled to an shall receive a
legally and fully approved condominium unit under Virginia law.

 

b.                                      Construction of the Commercial Unit then
to be settled upon shall be completed so that such Commercial Unit shall be
considered a warm vanilla shell.  For the purpose of this Agreement, a “warm
vanilla shell” shall be defined as the full and complete completion of the
Commercial Unit pursuant to the Plans and in accordance with Exhibit E attached
hereto.  Provided however, Purchaser and its brokers shall have utilized all
commercially reasonable efforts available to negotiate leases with prospective
tenants in such a manner as to reduce the amount of construction required to
meet these requirements with all cost savings realized to be credited against
Seller’s obligations pursuant hereto.

 

c.                                       No governmental action or inaction
(such as but not limited to the imposition of a sewer moratorium) shall have
been taken, or shall have been publicly announced to be taken, by any applicable
governmental authority, which would increase the cost of, or materially increase
the processing time for obtaining all necessary permits or utilities required
for the construction, occupancy use of each Commercial Unit as a

 

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retail establishment or would materially increase the cost of or materially
delay the buildout of the Commercial Units.

 

d.                                      Title to the Commercial Units is as
required by Paragraph 3.01 hereof.

 

e.                                       The representations, warranties and
covenants of Seller contained within this Agreement are true and correct.

 

ARTICLE VI

CLOSING AND POSSESSION

 

6.01                           Preclosing Inspection.  Within five (5) days
after the request of either party to do so or immediately prior to each
settlement, whichever is sooner, Purchaser shall accompany Seller on an
inspection of the Commercial Units which are ready for settlement.  Upon
completion of each such inspection, an Inspection Report shall be completed
jointly by Purchaser and Seller, indicating thereon any noncompliance with the
provisions of this Agreement and/or noting any incomplete or defective work
performed or to be performed by Seller.  Failure for the non-requesting party to
participate in such inspections will be considered an acceptance of the
Inspection Report as prepared by the requesting party.  Any defective or
uncompleted work shall be corrected or completed by Seller within sixty (60)
days of said inspection.  Unless Seller has begun and is progressing with all
reasonable diligence toward completion at the end of said sixty (60) day period,
Purchaser may perform the work and Seller shall compensate Purchaser (in cash or
by credit on future settlements) for its actual costs to complete or correct
plus ten percent (10%) for overhead and profit.  Upon acceptance of any work by
Purchaser, as indicated by the Inspection Report, Seller will be deemed for all
purposes of this Agreement to have completed such work.

 

6.02                           Conveyance.     Settlement and closing hereunder
on each Commercial Unit shall be held and conducted on or before the later of
(i) fifteen (15) days after satisfaction of the Pre-Conditions (see Paragraph
5.01) for such Commercial Unit, or (ii) thirty-six months from the effective
date of this Agreement or (iii) at such earlier time as Purchaser may designate
upon fifteen (15) days prior notice.  Settlement and closing shall be held at
the offices of Premier Title, Inc., or by such other agent or attorney
designated by Purchaser and reasonably satisfactory to Seller.  Purchaser shall
provide written notice to Seller of the exact time, date and place of settlement
at least five (5) days prior thereto.  In the absence of such notice of
settlement, it shall be presumed that settlement shall take place at 10:00 a.m.
on the latest date for such settlement and closing pursuant to the terms hereof.

 

6.03                           Deed of Conveyance.     At each settlement,
Seller shall execute and deliver into settlement a Special Warranty Deed in
proper form for recording among the land records of Arlington County, Virginia. 
Seller’s attorney’s fees, costs pertaining to payoff and release of existing
trusts and liens, and the state Grantor’s Tax, shall be paid by the Seller. 
Purchaser shall pay all expenses of examination of title, all other applicable

 

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state, county or city (if any) transfer and recordation taxes and stamps or
similar transfer tax imposed by any governmental authority, all other fees,
charges and expenses of the settlement agent or attorney, title insurance
premiums, if any, and all other recording fees and closing expenses.

 

6.04                           Taxes and Assessments.     Seller shall pay or
credit against the Purchase Price (a) all delinquent real estate taxes or
similar charges (the “Real Estate Taxes”), together with penalties and interest
thereon, (b) all assessments which are a lien against the Commercial Units then
to be closed upon as of the date of closing, both current and reassessed, which
are due and payable on or before closing, (c) all use recoupment taxes
(agricultural or otherwise) for years through the year of closing, if any, and
(d) all real estate taxes for years prior to the closing.  The proration of
undetermined taxes shall be based on a 365-day year and on the last available
tax rate and valuations, giving effect to applicable exemptions, recently voted
millage, change in tax rate or valuation, etc., whether or not officially
certified.  It is the intention of the parties in making this tax proration for
Purchaser to pay to Seller at closing the amount which Seller remitted, or will
be required to remit, to the appropriate collector of taxes for the period of
time after the closing date hereof.  Should the Commercial Units be taxed as
part of a larger parcel, the proration shall be based on the acreage of each
Commercial Units versus the acreage of the larger parcel.  Upon making the
proration provided for herein, Seller and Purchaser agree that the amount so
computed shall be subject to later adjustment should the amount credited at
closing be incorrect based upon actual tax bills received by Purchaser after
closing.  Seller hereby represents and warrants to Purchaser that (i) all
assessments now a lien are shown on the public records of the collector of real
property taxes, (ii) no improvements have been installed by public authority or
Seller, the costs of which are to be assessed against the Commercial Units in
the future, and (iii) Seller has not been notified orally or in writing of
possible future improvements by public authority, any part of the cost of which
would or might be assessed against the Commercial Units.

 

Recognizing that there will be a period of time during which Purchaser shall be
and is authorized to use, occupy and lease to others all or parts of the
Commercial Units, it is agreed that during any such period of authorized use,
the Purchaser shall pay or reimburse Seller for any real estate taxes applicable
to the Commercial Units which are in use or have been occupied by Purchaser or
its authorized assigns.

 

6.05                           Future Encumbrances.     Seller agrees that from
the date of execution hereof by Seller, Seller may not further encumber the
Commercial Units, except for the recordation of the Declaration of Condominium,
without the written consent of the Purchaser, which consent will not be
unreasonably withheld.

 

6.06                           FIRPTA.     Seller hereby represents and warrants
to Purchaser that Seller is not a “foreign person” within the meaning of
Section 1445 of the Internal Revenue Code of 1986, and Seller further agrees, at
closing, if requested, to furnish Purchaser an affidavit to this effect
complying with the provisions of Section 1445 of the Internal Revenue Code.

 

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6.07                           Performance.     The delivery to settlement
attorney or agent of the cash payment, the executed deed of conveyance, and all
other documents and instruments required to be delivered by either party to the
other by the terms of this Agreement shall be deemed to be good and sufficient
tender of performance of the terms hereof.  Seller shall give possession of each
Commercial Unit at the time of payment of Purchase Price and delivery of the
appropriate deed of conveyance for such Commercial Unit.

 

6.08         Temporary Use and Occupancy.     The Seller hereby agrees Purchaser
and its tenants, if any, shall be permitted to use and occupy the Commercial
Units prior to their legal conveyance to Purchaser in accordance with the terms
and provisions of a “AGREEMENT FOR TEMPORARY USE AND OCCUPANCY OF COMMERCIAL
UNITS”, the form of which is attached hereto as Exhibit C.

 

ARTICLE VII

DECLARATION OF CONDOMINIUM

 

7.01.                        Declaration of Condominium.  Prior to settlement
and closing on each Commercial Unit, each Commercial Unit shall be subjected to
the Declaration of Condominium, all other related documents and to all of the
terms and conditions related thereto (jointly the “Condominium Documents”).  The
Purchaser acknowledges that it has been provided with a copy of the Application
and that it has fully reviewed the Application and understands the terms and
conditions contained therein as they relate to the Commercial Units.  The
Commercial Units shall be constructed, occupied, used and/or sold subject to the
terms and conditions of the Condominium Documents as they relate to the
Commercial Units.

 

ARTICLE VIII

PURCHASER’S IMPROVEMENTS

 

8.01.                        Improvements.

 

a.                                       The design and location of all
improvements to be constructed by Purchaser on the exterior of Commercial Units
shall be subject to the prior review and approval by the Seller (in addition to
and not in lieu of any review and approval required by the Condominium
Documents).  Purchaser agrees to adhere to all design standards as may be
imposed by the Seller and shall adhere to all revisions thereto that are known
to Purchaser submitting an application for building permit for each commercial
unit.

 

b.                                      Applications for approvals under this
Paragraph are to be submitted in duplicate.  All approvals or disapprovals shall
be in writing and shall not be unreasonably withheld.  The Seller shall approve
or disapprove submissions within fifteen (15) calendar days of receipt, subject
to reasonable extensions.  If no approval or disapproval is communicated in
writing within said fifteen (15) calendar days, requests shall be deemed
approved.  Reasons will be stated to Purchaser in writing for any disapprovals.

 

c.                                       Governmental approval of Purchaser’s
construction plans for any

 

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Commercial Unit is not a condition precedent to Purchaser’s obligation to close
on such Commercial Unit.

 

d.                                      Seller agrees that as to all plans for
the design and configuration of the Commercial Units it shall not permit the
control of any architectural or design review process to be provided to any
other party prior to Purchaser being provided the plans and approving the same.

 

8.02.                        Maintenance of Construction Site.     Purchaser
shall maintain its construction site in an orderly fashion, and shall remove all
debris and equipment daily.  Purchaser shall keep roads and pedestrian access
ways free from storage of equipment, building materials, and dirt both on the
Project and on all roads daily.  Parking of vehicles for workmen must be
provided off the publicly dedicated rights-of-way.

 

8.03.                        Purchaser’s Construction Activities.     Purchaser
shall complete all improvements in the Commercial Units in a timely and
workmanlike manner.

 

8.04.                        Compliance with Laws.     All improvements
constructed by Purchaser in the Commercial Units shall conform to the
Condominium Documents and all applicable laws, codes, ordinances, and
regulations, and shall also comply with all development conditions applicable to
the Project.

 

ARTICLE IX

DEFAULT

 

9.01                           Purchaser.

 

a.                                       In the event Purchaser shall default
with respect to its obligations to proceed to full and final settlement on any
Commercial Unit, then Seller shall give written notice to Purchaser that said
default shall be cured within ninety (90) days of Purchaser’s receipt of such
notice.  If Purchaser fails to cure the default within such ninety (90) day cure
period, then Seller shall be entitled to terminate this Agreement and to retain,
as Seller’s fixed, agreed and liquidated damages, and as Seller’s sole remedy,
the Deposit (or the remaining balance thereof) delivered to the Seller by the
Purchaser and thereafter the parties shall be relieved of all liability and
obligation under this Agreement excluding, however, the indemnification of
obligations under Paragraph 4.01, which shall survive termination.  The parties
hereto agree that if Purchaser defaults on its obligations as described above
the actual damages thereby incurred by Seller would be difficult to measure and
the retention of the Deposit by Seller would in such circumstances represent
reasonable compensation to Seller on account thereof.

 

b.                                      In the event Purchaser shall default
with respect to any other obligation to be performed in accordance with the
terms hereof, and if Seller is ready, willing and able to perform, then Seller
shall give written notice to Purchaser that said default shall be cured within
thirty (30) days of Purchaser’s receipt of such notice.  If Purchaser fails to
cure the default within such thirty (30) day cure period, to Seller’s

 

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reasonable satisfaction, then the Seller shall be entitled to act on the benefit
of Purchaser, to cure or remedy any breach by Purchaser, and to charge to
Purchaser all costs related to such remediation.

 

9.02                           Seller.

 

a.                                       In the event Purchaser shall default
with respect to its obligations to proceed to full and final settlement on any
Commercial Unit, then Seller shall give written notice to Purchaser that said
default shall be cured within thirty (30) days of Purchaser’s receipt of such
notice.  If Purchaser fails to cure the default within such thirty (30) day cure
period, then as Purchaser’s sole option and remedy, Purchaser may seek to
enforce the remedy of specific performance.  Notwithstanding the preceding
sentence, if an only if the remedy of specific performance is unavailable to the
Purchaser as a result of the Purchaser having previously conveyed the Commercial
Unit at issue to a third party, then Purchaser may pursue all other remedies
available to Purchaser at law or in equity.  At Purchaser’s option, should
Purchaser elect to proceed to closing and there remain deficiencies in the
Commercial Units which are the result of Seller’s breach, Purchaser shall have
the right, but not the option, to initiate reasonable cure and remedy of all
such Seller caused breaches and charge Seller or otherwise receive credit for
all such cures at closing or by other means.

 

b.                                      In the event Seller shall default with
respect to any other obligation to be performed in accordance with the terms
hereof, and if Purchaser is ready, willing and able to perform, then Purchaser
shall give written notice to Seller that such default shall be cured within
thirty (30) days of Seller’s receipt of such notice.  If Seller fails to cure
the default within such thirty (30) day cure period, to Purchaser’s reasonable
satisfaction, then, at Purchaser’s sole option, Purchaser may either
(i) terminate this Agreement, whereupon the Seller shall return the Deposit (or
the then remaining balance thereof) to the Purchaser, after which event neither
party shall have any further liability hereunder, or (ii) enforce only the
remedy of specific performance.  Notwithstanding the preceding sentence, if and
only if the remedy of specific performance is unavailable to the Purchaser as a
result of the Purchaser having previously conveyed the Commercial Unit at issue
to a third party, then Purchaser may pursue all other remedies available to
Purchaser at law or in equity.

 

ARTICLE X

AGENTS AND COMMISSION

 

10.01                     Liability.     Seller and Purchaser each warrant to
the other that neither has dealt with any agent, broker or finder with respect
to the transaction contemplated by this Agreement.  In the event that any other
claim for commission or finder’s fee is brought by any person or entity as a
consequence of the transaction contemplated hereby, then the party whose acts
gave rise to such claim shall hold harmless the other party against any loss,
cost or expense of any nature, including, but not limited to, court costs and
reasonable attorney’s fees arising as a consequence of the claim for the
commission or fee.

 

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ARTICLE XI

CONDEMNATION

 

11.01                     Notice and Award.     Seller agrees to give Purchaser
prompt notice of any actual or threatened taking of all or any portion of the
Commercial Units by condemnation or eminent domain prior to the date of closing
hereunder.  In the event that prior to closing hereunder there shall occur a
taking by condemnation or eminent domain or a proposed conveyance to a
condemning authority in lieu of condemnation, of all or any material portion of
the Commercial Units, then Purchaser, at its option, may either (i) terminate
this Agreement by written notice to Seller whereupon the Seller shall return the
Deposit (or the then remaining balance thereof) to Purchaser and the parties
shall not be further obligated to each other pursuant to this Agreement, except
for the indemnification obligations set forth in Paragraph 4.01 and their
obligations pursuant to Paragraph 14.06, or (ii) proceed to closing hereunder,
without reduction in the Purchase Price, in which event Seller shall assign to
Purchaser at closing all interest of Seller in and to any condemnation proceeds
(but not exceeding the amount of the Purchase Price) that may be payable to
Seller on account of such condemnation with respect to the Commercial Units;
Purchaser shall receive a credit at closing in the amount of any condemnation
proceeds paid to Seller with respect to the Commercial Units prior to the date
of closing (to the extent that such amount does not exceed the Purchase Price
thereof).

 

ARTICLE XII

SELLER’S REPRESENTATIONS

 

12.01                     General.     Seller hereby represents, warrants and
covenants to Purchaser that Seller is a duly organized and validly existing
limited liability company under the laws of the Commonwealth of Virginia,
qualified to do business in the Commonwealth of Virginia, and in good standing;
that Seller has the power as a limited liability company to execute and perform
this Agreement; that all necessary consents and approvals from the Seller have
been obtained; and that the person executing this Agreement on behalf of Seller
is duly empowered to bind Seller to perform its obligations hereunder.  Copies
of any necessary approvals are to be furnished by Seller upon written request by
Purchaser.

 

12.02                     Specific.     In addition to any other warranty made
in connection with this Agreement, the Seller warrants and agrees that as of the
date of settlement (a) the Seller is the fee simple owner of the Commercial
Units, and the Commercial Units are free and clear of all liens and encumbrances
except as otherwise provided herein; (b) that to the best of Seller’s knowledge
and belief, the Commercial Units do not contain any hazardous substance other
than trace amounts usually and customarily created as a result of the
construction of improvements similar to the Commercial Units, the Seller has not
conducted or authorized the generation, transportation, storage, treatment or
disposal at the Project of any hazardous substance other than as is customary
resulting from development of improvements similar to the Project or development
of surrounding properties; that the Seller has not received any notice of, and
has no knowledge that, any government authority or any employee or agent
thereof, or any private citizen, has determined, or threatens to determine, or
has made any claim in any form, that there is a presence, release, threat of
release, placement on or in the Project, or the generation,

 

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transportation, storage, treatment or disposal at the Project, of any hazardous
substance; nor has any “clean-up” of the Project occurred pursuant to the
Environmental Laws (as hereinafter defined) which could give rise to liability
on the part of Purchaser to reimburse any governmental authority for the costs
of such clean-up or a lien or encumbrance on the Project.  For purposes of this
paragraph, “hazardous substance” means any materials in violation of any
applicable environmental laws or regulations including, but not limited to,
Section 103 of the Comprehensive Environmental Response, Compensation and
Liability Act, 42 U.S.C. 9601 et seq., any “superlien” laws, any “superfund”
laws, or similar federal, state or local laws, or any successor statutes thereto
(the “Environmental Laws”); (c) no suit, actions, arbitration or legal,
administrative or other proceeding is pending or has been threatened against the
Commercial Units, or against Seller with respect to the Commercial Units, or any
part thereof; (d) no bankruptcy, insolvency, rearrangement, or similar action or
proceeding, whether voluntary or involuntary, is pending or threatened against
Seller, or any parent, partner or person or entity with a controlling interest
of the Seller, and Seller has no intention of filing or commencing any such
action or proceeding; (e) that Seller has granted no person any contract right
or other legal right to the use of any portion of the Commercial Units or to the
furnishing or use of any facility or amenity on or relating solely to the
Commercial Units other than as may be set forth in the Condominium Documents;
and (f) that the execution of this Agreement will not conflict with or result in
a breach of any of the terms or provisions of, constitute a default under, or
cause or allow an acceleration of any note, mortgage, deed of trust, loan
agreement or other document, instrument or agreement to which Seller is a party
or by which the Commercial Units are encumbered or affected.  Notwithstanding
the foregoing, Purchaser acknowledges that Seller has disclosed and Purchaser is
aware as a matter of public record that the Commercial Units will be located in
a Project which will be built upon formerly contaminated industrial property
which property has been fully remediated under applicable state and federal
environmental laws and certified for use which use expressly includes the uses
contemplated by Purchaser and authorized under all applicable environmental and
zoning laws.

 

12.03                     Mechanic’s Liens.     All contractors, subcontractors,
laborers, and materialmen who are or did perform work upon or furnish labor or
materials at Seller’s request to improve or benefit the Commercial Units prior
to settlement have been or will be paid in full by Seller in the ordinary course
of business.  Seller will execute at closing the necessary affidavits and other
documents reasonably required by Purchaser’s title insurance company to
eliminate from its title policy any exception to filed or unfiled mechanic’s
liens arising from any act of Seller or its subcontractors.  Should at any time
after settlement and closing a notice of intent to file a mechanic’s lien or a
mechanic’s lien be filed against the Commercial Units arising from any act of
Seller or its contractors, subcontractors, laborers or materialmen, Seller
shall, within thirty (30) days of written notification from Purchaser to Seller
of the filing of such notice or lien, cause said notice or lien to be withdrawn
or released of record, either by payment in full of all sums represented by said
lien or by statutory bonding.  Seller shall indemnify and hold Purchaser
harmless against all costs and expenses (including reasonable attorney’s fees)
incurred by Purchaser for Seller’s failure to do so.

 

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12.04                     Indemnification.     Seller shall, and hereby does
indemnify, protect and hold harmless the Purchaser of, and from, any and all
liability and all loss, damage and expense including judgments, costs and
attorney’s fees by reason of injuries to or death of any person or persons,
expressly including therein employees of Seller, its subcontractors, employees
and agents, or loss of or damage to their property or that of any person, firm,
association or corporation, however the same shall occur or be caused or by
reason of claim of any and every character whatsoever in any manner resulting
from, arising out of, or connected with any work, or undertaking, or acts or
omissions of Seller or its employees and agents, whether such acts or omissions
be claimed to be negligent or not, except that this indemnification provision
shall not cover the gross negligence or intentional wrong doing of the Purchaser
or its subcontractors, employees and agents.

 

12.05                     Affidavit.     All of the foregoing covenants,
warranties and representations will be effective, repeated and true at the time
of settlement and closing and Seller will provide an affidavit to that effect.

 

12.06                     Warranty of Workmanship.     Seller warrants that all
conditions and improvements in the Commercial Units, including but not limited
to the elements required by Exhibit E, are and shall be complete and Seller
warrants all such work for a period of one year from the date the Commercial
Unit is made available for use, occupancy or leasing by the Purchaser.

 

12.07                     Survival.     The warranties set forth above will
survive for a period of one (1) year after the conveyance of the last Commercial
Unit to the Purchaser and will be for the benefit of the Purchaser and its
successors and/or assignees.  In addition to other remedies available to the
Purchaser at any time, the Seller will indemnify the Purchaser for, and will
save it harmless from, all claims for damages, suits for injunctive relief and
other proceedings and attorney’s fees and costs of any kind which may be
asserted or incurred at any time hereafter by reason of any allegation or
occurrence which (if true) would involve a material breach of any of the
warranties provided above.

 

ARTICLE XIII

PURCHASER’S REPRESENTATIONS

 

13.01                     General.     Purchaser hereby represents, warrants and
covenants to Seller that Purchaser is a duly organized and validly existing
limited liability company under the laws of the Commonwealth of Virginia,
qualified to do business in the Commonwealth of Virginia, and in good standing;
that Purchaser has the power to execute and perform this Agreement; that all
necessary consents and approvals from the Purchaser have been obtained; and that
person executing this Agreement on behalf of Purchaser is duly empowered to bind
Purchaser to perform its obligations hereunder.  Copies of any necessary
approvals are to be furnished by Purchaser upon written request by Seller.

 

13.02                     Indemnification.     Purchaser shall, and hereby does
indemnify, protect and hold harmless the Seller of, and from, any and all
liability and all loss, damage and

 

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expense including judgments, costs and attorney’s fees by reason of injuries to
or death of any person or persons, expressly including therein employees of
Purchaser, its subcontractors, employees and agents, or loss of or damage to
their property or that of any person, firm, association or corporation, however
the same shall occur or be caused or by reason of claim of any and every
character whatsoever in any manner resulting from, arising out of, or connected
with any work, or undertaking, or acts or omissions of Purchaser or its
employees and agents, whether such acts or omissions be claimed to be negligent
or not, except that this indemnification provision shall not cover the gross
negligence or intentional wrong doing of the Seller or its subcontractors,
employees and agents.

 

13.03                     Survival.     The warranties set forth above will
survive for a period of one (1) year after the conveyance of the last Commercial
Unit to the Purchaser and will be for the benefit of the Seller and its
successors and/or assignees. In addition to other remedies available to the
Seller at any time, the Purchaser will indemnify the Seller for, and will save
it harmless from, all claims for damages, suits for injunctive relief and other
proceedings and attorney’s fees and costs of any kind which may be asserted or
incurred at any time hereafter by reason of any allegation of occurrence which
(if true) would involve a breach of any of the warranties provided above.

 

ARTICLE XIV

MISCELLANEOUS

 

14.01                     Notice.     All notices and other communications
hereunder shall be in writing and be deemed duly given if personally delivered,
telecopied with proof of receipt or mailed by certified mail, return receipt
requested, postage prepaid;

 

if to Seller to:

 

Comstock Potomac Yard, L.C.

 

 

11465 Sunset Hills Road, Suite 510

 

 

Reston, Virginia 20190

 

 

Attn: Gregory V. Benson/Jubal R. Thompson

 

 

telecopier #(703) 760-1520

 

 

 

with a copy to:

 

Bankert & Associates, P.C.

 

 

3025 Hamaker Court, Suite 501

 

 

Fairfax, Virginia 22031

 

 

Attn: Joseph E. Bankert, Esquire

 

 

telecopier #(703) 876-4628

 

 

 

and if to Purchaser to:

 

Comstock Asset Management, L.C.

 

 

11465 Sunset Hills Road, Suite 510

 

 

Reston, Virginia 20190

 

 

Attn: Christopher D. Clemente

 

 

telecopier #(703) 760-1520

 

The parties hereto shall be responsible for notifying each other of any change
of

 

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address.

 

14.02                     Survival.     The provisions hereof shall survive the
execution and delivery of the deed(s) executed hereunder and shall not be merged
therein.

 

14.03                     Assignment.     The principals to the Agreement
mutually agree that with the benefits hereunder are not assignable by either
party without the written consent of the other party.  Such consent may be
granted or withheld at either party’s sole discretion and option without
applying the standard of reasonableness.

 

14.04                     Construction of Agreement.

 

a.                                       This Agreement may be executed in
several counterparts, each of which shall be deemed an original, but all of
which shall constitute one and the same instrument.  .  Each party shall become
bound by this Agreement immediately upon affixing its signature hereto
independently of the signature of any other party.  Any signature or
acknowledgement page to any counterpart may be detached from such counterpart
without impairing the legal effect of the signatures or acknowledgments thereon
and thereafter attached to another counterpart identical thereto except having
attached to it additional signature or acknowledgment pages.

 

b.                                      Titles to paragraphs and subparagraphs
are for convenience only and are not intended to limit or expand the covenants
and obligations expressed thereunder.

 

c.                                       Time shall be of the essence with
regard to all terms and conditions of this Agreement.

 

d.                                      This Agreement contains the entire
agreement among the parties hereto with respect to the Commercial Units.  No
change or modification of this Agreement, or any waiver of the provisions
hereof, shall be valid unless same is in writing and signed by the parties
hereto.

 

e.                                       Waiver of performance or satisfaction
of timely performance or the satisfaction of any condition, covenant,
requirement, obligation or warranty by one party shall not be deemed a waiver of
the performance or satisfaction of any other condition, covenant, requirement,
obligation or warranty unless specifically consented to in writing.

 

f.                                         In the event any moratorium which has
a materially adverse effect on the Commercial Units are imposed by any
governmental entity, either the Purchaser or Seller shall be entitled to extend
all time periods imposed in this Agreement by a period equal to the length of
the moratorium, provided, that if such moratorium shall extend beyond nine
(9) months either party hereto may terminate this Agreement, in which event the
Deposit (or the remaining balance thereof) shall be forthwith returned to
Purchaser and both parties shall be released of all further liability or
obligation hereunder.

 

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g.                                      It is the intention of the parties
hereto that all questions with respect to the construction of this Agreement and
the rights or liabilities of the parties hereunder shall be determined in
accordance with the laws of the Commonwealth of Virginia.

 

h.                                      Any date specified in this Agreement
which is a Saturday, Sunday or legal holiday, shall be extended to the first
regular business day after such date which is not a Saturday, Sunday or legal
holiday.  Any reference herein to the singular shall include the plural and vice
versa and reference to the male, female or neuter gender shall include reference
to all other genders.

 

i.                                          This Agreement represents the result
of bargaining and negotiations between the parties and of a combined
draftsmanship effort.  Consequently, Seller and Purchaser expressly waive and
disclaim, in connection with the interpretation of this Agreement, any rule of
law requiring that ambiguous or conflicting terms be construed against the party
whose attorney prepared this Agreement or any earlier draft hereof.

 

j.                                          Nothing contained herein is intended
to create, nor shall it ever be construed to make, Seller and Purchaser partners
or joint venturers.

 

k.                                       In the event that full performance
under this Agreement has not occurred within ten (10) years of the date hereof,
this Agreement shall terminate and be of no further force and effect, with the
Deposit being returned to Purchaser.

 

l.                                          Each of the exhibits attached hereto
(if any) is incorporated herein by reference.  Any exhibit not available at the
time this Agreement is executed and signed shall be agreed upon, initialed and
attached by the parties as soon after execution as practical.  The failure to
attach any exhibits shall not effect the validity of this Agreement unless the
parties are in material disagreement as to the contents thereof.

 

14.05                     Duration and Acceptance of Offer.     Should this
Agreement be ratified by one party prior to submission to the other party,
Purchaser’s offer to purchase or Seller’s offer to sell, as the case may be,
shall remain open for fifteen (15) days after ratification by the first party to
do so.  Should the other party not ratify this Agreement within said fifteen
(15) day period, the offer to purchase or sell, as the case may be, is withdrawn
and this Agreement shall be null and void.

 

14.06                     Continuing Rights and Obligations.     Notwithstanding
anything otherwise contained herein to the contrary, in the event that this
Agreement terminates for any reason whatsoever after Purchaser has acquired one
or more of the Commercial Units but prior to Purchaser acquiring all of the
Commercial Units, then this Agreement shall be deemed to have terminated with
respect to, but only with respect to, those rights and obligations of Seller and
Purchaser which relate to those Commercial Units not yet acquired by Purchaser
at the time of such termination.  All rights and obligations hereunder of Seller
and Purchaser which relate to those Commercial Units acquired by Purchaser prior
to such terminations shall remain in full force and effect.

 

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14.07                     Validity.     If any term, covenant or condition of
this Agreement or the application thereof to any party shall be invalid or
unenforceable, the remaining terms, covenants and conditions or circumstances
shall not be affected thereby, and each term shall be valid and enforceable to
the fullest extent permitted by law.

 

14.08                     Litigation.     In the event any party is required to
resort to litigation to enforce its rights hereunder, the parties hereto agree
that any judgment awarded to the substantially prevailing party shall include
all litigation expenses, including reasonable attorney’s fees and costs.  EACH
PARTY HERETO WAIVES TRIAL BY JURY IN ANY ACTION, PROCEEDING, CLAIM OR
COUNTERCLAIM BROUGHT BY ANY PARTY IN CONNECTION WITH ANY MATTER ARISING OUT OF
OR IN ANY WAY CONNECTED WITH THIS AGREEMENT, THE RELATIONSHIP OF PURCHASER AND
SELLER HEREUNDER OR THE COMMERCIAL UNITS.

 

14.09                     Effective Date.     The date on which this Agreement
is accepted by the last party to accept and sign this Agreement shall be
inserted as the effective date of this Agreement under the first paragraph
hereof.

 

WITNESS the following signatures and seals:

 

 

[SIGNATURES FOLLOW]

 

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SELLER:

 

 

 

COMSTOCK POTOMAC YARD, L.C.

 

a Virginia limited liability company

 

 

 

 

 

by

 

Comstock Holding Company, Inc.

 

 

 

a Virginia corporation

 

 

 

its manager

 

 

 

 

Acknowledgement:

 

 

 

 

 

 

 

/s/ JAT

 

By:

/s/ Gregory Benson

 

 

 

Name:

Gregory V. Benson

 

 

Title:

President

 

 

 

 

 

 

 

 

 

PURCHASER:

 

 

 

 

 

COMSTOCK ASSET MANAGEMENT, L.C.

 

a Virginia limited liability company

 

 

 

 

Acknowledgement:

 

 

 

 

 

 

 

 

 

By:

/s/ Christopher Clemente

 

 

 

Name:

Christopher Clemente

 

 

Title:

Manager

 

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EXHIBIT A

 

Attached hereto as Exhibit A shall be a description of the Project.

 

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EXHIBIT B

 

Attached hereto as Exhibit B shall be a description of Commercial Units #1-#5

 

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EXHIBIT C

 

Attached hereto as Exhibit C- shall be a AGREEMENT FOR TEMPORARY USE AND
OCCUPANCY OF COMMERCIAL UNITS.

 

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EXHIBIT D

 

Attached hereto as Exhibit D shall be form of the Deposit Deed of Trust

 

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EXHIBIT E

 

Attached hereto as Exhibit E shall be the general specifications for fit out of
the Commercial Units as referenced in Section 5.01(b).

 

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