EXHIBIT 10.39
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LOAN AGREEMENT
     THIS LOAN AGREEMENT (this “Agreement”) is made as of this 31st day of
January, 2006 by and between (i) COMSTOCK CARTER LAKE, L.C., a Virginia limited
liability company (“Borrower”) and (ii) BANK OF AMERICA, N.A., a national
banking association (the “Lender”).
R E C I T A L S:
     WHEREAS, Lender has agreed to make a loan to Borrower as more particularly
described herein (the “Loan”) for the purpose of the acquisition of an apartment
complex in Reston, Fairfax County, Virginia containing in the aggregate 259
units (each a “Unit” and collectively, the “Units”), more fully described in
Exhibit “A” hereto.
     WHEREAS, Lender acknowledges that Borrower intends to renovate and convert
the Units into condominiums (the “Renovation”) during the term of the Loan, such
Renovation being subject to the provisions of this Agreement;
     WHEREAS, Comstock Homebuilding Companies, Inc. has executed and delivered
to Lender a Guaranty (as defined herein); and
     WHEREAS, Lender and Borrower have agreed to execute this Agreement for the
purpose of describing together with the other Loan Documents (as herein defined)
some of the obligations of Borrower and the Lender.
W I T N E S S E T H:
     For and in consideration of these presents, and in further consideration of
the mutual covenants and agreements herein set forth, and in consideration of
the sum of Ten and no/100 Dollars ($10.00) lawful money of the United States of
America by each of the parties to the other paid, receipt of which is hereby
acknowledged, the parties hereto, intending to be legally bound, do hereby
covenant and agree as follows:
ARTICLE I — DEFINITIONS
     1.1 Definitions. Borrower and the Lender agree that, unless the context
otherwise specifies or requires, the following terms shall have the meanings
herein specified, such definitions to be applicable equally to the singular and
the plural forms of such terms and to all genders:

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          (a) Appraised Value — The then current market value determined
pursuant to the most recent appraisal for the Property. All such appraisals
shall be ordered by the Lender, prepared at Borrower’s expense by a certified
appraiser acceptable to the Lender and otherwise satisfactory to the Lender in
all respects. The Lender may order, if required by the Lender’s internal
policies, reappraisals of the Property, at the Lender’s sole discretion and at
Borrower’s expense.
          (b) Borrower — The entity hereinabove designated as such.
          (c) Contract — A fully executed contract of sale for a Unit that:
(i) has been accepted by Borrower and meets the Lender’s criteria for acceptable
contracts; (ii) is not subject to cancellation without forfeiture of all
deposits thereunder (except for cause in accordance with applicable law and in
the event the purchaser fails to obtain the necessary mortgage loan); (iii)
contains no contingencies (including, without limitation, the sale of the
purchaser’s home) except ordinary financing contingencies; (iv) is accompanied
by a cash deposit or deposits in form, content and amount acceptable to the
Lender; and (v) that either (A) provides for a cash sale (i.e., a sale not
contingent upon financing) by a purchaser whose creditworthiness is satisfactory
to the Lender in all respects, or (B) is accompanied by a pre-qualification
letter from a permanent mortgage lender in form, amount and content satisfactory
to the Lender in all respects. In lieu of copies of Contracts, the Borrower may
elect to submit a “Unit Contract Summary Report” in form attached hereto as
Exhibit “B”. At Lender’s option, no more than twice monthly Lender shall verify
the accuracy of the information on each Unit Contract Summary Report through a
review of Borrower’s files. Notwithstanding the foregoing, the Lender shall
retain the right to request copies of Contracts at any time during the term of
the Loan. At the time any Unit Contract Summary Report is submitted to the
Lender for its approval, Borrower shall specifically identify to the Lender each
Contract wherein the purchaser is affiliated with or related to Borrower,
Guarantor (hereinafter defined) or any of their respective employees,
shareholders, partners, members or other principals, as applicable “Related
Party Contracts”). The number of Related Party Contracts shall not exceed ten
percent (10%) of the total Units without Lender’s prior consent.
          (d) Deed of Trust — Collectively, that certain Credit Line Deed of
Trust and Security Agreement of even date herewith, executed and delivered by
Borrower to secure the Loan, as any of the same may from time to time be
amended, modified, supplemented or spread.
          (e) Default — Any of the happenings, events, circumstances or
occurrences designated as such in this Agreement.
          (f) Environmental Regulations — “Environmental Regulations” as defined
in the Deed of Trust.
          (g) Guarantor — Comstock Homebuilding Companies, Inc. and any other
party that executes and delivers a Guaranty, and its or their respective
successors, personal representatives and permitted assigns.

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          (h) Guaranty — That certain (i) Guaranty Agreement of even date
herewith executed and delivered by Guarantor to secure the Loan and all other
indebtedness under the Loan Documents (hereinafter defined), and (ii) any and
all other guaranty agreements executed for the benefit of the Lender to secure
the Loan, as any of the same may from time to time be amended, modified,
replaced or supplemented.
          (i) Hazardous Materials — “Hazardous Materials” as defined in the Deed
of Trust.
          (j) Improvements — Any and all buildings, structures, improvements,
alterations or appurtenances already existing or at any time hereafter
constructed or placed upon the Land, and any replacements thereof, additions
thereto and substitutions therefor, including without limitation, all equipment,
apparatus, machinery and fixtures of any kind or character forming a part
thereof.
          (k) Indebtedness — All amounts due or to become due to the Lender
pursuant to or on account of the Note (hereinafter defined), this Agreement and
each of the other Loan Documents, including, without limitation, all principal
(whether advanced prior to, upon execution of, or after the date of this
Agreement), interest, late charges, loan fees, extension fees, prepayment fees,
amounts drawn under any letters of credit, any letter of credit fees and all
other payments required to be made by the Borrower pursuant to or on account of
the Note, this Agreement and any of the other Loan Documents, and including any
and all amounts advanced by the Lender for the account of the Borrower pursuant
to the provisions of this Agreement and any of the other Loan Documents, whether
or not such amounts are advanced from the proceeds of the Loan.
          (l) Jurisdiction of Choice — The Commonwealth of Virginia, the
jurisdiction under whose laws this Agreement shall be governed, unless otherwise
provided herein.
          (m) Land — Any or all of the real property now owned or hereafter
acquired by the Borrower with Loan proceeds and more particularly described in
the Deed of Trust.
          (n) Lender — The party hereinabove designated as such, its successors
and assigns.
          (o) Loan — That certain acquisition loan in the amount of
$26,000,000.00, made pursuant to this Agreement, to finance the acquisition of
certain property, as evidenced by the Note and secured by the Deed of Trust and
the other Loan Documents.
          (p) Loan Documents — This Agreement, the Note, the Deed of Trust, any
Guaranty and any other instrument or documents executed in connection with the
Loan, as any of the same may from time to time be amended, modified or
supplemented.
          (q) Maturity Date — July 31, 2006.

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          (r) Note — That certain Deed of Trust Note of even date herewith in
the original principal amount of $26,000,000.00, or so much thereof as shall be
advanced, made by the Borrower, payable to the order of the Lender, as the same
may from time to time be amended, modified, replaced or supplemented.
          (s) Obligations — Any and all of the covenants, warranties,
representations, agreements, promises and other obligations (other than the
Indebtedness) made or owing by the Borrower, the Guarantor or others to the
Lender pursuant to or as otherwise set forth in the Loan Documents.
          (t) Progress Inspector — Such person or firm as the Lender may from
time to time appoint or designate to inspect the progress of the Renovation and
conformity of construction with applicable laws, and for such other purposes as
may from time to time seem appropriate to the Lender or as may be required by
the terms of this Agreement
          (u) Project — Carter Lake Project (hereinafter defined).
          (v) Property — The property described as such in the Deed of Trust,
including, but not limited to, the Land and the Improvements.
          (w) Title Company — Any title company approved by the Lender that
provides mortgagee title insurance covering the lien of the Deed of Trust in
favor of the Lender thereon.
          (x) Carter Lake Project — acquisition of an apartment complex in
Reston, Fairfax County, Virginia containing 259 apartment Units to be converted
into 258 condominium Units.
ARTICLE II — CONDITIONS PRECEDENT TO CLOSING
     In addition to any other conditions stated in this Agreement, the following
conditions must be satisfied prior to Lender having any obligation to advance
funds hereunder:
     2.1 Loan Documents. Receipt by Lender of appropriately completed and duly
executed originals of this Agreement and the other Loan Documents. In addition,
Borrower shall provide a written opinion of counsel to the Borrower and the
Guarantor as to the authority of the Borrower and the Guarantor to execute and
deliver the Loan Documents, as to the enforceability and validity of the Loan
Documents, and as to such other matters as the Lender may reasonably require.
     2.2. Organizational Documents. Borrower shall supply, with respect to the
Borrower and Guarantor: (i) a currently certified copy of the Articles of
Organization or Certificate of Incorporation and all amendments thereto, as
applicable; (ii) evidence satisfactory to Lender and its counsel that Borrower
and Guarantor in good standing in the jurisdiction where

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organized and qualified to do business in every jurisdiction in which the nature
of their businesses or their properties makes such qualification necessary;
(iii) resolutions of the Borrower and Guarantor authorizing the due execution
and delivery of the Loan Documents to which it is a party, to the extent
necessary; and (iv) certified true copies of the Operating Agreement or By-laws
and all amendments thereto, as applicable.
None of the documents pursuant to which the Borrower or Guarantor is organized
shall be amended or modified in any respect without the prior written consent of
the Lender, which may be given or withheld in the reasonable discretion of the
Lender.
     2.3 Insurance. Borrower shall provide Lender with a complete and fully paid
up policy or policies of casualty and fire insurance with standard extended
coverage in an amount not less than the replacement cost of the improvements and
personalty located on the Property; $2,000,000.00 covering all claims for bodily
injury or death and property damage arising out of a single occurrence and
$2,000,000.00 for the aggregate of all occurrences during any given annual
policy period, plus $5,000,000.00 of “umbrella” coverage; builder’s risk
insurance with on a completed value, nonreporting form with permission to
complete and occupy; malicious mischief insurance; business interruption
insurance and insurance against such other hazards as Lender may require, in
amounts, with insurers and under forms of policies containing such provisions
and endorsements as Lender may require. All policies of insurance (except
employee benefit and public liability insurance which shall name Lender as an
additional insured) shall contain a lender’s loss payable clause and standard
mortgagee clause for the benefit of Lender, and shall provide, in part, that:
(a) in the event of a loss, all insurance proceeds shall be paid to Lender and
Lender shall be authorized and empowered by Borrower to settle, adjust or
compromise any claims for loss, damage or destruction under such policies of
insurance; (b) any loss covered by such insurance shall be payable by the
insurer in accordance with the terms of such policy notwithstanding any act or
negligence of Borrower, its agents or employees, the named insured or any owner,
tenant or occupant of the Property which might otherwise result in forfeiture of
said insurance; (c) the insurer waives all rights of setoff, counterclaim or
deduction against Borrower; and (d) should title to and beneficial ownership of
the Property become vested in Lender, the insurance provided by such policies
shall continue for the term thereof for the benefit of Lender. All required
insurance shall provide that (i) the insurance afforded all parties named as
insureds shall be primary insurance and shall not participate with, nor be in
excess over, any other valid and collectible insurance available to Lender,
(ii) any other insurance obtained by any named insured shall not be called upon
to contribute until the limits of the policies required hereunder are exhausted,
and (iii) the insurance required hereunder cannot be canceled or materially
amended or altered without at least thirty (30) days prior written notification
to Lender. All insurance required hereunder shall be issued by companies and in
an amounts in each company approved in advance by Lender, in its sole
discretion, and such insurance shall be in the form and on terms (including but
not limited to deductibles, self-insured retentions or similar provisions)
approved in advance by Lender, in its sole discretion.
     Borrower shall deliver all such policies (or certified copies thereof) to
Lender, together with a one-year’s paid receipt for each such policy. In
addition, Lender shall be furnished with

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satisfactory evidence indicating whether the Property is located within an area
that has been identified as a “special flood hazard area” as that term is used
in the Flood Disaster Protection Act of 1973. If any insurable improvements on
the Property are located in any area so designated, a flood insurance policy
satisfactory to Lender shall be deposited with Lender prior to the closing on
the Loan and shall be maintained in full force until the Loan is repaid in full.
     2.4 Financing Statement. The financing statement necessary to perfect
Lender’s security interest in the personal property subject to the Deed of Trust
shall be duly filed in all appropriate offices and jurisdictions, all other
financing statements covering any of such personal property shall be terminated,
and filing and recording receipts evidencing such filings and terminations shall
be delivered to Lender, all in form and substance satisfactory to Lender.
     2.5 Real Estate Documents. Lender shall have received and approved, in its
sole discretion, the following:
          (a) Appraisal. An appraisal of the Property, prepared by an appraiser
acceptable to Lender, in form and content acceptable to Lender, conforming to
all regulatory and internal appraisal guidelines applicable to or established by
Lender, in its sole, absolute, nonreviewable discretion, reflecting an
as-finished discounted value for the Property satisfactory to Lender in its
sole, absolute nonreviewable discretion. Lender acknowledges that the appraisal
received by it is acceptable.
          (b) Title Insurance. An irrevocable commitment to issue a
full-coverage mortgagee title insurance policy (the “Title Policy”) on the ALTA
1992 form insuring the first lien of the Deed of Trust to Lender in a form and
issued by a title insurance company or companies acceptable to Lender, said
policy (i) containing only those exceptions to title as shall be reasonably
approved by Lender and Lender’s counsel, and (ii) showing the lien of the Deed
of Trust securing the Loan to be a first lien of record, on the fee simple
estate of Borrower in the Property, together with true and complete copies of
all documents or instruments identified therein as exceptions to title. The
title policy shall be delivered to Lender promptly after recordation of the Deed
of Trust. Lender shall have the right to designate such co-insurers or
re-insurers as it deems advisable in its sole discretion. Such policy or
policies shall be endorsable or assignable to Lender’s successors and assigns,
upon request, without cost to Lender. Such policy or policies shall contain
affirmative insurance against filed and unfiled mechanic’s liens in form
acceptable to Lender. Lender shall receive satisfactory evidence that there is
no pending litigation with respect to the Property.
          (c) Survey. A current survey (or other documentation acceptable to
Lender) and legal description of the Property satisfactory to Lender from a
registered land surveyor of the Commonwealth of Virginia, which survey shall
show all easements, rights of way and other matters of record, shall locate all
proposed improvements on the Land and shall generally show a state of facts
acceptable to Lender and contain a surveyor’s certificate satisfactory to the
Lender.

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          (d) Environmental Audit. An environmental audit of the Property
prepared by an environmental consulting firm acceptable to Lender, in its sole
discretion, confirming that the Property is in compliance with all applicable
environmental laws.
          (e) Evidence of Zoning Compliance. Such written evidence as the Lender
may require to the effect that the Property has been zoned for purposes
consistent with the uses contemplated beyond any possibility of appeal and to
the effect, further, that there are no pending proceedings, either
administrative, legislative or judicial which would in any manner adversely
affect the status of the zoning with respect to such property or any part
thereof.
          (g) Public Utilities. Evidence to the effect that sanitary sewer,
water, electric, gas, telephone and other public utilities are available and
adequate to serve the Property.
          (h) Sale Agreement. A copy of the purchase contract for the Property,
satisfactory to the Lender and Lender’s counsel in form and substance.
          (i) No Default. No event shall have occurred and be continuing that
constitutes a Default (as defined below).
          (j) Representations. All representations and warranties contained in
this Agreement shall be true and correct in every material respect as of the
date of the first disbursement under this Agreement and on the date of any
future disbursements hereunder.
          (k) Satisfactory Documents. All documents delivered pursuant to this
Agreement must be in form and substance reasonably satisfactory to Lender and
its counsel, and all legal matters incident to this Agreement must be reasonably
satisfactory to Lender’s counsel.
     2.6 Equity Requirement. At or prior to Closing, Borrower shall provide
Lender evidence that Borrower has contributed a minimum of $10,250,000.00 toward
the purchase price of the Property and the related closing costs (“Equity
Contribution”).
     2.7 Loan Fee. Upon the closing of the Loan, the Borrower shall pay Lender a
non-refundable loan fee in the amount of Sixty-Five Thousand and 00/100 Dollars
($65,000.00).
ARTICLE III –CONDITIONS PRECEDENT FOR COMMENCEMENT OF RENOVATION
     3.1 In addition to any other conditions stated in this Agreement, the
following conditions must be satisfied prior to commencement of the Renovation.
Borrower shall obtain and submit to Lender, the following, as they pertain to
the Renovation:
          (a) Permits. Copies of any and all building and similar permits
required in connection with the Renovation, together with such evidence as the
Lender may require to the effect that all fees for such permits have been paid.
Satisfactory evidence shall be submitted to Lender of the receipt of all
governmental approvals necessary for the Renovation and

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condominium conversion of the Units have been obtained. Lender shall also
receive satisfactory evidence that all applicable safety, ecological and
environmental laws and any other codes or regulations affecting the Renovation
and/or proposed use of the Property have been complied with.
          (b) General Contractor. The Borrower shall disclose to Lender the name
of the general contractor, who must maintain workers’ compensation and
disability insurance in amounts required by law, and employer’s liability
insurance (the “General Contractor”) and submit to Lender the executed contract
for the Renovation.
          (c) List of Subcontractors and Materialmen. If required by Lender, a
list of the names of all subcontractors and materialmen intended by the Borrower
to perform work or supply materials in connection with the Renovation, and
conformed copies of executed contracts for such work and materials.
          (d) Builder’s Risk Insurance. Evidence that the insurance policy
referred to in paragraph 2.3 hereof contains builder’s risk coverage on a
completed value, non-reporting form with permission to complete and occupy.
          (e) Budget. Borrower shall submit to Lender a budget for the
Renovation.
          (f) Plans and Specifications. Borrower shall submit to Lender the
plans and specifications for the Renovation, as certified by an architect.
ARTICLE IV – REQUIREMENTS FOR THE RENOVATION
     4.1 The Renovation shall be performed by the Borrower in strict accordance
with all applicable (whether present or future) laws, ordinances, rules,
regulations, requirements and order of any governmental or regulatory authority
having or claiming jurisdiction. The Renovation shall be completed in a manner
so as not to encroach upon any easement or right-of-way, or upon the land of
others. The Renovation shall be wholly within all applicable building
restriction lines and set-backs or variances made therefor, however established,
and shall be in strict accordance with all applicable use or other restrictions
and the provisions of any prior declarations, covenants and zoning ordinances
and regulations.
     4.2 Borrower shall submit to Lender or the Progress Inspector, at Lender’s
discretion, such information as may be reasonably requested by Lender or the
Progress Inspector to verify the Renovation costs which are to be incurred in
connection with the Renovation. On-site inspection by an authorized officer of
the Lender and the Progress Inspector shall be permitted at all times during the
term of the Loan.
     4.3 Borrower shall permit the Lender and its duly authorized
representatives (including, without limitation, the Progress Inspector) to enter
upon the Property at all reasonable times and in a reasonable manner to inspect
the Improvements and any and all materials and to examine all detailed plans and
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the Renovation. Borrower will at all times cooperate and request its
subcontractors and materialmen to cooperate with the Lender and its duly
authorized representatives (including, without limitation, the Progress
Inspector) in connection with or in aid of the performance of the Lender’s
functions under this Loan Agreement. Borrower shall pay all inspection fees
incurred by the Lender in connection with the Loan; however, so long as no
Default exists, inspections shall be limited to two site inspection visits per
month to be performed by the Progress Inspector at Borrower’s sole cost and
expense.
     4.4 Borrower will furnish to the Lender, promptly on demand, a computer
generated report of job costs and accounts payable for the Renovation.
     4.5 Borrower will pay when due all bills for materials supplied and for
services or labor performed in connection with the Renovation.
     4.6 Borrower will promptly correct or cause the correction of any
structural defects in the Improvements and any substantial departures or
deviations from the plans and specifications for the Renovation.
     4.7 Lender may also require an endorsement to the title insurance policy
theretofore delivered, indicating that there has been no change in the status of
title and no title exceptions not theretofore approved by the Lender.
     4.8 Lender may require the Borrower to obtain from the General Contractor,
acknowledgments of payment and releases of liens and rights to claim liens, if
applicable. All such acknowledgments and releases shall be in the form and
substance satisfactory to the Lender.
     4.9 Lender may require (i) evidence satisfactory to it that all work
requiring inspection by governmental or regulatory authorities having or
claiming jurisdiction has been duly inspected and approved by such authorities
and by any rating or inspection organization, bureau, association, or office
having or claiming jurisdiction; and (ii) evidence satisfactory to it that
requisite certificates of occupancy for permanent occupancy have been validly
issued and that the Renovation has occurred free and clear of all mechanics’ or
materialmens’ liens and any bills or claims for labor, materials and services in
connection with the Renovation. All fees and costs of the Progress Inspector
incurred by the Lender shall be paid by the Borrower at its sole expense.

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ARTICLE V — REPRESENTATIONS AND WARRANTIES
     Borrower hereby represents and warrants to the Lender, as of the date
hereof and at all times hereafter, that:
     5.1 Organization, Power, Etc. (a) Borrower is a duly organized, validly
existing limited liability company, in good standing under the laws of the
jurisdiction of its organization; (b) Guarantor is a duly organized, validly
existing corporation under the laws of the jurisdiction of its organization
(c) each of the Borrower and Guarantor has the power and authority to own its
properties and to carry on its business as now being conducted; (c) each of the
Borrower and Guarantor is duly qualified to do business in the jurisdiction
where the Property is located and in every jurisdiction in which the nature of
its business or its properties makes such qualification necessary; (d) each of
the Borrower and Guarantor is in compliance with all laws, regulations,
ordinances and orders of public authorities applicable to it; and (e) each of
the Borrower and Guarantor has the full power, authority and legal right to
execute, deliver and perform the covenants and obligations set forth in this
Agreement and the other Loan Documents and to carry out the terms hereof and
thereof.
     5.2 Validity of Loan Documents. The execution, delivery and performance by
Borrower of the Note, and the other Loan Documents: (a) are within the legal
powers of Borrower; (b) have been duly authorized by all requisite partnership
and/or membership action, as applicable; (c) have received all necessary
governmental approvals; (d) will not violate any provision of law, any order of
any court or other agency of government or any articles of organization,
membership and/or operating agreement, partnership agreement, indenture,
agreement or other instrument to which Borrower is a party or by which it or any
of its property is bound, or be in conflict with, result in a breach of or
constitute (with due notice or lapse of time or both) a default under any such
indenture, agreement or other instrument, or result in the creation or
imposition of any lien, charge or encumbrance of any nature whatsoever upon any
of its property or assets, except as contemplated by the provisions of the Loan
Documents; and (e) when executed and delivered by Borrower, will constitute the
legal, valid and binding obligations of the Borrower and other obligors named
therein, if any, in accordance with their respective terms.
     5.3 Financial Statements. All financial statements delivered to the Lender
are true and correct in all respects, have been prepared in accordance with
generally accepted accounting practices consistently applied (other than with
respect to individual Guarantors), and fairly present the financial condition of
the Borrower and other parties named therein as of the dates thereof. No
material adverse change has occurred in the financial condition reflected
therein since the dates thereof and no material additional liabilities have been
incurred since the most recent date thereof other than the borrowing
contemplated in the Commitment and this Agreement.
     5.4 Other Information. All other information, reports, papers and data
given to the Lender with respect to Borrower or others obligated under the terms
of the Loan Documents

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and the Property are accurate and correct in all material respects and complete
insofar as completeness may be necessary to give the Lender a true and accurate
knowledge of the subject matter.
     5.5 Utilities and Access. All utility services and access necessary for the
continued operation of the Property are available, including, without
limitation, roads, telephone service, water supply, storm and sanitary sewer
facilities, and natural gas or electric facilities.
     5.6 Defaults. There is no Default on the part of the Borrower under the
Note or any of the other Loan Documents and no event has occurred that may give
rise to a Default.
     5.7 Use of Proceeds. The proceeds of the Loan shall be used solely for the
acquisition of the Property. None of the proceeds of the Loan shall be applied
toward the costs of the Renovation.
ARTICLE VI — AFFIRMATIVE COVENANTS
     Until the Indebtedness has been paid in full and the Loan has been
terminated, Borrower hereby affirmatively covenants and agrees as follows:
     6.1 Financial Statements . Borrower shall provide the following with
respect to the Guarantor:
          (a) as soon as available, but in no event later than ninety (90) days
after the close of its fiscal year (but in no event earlier than the date such
financial statements must be submitted to governmental authorities), financial
statements (all of which financial statements may include, as requested by the
Lender, a balance sheet, income statement, sources and uses of funds for such
fiscal and/or calendar year, projected sources and uses of funds for the coming
year, detailed listing and description of all contingent liabilities, tax
returns, written verification of liquidity and such other supporting schedules
and documentation which the Lender may request). All such financial statements
shall be audited by a certified public accountant acceptable to the Lender in
all respects; and
          (b) if requested by the Lender, within forty-five (45) days after the
close of its quarterly business period (but in no event earlier than the date
such financial statements must be submitted to governmental authorities), the
financial statements to be filed with applicable governmental authorities.
     6.2 Approval and Permits. No work associated with the Renovation shall be
commenced by Borrower unless and until all necessary approvals by all
governmental authorities having or claiming jurisdiction and by the beneficiary
of any applicable restrictive covenant have been obtained, and unless and until
all required building and other permits have been validly issued and all
required fees and bonds have been paid or posted, as the circumstances may
require.

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     6.3 Free and Clear of Liens. Except as may be otherwise specifically
permitted under the Loan Documents, Borrower shall not make any contract or
arrangement of any kind which would give rise to a lien on any portion of the
Property. The Renovation shall be completed by Borrower free and clear of all
mechanics’ and materialmen’s liens.
     6.4 Insurance. Borrower will comply with all insurance requirements set
forth in the Deed of Trust.
     6.5 Hazardous Materials. Borrower will comply with the provisions of the
Deed of Trust regarding Hazardous Materials and all applicable Environmental
Regulations.
     6.6 Compliance with Laws. Borrower, at its own cost and expense, will
promptly, fully and faithfully comply with, conform to and obey all present and
future applicable federal, state and local statutes, laws, ordinances, rules,
regulations, requirements, determinations, judgments, decrees and orders of any
governmental authority, governmental agency (including, without limitation, any
Board of Fire Underwriters) or court having or claiming jurisdiction over the
Borrower or the Property or any part thereof.
     6.7 Equity Contribution. At or prior to closing, Borrower shall make the
Equity Contribution.
     6.8 Condominium Conversion. The Borrower shall take all steps necessary to
validly and legally convert the Property into a condominium regime with
approximately 258 residential Units. The condominium documents, including
without limitation, the condominium declaration and by-laws, shall be acceptable
to the Lender in its discretion. From time to time, upon the Lender’s request,
the Borrower shall provide Lender with evidence that Borrower has complied with
any applicable requirements of the condominium documents and any applicable
laws. Borrower shall, within 150 days of the closing of the Loan, provide Lender
with all condominium documents, including without limitation, the public
offering statement.
     6.9 Condominium Sales. Borrower will provide Lender with copies of any and
all Contracts within two (2) business days of execution.
ARTICLE VII — NEGATIVE COVENANTS
     Until the Indebtedness has been paid in full and the Loan has been
terminated, Borrower hereby covenants and agrees as follows:
     7.1 Restrictions on Subordinate Financing. Throughout the term of the Loan,
Borrower shall not place any subordinate financing on the Property.

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     7.2 Changes to Plans and Specifications. Without the prior written consent
of the Lender, Borrower will not permit any substantial changes in the plans and
specifications for the Renovation.
     7.3 Prohibition on Transfer of Assets. Without the prior written consent of
the Lender, Borrower will not transfer any of its assets, except for transfers
in the ordinary course of business and transfers for which Borrower receives
consideration substantially equivalent to the fair market value of the
transferred asset.
     7.4 Assignments. Without the prior written consent of Lender, Borrower will
not transfer, assign, pledge or hypothecate any of its rights to advances, or
any of its rights or obligations under this Agreement. Any assignment made or
attempted by Borrower without the prior written consent of the Lender shall be
void. No consent by the Lender to an assignment by Borrower shall either
(a) release Borrower as the party primarily obligated and liable under the terms
of this Agreement unless Borrower shall be released specifically by the Lender
in writing, or (b) be deemed to be a waiver of the requirement of prior written
consent by the Lender with respect to each and every further assignment.
     7.5 Amendments to Purchase Agreement or Holdback Escrow Agreement. Without
the prior consent of Lender, Borrower will not amend, restate, or otherwise
modify the Purchase Agreement (as defined in the Deed of Trust) or that certain
Holdback Escrow Agreement by and between ER Carter,L.L.C. and Borrower dated
Janauary 31, 2006.
ARTICLE VIII — DEFAULT
     Each of the following events shall constitute a “Default” under this
Agreement and each of the other Loan Documents:
     8.1 Payment of Indebtedness. Any failure by the Borrower to pay when due
any and all amounts payable by the Borrower under the terms of the Note or any
of the other Loan Documents, which failure to pay remains uncured for a period
of five (5) calendar days after the date such payment is due (or five
(5) calendar days after notice from Lender in the case of amounts due that are
not regular monthly payments), including, without limitation, any principal
payment, interest payment, letter of credit reimbursement, loan fee, extension
fee, letter of credit fee or late charge, and including any advances made by the
Lender from the proceeds of the Loan or otherwise and interest thereon at the
applicable rate set forth in the Loan Documents.
     8.2 Performance of Obligations. Any default by the Borrower or Guarantor in
the due observance or performance of any of the Obligations and such default, if
other than in payment of the Indebtedness, shall remain uncured thirty (30) days
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Borrower of written notice from Lender identifying such default. If Borrower
receives such notice, Borrower shall diligently pursue a cure of such default.
     8.3 Other Defaults. The occurrence of any Default under the Deed of Trust
or the Note or any of the other Loan Documents.
     8.4 Representations and Warranties. Any determination by the Lender that
any representation or warranty contained in any of the Loan Documents or in any
certificate, opinion, financial information or any other form delivered to the
Lender in connection with the Loan, is incorrect or misleading in any material
respect at any time.
     8.5 Mechanic’s Lien. The establishment of any mechanics’ or materialmen’s
lien against any portion of the Property, unless the same is insured over by the
Title Company, satisfied, or bonded off to the satisfaction of the Lender within
thirty (30) days.
     8.6 Adverse Action or Insolvency. (a) the entry of a final judgment for the
payment of money in excess of $50,000.00 against the Borrower or the Guarantor
that is not discharged or bonded within thirty (30) days after the date of
entry, (b) the institution of any proceeding by or against the Borrower or the
Guarantor in bankruptcy, or for a reorganization or an arrangement with
creditors under any insolvency or debtor relief law which is not dismissed or
stayed within thirty (30) days of the date of filing, (c) the appointment of any
receiver, liquidator, assignee, custodian or similar official for the Borrower
or the Guarantor or any portion of the Property, or (d) the issuance of any writ
or order of attachment, levy or garnishment against the Borrower or the
Guarantor which is not discharged to the Lender’s satisfaction within thirty
(30) days after the date of such issuance.
     8.7 Financial Condition. Any reasonable determination by the Lender that a
material adverse change has occurred in the financial condition of the Borrower
or Guarantor, including without limitation, the failure of Guarantor to meet the
financial covenants of set forth in Section 4 of the Guaranty.
     8.8 Hazardous Materials. Violations of any applicable Environmental
Regulations or requirements of the Deed of Trust pertaining to Hazardous
Materials.
     8.9 Death and Dissolution. The death, legal incompetence, dissolution,
liquidation or termination of Borrower or Guarantor, or of any general partner
of Borrower or Guarantor, subject to the provisions of the Guaranty.
     8.10 Cross Defaults. The occurrence of any Default or Event of Default
under any other loan or credit facility from Lender to (or guaranteed by)
Borrower or Guarantor.
ARTICLE IX — DEFAULT — REMEDIES

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     9.1 Remedies on Default. Upon the happening of any Default, the Lender
shall not be obligated to advance any additional Loan proceeds, and, in addition
to any other rights or remedies available to it under this Section, the Deed of
Trust and other Loan Documents, the Lender may enter into possession of the
Property or any portion thereof.
          All sums expended by the Lender for such purposes shall be deemed to
have been paid to the Borrower or for its benefit and shall constitute part of
the Indebtedness secured by the Deed of Trust. Borrower hereby constitutes and
appoints the Lender as its true and lawful attorney-in-fact with full power of
substitution to execute, acknowledge and deliver such documents, instruments and
certificates, and to take such other actions, in the name and on behalf of
Borrower and at the sole cost and expense of Borrower, as the Lender, in its
sole discretion, deems necessary, desirable or appropriate to effectuate the
provisions of this section.
     It is understood and agreed that this power of attorney shall be deemed to
be a power coupled with an interest which cannot be revoked.
     The Lender shall also have the right, upon the happening of any Default, to
do any one or more of the following, at its election, but without any obligation
to do so:
          (a) to declare the Indebtedness immediately due and payable;
          (b) to terminate the Loan;
          (c) to decline to make any further Loan advances and/or readvances;
          (d) to reduce any claim to judgment;
          (e) to exercise any and all rights and remedies afforded by this
Agreement and the other Loan Documents, as well as any and all legal or
equitable rights and remedies afforded under any statute or otherwise; and
          (f) to set off and apply against the Indebtedness any and all
deposits, funds or assets at any time held, and any and all indebtedness at any
time owed, by the Lender to or for the credit or account of Borrower.
     9.2 No Conditions Precedent to Exercise of Remedies. Neither Borrower nor
Guarantor shall be relieved of any obligation by reason of the failure of the
Lender to comply with any request of Borrower or of any other person to take
action to foreclose on the Deed of Trust or otherwise to enforce any provisions
of the Note or the other Loan Documents, or by reason of the release, regardless
of consideration, of all or any part of the Property, or by reason of any
agreement of stipulation between any subsequent owner of any portion of the
Property and the Lender extending the time of payment or modifying the terms of
the Note or the other Loan Documents without first having obtained the consent
of Borrower or Guarantor; and in the latter event, Borrower and Guarantor shall
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according to the terms of any such extension or modification agreement, unless
expressly released and discharged in writing by the Lender.
     9.3 Remedies Cumulative and Concurrent. No remedy herein conferred upon or
reserved to the Lender is intended to be exclusive of any other remedies
provided for in the Note or in the other Loan Documents, and each and every such
remedy shall be cumulative, and shall be in addition to every other remedy given
hereunder, or under the Note, the Deed of Trust or the other Loan Documents, or
now or hereafter existing at law or in equity or by statute. Every right, power
and remedy given by the Note and the Loan Documents to the Lender shall be
concurrent and may be pursued separately, successively or together against the
Borrower, Guarantor, or the Property or any part thereof, or any one or more of
them; and every right, power and remedy given by the Note or the other Loan
Documents may be exercised from time to time as often as may be deemed expedient
by the Lender.
     9.4 Strict Performance. No delay or omission of the Lender in exercising
any right, power or remedy accruing upon the happening of a Default shall impair
any such right, power or remedy or shall be construed to be a waiver of any such
Default or any acquiescence therein. No delay or omission on the part of the
Lender in exercising any option for acceleration of the maturity of the
Indebtedness, or for foreclosure under the Deed of Trust following any Default
as aforesaid, or any other option granted to the Lender hereunder in any one or
more instances, or the acceptance by the Lender of any partial payment on
account of the Indebtedness, shall constitute a waiver of any such Default and
each such option shall remain continuously in full force and effect.
     9.5 Dispute Resolution.
     (a) Arbitration. Except to the extent expressly provided below, any Dispute
shall, upon the request of either party, be determined by binding arbitration in
accordance with the Federal Arbitration Act, Title 9, United States Code (or if
not applicable, the applicable state law), the then-current rules for
arbitration of financial services disputes of the American Arbitration
Association, or any successor thereof (“AAA”) and the “Special Rules” set forth
below. “Dispute” means any controversy, claim or dispute between or among the
parties to this Note, Agreement, or Guaranty, as applicable, including any
controversy, claim or dispute arising out of or relating to (a) this Agreement,
(b) any other Loan Documents, (c) any related agreements or instruments, or (d)
the transaction contemplated herein or therein (including any claim based on or
arising from an alleged personal injury or business tort). In the event of any
inconsistency, the Special Rules shall control. The filing of a court action is
not intended to constitute a waiver of the right of Borrower or Lender,
including the suing party, thereafter to require submittal of the Dispute to
arbitration. Any party to this Agreement may bring an action, including a
summary or expedited proceeding, to compel arbitration of any Dispute in any
court having jurisdiction over such action. For the purposes of this Dispute
Resolution Section only, the terms “party” and “parties” shall include any
parent corporation, subsidiary or affiliate of Lender involved in the servicing,
management or administration of any obligation described in or evidenced by this
Agreement, together with the officers, employees, successors and assigns of each
of the foregoing.

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     (b) Special Rules.
     (i) The arbitration shall be conducted in any U.S. state where real or
tangible personal property collateral is located, or if there is no such
collateral, in the City and County where Lender is located pursuant to its
address for notice purposes in this Agreement.
     (ii) The arbitration shall be administered by AAA, who will appoint an
arbitrator. If AAA is unwilling or unable to administer or legally precluded
from administering the arbitration, or if AAA is unwilling or unable to enforce
or legally precluded from enforcing any and all provisions of this Dispute
Resolution Section, the any party to this Agreement, may substitute another
arbitration organization that has similar procedures to AAA and that will
observe and enforce any and all provisions of this Dispute Resolution Section.
All Disputes shall be determined by one arbitrator; however, if the amount in
controversy in a Dispute exceeds Five Million Dollars ($5,000,000), upon the
request of any party, the Dispute shall be decided by three arbitrators (for
purposes of this Agreement, referred to collectively as the “arbitrator”).
     (iii) All arbitration hearings will be commenced within ninety (90) days of
the demand for arbitration and completed within ninety (90) days from the date
of commencement; provided, however, that upon a showing of good cause, the
arbitrator shall be permitted to extend the commencement of such hearing for up
to an additional sixty (60) days.
     (iv) The judgment and the award, if any, of the arbitrator shall be issued
within thirty (30) days of the close of the hearing. The arbitrator shall
provide a concise written statement setting forth the reasons for the judgment
and for the award, if any. The arbitration award, if any, may be submitted to
any court having jurisdiction to be confirmed and enforced, and such
confirmation and enforcement shall not be subject to arbitration.
     (v) The arbitrator will give effect to statutes of limitations and any
waivers thereof in determining the disposition of any Dispute and may dismiss
one or more claims in the arbitration on the basis that such claim or claims is
or are barred. For purposes of the application of the statute of limitations,
the service on AAA under applicable AAA rules of a notice of Dispute is the
equivalent of the filing of a lawsuit.
     (vi) Any dispute concerning this arbitration provision, including any such
dispute as to the validity or enforceability of this provision, or whether a
Dispute is arbitrable, shall be determined by the arbitrator; provided, however,
that the arbitrator shall not be permitted to vary the express provisions of
these Special Rules or the Reservations of Rights in subsection (c) below.

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     (vii) The arbitrator shall have the power to award legal fees and costs
pursuant to the terms of this Agreement.
     (viii) The arbitration will take place on an individual basis without
reference to, resort to, or consideration of any form of class or class
  action.
     (c) Reservations of Rights. Nothing in this Agreement shall be deemed to
(i) limit the applicability of any otherwise applicable statutes of limitation
and any waivers contained in this Agreement, or (ii) apply to or limit the right
of Lender (A) to exercise self help remedies such as (but not limited to)
setoff, or (B) to foreclose judicially or nonjudicially against any real or
personal property collateral, or to exercise judicial or nonjudicial power of
sale rights, (C) to obtain from a court provisional or ancillary remedies such
as (but not limited to) injunctive relief, writ of possession, prejudgment
attachment, or the appointment of a receiver, or (D) to pursue rights against a
party to this Agreement, in a third-party proceeding in any action brought
against Lender in a state, federal or international court, tribunal or hearing
body (including actions in specialty courts, such as bankruptcy and patent
courts). Lender may exercise the rights set forth in clauses (A) through (D),
inclusive, before, during or after the pendency of any arbitration proceeding
brought pursuant to this Agreement, as applicable. Neither the exercise of self
help remedies nor the institution or maintenance of an action for foreclosure or
provisional or ancillary remedies shall constitute a waiver of the right of any
party, including the claimant in any such action, to arbitrate the merits of the
Dispute occasioning resort to such remedies. No provision in the Loan Documents
regarding submission to jurisdiction and/or venue in any court is intended or
shall be construed to be in derogation of the provisions in any Loan Document
for arbitration of any Dispute.
     (d) Conflicting Provisions for Dispute Resolution. If there is any conflict
between the terms, conditions and provisions of this Section and those of any
other provision or agreement for arbitration or dispute resolution, the terms,
conditions and provisions of this Section shall prevail as to any Dispute
arising out of or relating to (i) this Agreement, (ii) any other Loan Document,
(iii) any related agreements or instruments, or (iv) the transaction
contemplated herein or therein (including any claim based on or arising from an
alleged personal injury or business tort). In any other situation, if the
resolution of a given Dispute is specifically governed by another provision or
agreement for arbitration or dispute resolution, the other provision or
agreement shall prevail with respect to said Dispute.
     (e) Jury Trial Waiver in Arbitration. By agreeing to this Section, the
parties irrevocably and voluntarily waive any right they may have to a trial by
jury in respect of any Dispute.
ARTICLE X — MISCELLANEOUS
     10.1 No Warranty by Lender. By accepting or approving anything required to
be observed, performed or fulfilled by Borrower or Guarantor pursuant to this
Agreement or any other Loan Documents, including, without limitation, any plans,
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financial information, survey, receipt, appraisal or insurance policy, the
Lender shall not be deemed to have warranted or represented the sufficiency,
legality, effectiveness or legal effect of the same, or of any term, provision
or condition thereof. Any such acceptance or approval thereof shall not be or
constitute any warranty or representation with respect thereto by the Lender.
     10.2 Liability of Lender. The Lender shall not be liable for any act or
omission by it pursuant to the provisions of this Agreement in the absence of
fraud or gross negligence. The Lender shall incur no liability to Borrower or
any other party in connection with the acts or omissions of the Lender in
reliance upon any certificate or other paper believed by the Lender to be
genuine or with respect to any other thing which the Lender may do or refrain
from doing, unless such act or omission amounts to fraud or gross negligence.
     10.3 Modification — Waiver. None of the terms or provisions of this
Agreement may be changed, waived, modified, discharged or terminated except as
provided in the Deed of Trust.
     10.4 Third Parties — Benefit. All conditions set forth herein with respect
to the obligations of the Lender to make Loan advances are imposed solely and
exclusively for the benefit of the Lender, and no other person shall either have
standing to require satisfaction of such condition in accordance with its terms,
be entitled to assume that the Lender will refuse to make advances in the
absence of strict compliance with any or all of such conditions, or be deemed to
be beneficiary of such conditions under any circumstances, any or all of which
may be freely waived in whole or in part by the Lender at any time in the sole
and absolute exercise of its discretion. The Lender shall in no event be
responsible or liable to any person other than the Borrower for the disbursement
of or failure to disburse any of the proceeds of the Loan, and no contractor,
subcontractor, laborer or material supplier or other person shall have any right
or claim against the Lender with respect to this Agreement. The terms and
provisions of this Agreement are for the benefit of the parties hereto and,
except as herein specifically provided, no other person shall have any right or
cause of action on account thereof.
     10.5 Captions and Headings. The captions and headings contained in this
Agreement are included herein for convenience of reference only and shall not be
considered a part hereof.
     10.6 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be considered an original for all purposes;
provided, however, that all such counterparts shall together constitute one and
the same instrument.
     10.7 Signs; Publicity. At the request and expense of the Lender (subject to
applicable law and compliance with governmental requirements, and subject to
Borrower’s approval of the design and location of said sign, which consent shall
not be unreasonably withheld), Borrower shall install a sign or signs at a
location or locations on the Property satisfactory to the Lender, reciting,
among other things, that the Lender is financing the acquisition of the
Property. Borrower shall (at the expense of Lender) obtain all permits, licenses
and approvals from the appropriate governmental agency or association that are
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existence of any such signs. Borrower expressly authorizes the Lender to prepare
and to furnish to the news media for publication from time to time news releases
with respect to any portion of the Property detailing the Lender’s involvement
with the financing.
     10.8 Applicable Law. This Agreement shall be governed by and construed,
interpreted and enforced in accordance with the laws of the Jurisdiction of
Choice, unless the “choice of law” rules of the Jurisdiction of Choice can be
construed or interpreted to require the laws of another jurisdiction to govern,
in which case the “choice of law” rules of the Jurisdiction of Choice shall not
apply.
     10.9 Time of Essence. Time shall be of the essence of each and every
provision of this Agreement of which time is an element.
     10.10 Conflicts. The terms and conditions of the Note and the other Loan
Documents are incorporated into this Agreement and made a part hereof as if
specifically set forth herein. In the event any provision of this Agreement
conflicts with the terms of any other Loan Document, the terms of this Agreement
shall prevail. For purposes of this Section the absence of a provision from any
Loan Documents shall not constitute a conflict.
     10.11 Quality of Documents and Other Items. Each document, item or other
evidence required to be delivered to the Lender in connection with this
Agreement shall be satisfactory in form and substance to the Lender in its sole
discretion. In addition, all surveys, appraisals, environmental site
assessments, inspections, cost reviews, subcontracts, leases, bonds, insurance
policies and all other documents required or contemplated by this Agreement and
the other Loan Documents shall be satisfactory to the Lender and, if required by
the Lender, Borrower shall provide the Lender and its counsel with copies of any
or all of such documents. All contractors, subcontractors, sureties, insurers
and any other party responsible for the execution and preparation of the
foregoing documents shall also be satisfactory to the Lender.
     10.12 Professional Services. If requested by Lender, Borrower shall:
(a) not more frequently than annually, cause an inspection and written appraisal
of the Property (or such parts of it as are designated in the Lender’s request)
to be made and provided to Lender by an appraiser approved and engaged by the
Lender in its sole discretion; and (b) cause to be conducted or prepared any
other written report, summary, opinion, inspection, review, survey, audit or
other professional service relating to the Property or any operations in
connection with it (all as designated in Lender’s request) as Lender may
reasonably request, including, without limitation, any accounting,
auctioneering, architectural, consulting, engineering, design, legal,
management, pest control, surveying, title abstracting or other technical,
managerial or professional service relating to the Property or its operations.
The Lender may elect to deliver any such request by facsimile, by mail or by
hand delivery addressed to the Borrower as provided herein or by any other
legally effective method, and it may be given at any time and from time to time.
     10.13 Further Assurances. At the request of the Lender, Borrower shall take
any action or execute any additional document reasonably required by the Lender
to secure the

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Indebtedness, confirm the lien of the Deed of Trust or further the intent of any
of the Loan Documents.
     10.14 Costs and Expenses. The Borrower shall pay all out-of-pocket fees,
charges and expenses incurred by or on behalf of the Lender in connection with
the Loan and the making, closing and administration of the Loan, including,
without limitation (a) fees and expenses for the examination of title to the
Property; (b) recording and filing fees, recordation taxes and transfer taxes;
(c) Title Company premiums, fees and charges; (d) surveyor charges;
(e) appraisal fees; (f) inspection fees; (g) the fees and expenses of the
Lender’s counsel; (h) all amounts due the Progress Inspector; (i) the payment,
satisfaction, discharge and release of any encumbrance, tax, assessment or other
charge or lien upon any portion of the Property; (j) any syndication or
participation fees, if applicable, and (k) the construction, maintenance and
protection of the Improvements and every portion thereof. Further, the Lender
may (but shall be under no obligation to do so) advance for the account of
Borrower as part of or in addition to the Loan any amount or amounts as the
Lender may deem necessary or advisable in order to fulfill the obligations of
Borrower hereunder, which amount or amounts may be disbursed by the Lender
directly to a third party in order to protect its interests, and any amount so
applied by the Lender shall constitute a portion of the Indebtedness, even
though the aggregate of the amounts so applied, together with the other advances
under the Note, may exceed the principal amount of the Note.
     10.15 Fees and Expenses — Indemnity. Borrower will hold the Lender harmless
and indemnify the Lender from all claims of brokers and “finders” arising by
reason of the Loan, the execution and delivery of this Agreement or the making
of the Loan. Borrower shall protect, indemnify and save harmless the Lender and
its directors, officers, agents, and employees, the Deed of Trust trustees, and
all independent contractors from and against all liabilities, obligations,
claims, damages, fines, penalties, causes of action, costs and expenses
(including, without limitation, attorneys’ fees and disbursements), imposed upon
or incurred by or asserted against any of them in connection with the Loan.
     10.16 Sale/Assignment of Loan. Lender may sell or offer to sell the Loan or
interests therein to one or more assignees or participants. Borrower shall
execute, acknowledge and deliver any and all instruments reasonably requested by
Lender in connection therewith, and to the extent, if any, specified in any such
assignment or participation, such assignee(s) or participant(s) shall have the
same rights and benefits with respect to the Loan Documents as such person(s)
would have if such person(s) were Lender hereunder. Lender may disseminate any
information it now has or hereafter obtains pertaining to the Loan, including
any security for the Loan, any credit or other information on the Property
(including environmental reports and assessments), Borrower, any of Borrower’s
principals or any Guarantor, to any actual or prospective assignee or
participant, to Lender’s affiliates, including Banc of America Securities LLC,
to any regulatory body having jurisdiction over Lender, to any actual or
prospective counterparty (or its advisors) to any swap or derivative transaction
relating to Borrower and the Loan, or to any other party as necessary or
appropriate in Lender’s reasonable judgment.

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     10.17 Seal. If any Borrower is a corporation, the designation “(SEAL)” on
this Agreement shall be effective as the affixing of such Borrower’s corporate
seal physically to this Agreement.
     10.18 WAIVER OF JURY TRIAL. WITHOUT INTENDING IN ANY WAY TO LIMIT THE
PARTIES’ AGREEMENT TO ARBITRATE ANY “DISPUTE” (FOR PURPOSES OF THIS SECTION, AS
DEFINED IN THE “DISPUTE RESOLUTION” SECTION) AS SET FORTH IN THIS AGREEMENT, TO
THE EXTENT ANY “DISPUTE” IS NOT SUBMITTED TO ARBITRATION OR IS DEEMED BY THE
ARBITRATOR OR BY ANY COURT WITH JURISDICTION TO BE NOT ARBITRABLE OR NOT
REQUIRED TO BE ARBITRATED, BORROWER AND LENDER WAIVE TRIAL BY JURY IN RESPECT OF
ANY SUCH “DISPUTE” AND ANY ACTION ON SUCH “DISPUTE.” THIS WAIVER IS KNOWINGLY,
WILLINGLY AND VOLUNTARILY MADE BY BORROWER AND LENDER, AND BORROWER AND LENDER
HEREBY REPRESENT THAT NO REPRESENTATIONS OF FACT OR OPINION HAVE BEEN MADE BY
ANY PERSON OR ENTITY TO INDUCE THIS WAIVER OF TRIAL BY JURY OR TO IN ANY WAY
MODIFY OR NULLIFY ITS EFFECT. THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE
PARTIES ENTERING INTO THE LOAN DOCUMENTS. BORROWER AND LENDER ARE EACH HEREBY
AUTHORIZED TO FILE A COPY OF THIS SECTION IN ANY PROCEEDING AS CONCLUSIVE
EVIDENCE OF THIS WAIVER OF JURY TRIAL. BORROWER FURTHER REPRESENTS AND WARRANTS
THAT IT HAS BEEN REPRESENTED IN THE SIGNING OF THIS AGREEMENT, AND IN THE MAKING
OF THIS WAIVER BY INDEPENDENT LEGAL COUNSEL, OR HAS HAD THE OPPORTUNITY TO BE
REPRESENTED BY INDEPENDENT LEGAL COUNSEL SELECTED OF ITS OWN FREE WILL, AND THAT
IT HAS HAD THE OPPORTUNITY TO DISCUSS THIS WAIVER WITH COUNSEL.
     10.19 Electronic Transmission of Data. Lender and Borrower agree that
certain data related to the Loan (including confidential information, documents,
applications and reports) may be transmitted electronically, including
transmission over the Internet. This data may be transmitted to, received from
or circulated among agents and representatives of Borrower and/or Lender and
their affiliates and other persons involved with the subject matter of this
Agreement. Borrower acknowledges and agrees that (a) there are risks associated
with the use of electronic transmission and that Lender does not control the
method of transmittal or service providers, (b) Lender has no obligation or
responsibility whatsoever and assumes no duty or obligation for the security,
receipt or third party interception of any such transmission, except for
Lender’s fraud or gross negligence, and (c) Borrower will release, hold harmless
and indemnify Lender from any claim, damage or loss, including that arising in
whole or part from Lender’s strict liability or sole, comparative or
contributory negligence, but excluding that arising from Lender’s fraud or gross
negligence, which is related to the electronic transmission of data.
     10.20 USA Patriot Act Notice. Lender hereby notifies Borrower that pursuant
to the requirements of the USA Patriot Act (Title III of Pub. L. 107-56 (signed
into law October 26, 2001)) (the “Act”), Lender is required to obtain, verify
and record information that identifies.

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Borrower, which information includes the name and address of Borrower and other
information that will allow Lender to identify Borrower in accordance with the
Act.
[SIGNATURES APPEAR ON THE NEXT PAGE]

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     IN WITNESS WHEREOF, the Borrower and the Lender, intending to be executed
and delivered under seal, have executed and delivered these presents or caused
these presents to be executed and delivered under seal as of the year and day
first above written.

                                  BORROWER:    
 
                    WITNESS/ATTEST:       COMSTOCK CARTER LAKE, L.C.,          
      a Virginia limited liability company    
 
                   
 
          By:   Comstock Homebuilding Companies, Inc.,    
 
              Its manager    
 
                   
By:
          By:        
Name:
 
         
 
Christopher Clemente    
Title:
              its Chief Executive Officer    
 
                    (Seal)       Address:   11465 Sunset Hills Road    
 
              5 th Floor    
 
              Reston, Virginia 20190    
 
                    WITNESS:           LENDER:    
 
                                BANK OF AMERICA, N.A.    
 
                   
 
          By:                          
 
                   
Name:
              John M. DeZinno    
Title:
              Senior Vice President    
 
                                Address: 8300 Greensboro Drive
Suite 300
McLean, Va. 22102-3604    

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EXHIBIT “A”
Property Description

 

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EXHIBIT “B”
Unit Contract Summary Report