**Exhibit 10.23**

 

**SERVICES AGREEMENT**

 

THIS SERVICES AGREEMENT (the “Agreement”) is made asof the 1st day of October,****2004, by andbetween COMSTOCK HOMEBUILDING COMPANIES, INC., a Delaware corporation(“Comstock”), and COMSTOCK ASSET MANAGEMENT, L.C., a Virginia limited liabilitycompany (“CAM”).

 

**WITNESSETH:**

 

WHEREAS, CAM as agent for the record owner or contractowner of those certain real Loudoun Station Properties located in the County ofLoudoun, Commonwealth of Virginia, that comprise the Loudoun Stationdevelopment and as more particularly identified on the Concept Development Planfor Loudoun County ZMAP #2002-0005 hereto, attached hereto as Exhibit A (the“Loudoun Station Properties”); and

 

WHEREAS, the Loudoun Station Properties  were the subject of a successful rezoningapplication of the Loudoun Station development that rezoned the collectiveLoudoun Station Properties to a PD-TRC (Planned Development-Transit RelatedCenter) Zoning District in December, 2003; and

 

WHEREAS, Comstock is experienced in providing suchservices and CAM desires to formally engage and hire Comstock to carry outcertain management services for the purpose of securing development approvals,additional entitlements, processing plans and developing certain portions ofthe Loudoun Station Properties; and

 

WHEREAS, Comstock desires to assume suchresponsibilities, on and in accordance with the terms and conditions of thisAgreement;

 

NOW, THEREFORE, for and in consideration of thepremises and mutual covenants and agreement of the parties contained herein,and of other good and valuable consideration, the receipt and sufficiency ofwhich is hereby acknowledged, the parties hereto, intending to be legallybound, do hereby agree as follows:

 

**ARTICLE I**

**Scope of the Work**

 

1.01         Actingas a consultant for CAM and at its request, Comstock will undertake and performfor CAM the following responsibilities (the “Work”), provided however, it isagreed by the parties hereto that Comstock shall not be guaranteeing that theWork will be prosecuted within any timelines that may be delivered as part ofits Work.  Comstock shall managethe site configuration, design and layout of product to be incorporated intothe development plan for the Loudoun Station Properties at the direction ofCAM. All work shall comply with the approved Proffer Agreement dated December15, 2003 and adopted by Loudoun County as a condition of the rezoning approvalof the Loudoun Station Properties.

 

A.            Plan/Product Design andManagement.  In conjunction with landplanners, architects and engineers, Comstock shall review and comment upon anyand all design drawings, product specifications and shop drawings submitted bysuch professionals and by other Contractors for the  Loudoun Station Properties or portionsthereof.

 

B.            Governmental Approvals. Based on conceptual plansapproved by CAM, Comstock shall coordinate and submit engineering plans for theLoudoun Station Properties or portions thereof, monitor the approval processeswith the applicable governmental authority in order to seek final approvals forlot or unit yield and F.A.R. densities, provide for vested rights regarding theintended uses of the Loudoun Station Properties and prepare and submit bondingapplications required as a prerequisite to development of the Loudoun StationProperties.  Comstock shall seek tomaintain the proper pro-rata allocation of development F.A.R. upon the parcelsthat  comprise the Loudoun StationProperties in accordance with the applicable site area of each parcel, all asdirected by CAM.

 

C.            Solicit andEvaluate Development Bids. Comstock shall solicit and evaluate bids for thedevelopment of the Loudoun Station Properties, or portions thereof, fromqualified contractors and make recommendations to CAM regarding the selectionof the Contractors.

 

D.            Development ofLoudoun Station Properties. Comstock agrees to perform and complete allfunctions attendant to the management of the following items for the LoudounStation

 

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Properties:  (i) installation ofall road infrastructure over time required to service the Loudoun StationProperties; and (ii) installation of all utilities over time reasonablynecessary to commence construction of improvements on the Loudoun StationProperties as directed by CAM.

 

E.             FinancialServices.  Comstock, on behalf ofCAM, agrees to negotiate and make arrangements for agreements with lendinginstitutions related to the development of the Loudoun Station Properties, asrequested by CAM, and shall be responsible for the administration of any suchagreements and compliance by CAM with requirements imposed on CAM under anysuch agreements, provided however, Comstock shall not be required to enter intoor otherwise guaranty the repayment of any sums advanced as a result of saidarrangements.

 

F.             Legal Services.  Comstock, on behalf of CAM, shall assist inthe performance of requisite legal services required as a result of theprosecution of the Work, including but not limited to formation of master andneighborhood property owners associations reasonably required for the LoudounStation Properties development.

 

**ARTICLE II**

**Exclusions from Scope of the Work**

 

2.01         The scope of the Worklisted in Article I is not an exhaustive list but the Work shall in no eventinclude the following items:

 

A.            Procurement ofleasing agreements related to the retail or commercial space for the LoudounStation Properties development or the administration of any such agreements forthe Loudoun Station Properties development.

 

B.            Management dutiesassociated with a master or neighborhood property owners associations for theLoudoun Station Properties development.

 

C.            Management dutiesassociated with completed commercial or investment properties within theLoudoun Station Properties development.

 

**ARTICLE III**

**Personnel Assigned to Agreement**

 

3.01.        [Reserved]

 

**ARTICLE IVCompensation**

 

4.01         ManagementFees.  In partial considerationfor the performance of Comstock’s prosecution of the Work under this Agreement, CAM agrees to pay to Comstock, or any designatedaffiliate, and Comstock agrees to accept payment from CAM, the followingamounts:

 

A.                                   Upon commencement of this Agreement,$20,000.00 per month for payment of services related to Work for the LoudounStation Properties or any portion thereof (the “Management Fee”).

 

B.                                     Uponcommencement of site development of the Loudoun Station Properties development,or any portion thereof, if requested by CAM, Comstock will assign a full timeon-site project superintendent and in such event the fee for ManagementServices will be increased accordingly and paid by CAM (the “ProjectSuperintendent Fee”).

 

Collectively, theManagement Fee and the Project Superintendent Fee shall be known as the“Management Fees” and shall commence as aforementioned, shall continue on amonthly basis thereafter until the earlier of the completion of the Work ortermination of the Agreement in accordance with the terms hereof and shall bereviewed on a regular basis by the parties hereto.

 

4.02         AdditionalConsideration

 

**As additional consideration for Comstock’s entry into thisAgreement and faithful performance of the Work, CAM does hereby agree to assignover to Comstock, or its designee, all of CAM’s rights to purchase any portionof the Loudoun Station Properties that Comstock Loudoun Station, L.C. (“CLS”),in its capacity as owner of the Loudoun Station Properties, in**

 

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CLS’s sole discretion, determines to develop as for-sale residentialproperty (in the form of condominium units) and will not accept any offer forthe purchase of the subject for-sale residential property from any third partywithout first providing Comstock the opportunity to purchase the subjectfor-sale residential property (the “Purchase Opportunity”). The foregoingrights of CAM arise from that certain Development Management and RelatedService Agreement entered into by and between CLS and CAM on the same date asthis Agreement. Comstock will be provided a thirty (30) day period (theOpportunity Period”) to consider the Purchase Opportunity without incurring anyobligation to purchase the subject for-sale residential property.  At such time as CAM determines such for-saleresidential property will be made available for sale it will notify Comstockwhich commences the Opportunity Period. During the Opportunity Period, theparties shall negotiate in good faith regarding a fair and reasonable purchaseprice for the subject for-sale residential property and the terms andconditions of the purchase and sale agreement. If the parties cannot come to agreement upon a reasonable purchase priceor agree to the terms and conditions of a purchase and sale agreement duringthe Opportunity Period, the Purchase Opportunity shall automatically expire andthe parties hereto shall have no further obligations to each other in that regard.The Purchase Opportunity shall be granted for a period of five (5) years fromthe date hereof unless extended by mutual agreement.

 

4.03         Third Party Vendors andReimbursements

 

A.            CAM and Comstock hereby acknowledge and agree certainservices related to the Loudoun Station Properties shall be provided by thirdparty vendors, (the “Vendors”), under the management of Comstock.  Wherever practical, the fees incurred andinvoiced by the Vendors shall be billed to and payable by CLS and in no eventdeducted from the Project Fees.  TheVendors shall include, but are not limited to, land planners, civil engineers,architects, consultants, contractors and sub-contractors.

 

B.            CAM shall be responsible for the reimbursement of all ofComstock’s out of pocket expenses incurred in the prosecution of the Work,including but not limited to authorized travel and lodging expenses, payment ofwhich shall occur within fifteen (15) days from the end of the month in whichan invoice is received by CAM.  Comstockshall be responsible for the payment of the salaries of its officers andemployees from the Services Fees except that in the event a new employee(s) ishired for the exclusive purpose of prosecuting the Work hereunder or anexisting employee is reassigned to prosecute the Work on an exclusive basis,the salary of such employee(s) shall become an expense payable by CAM, subjectto the prior approval of CAM.

 

**ARTICLE V**

**Term of Agreement**

 

5.01.        Expiration

 

This Agreement shall be effective as of October 1, 2004 (the “EffectiveDate”) and shall remain in effect until the earlier of the following:

 

A.                                   Substantialcompletion of the Work.

B.                                     Five(5) years from the date hereof.

C.                                     Terminationas provided for herein.

 

5.02.        Termination Due toBreach or Default Prior to Expiration

 

A.            Noticeof Default and Cure. In the event of the breach or default by either partyof its obligations under this Agreement, the non-defaulting party shall sendwritten notice to the defaulting party of the action or failure to actconstituting such breach or default, and providing a period of forty-five (45)days from receipt of the Notice of Default within which to cure such breach ordefault (the “Cure Period”).  If thedefaulting party notifies the non-defaulting party of its intention not to curethe claimed breach or default, or fails, within the Cure Period, to cure thealleged breach or default to the reasonable satisfaction, of the non-defaultingparty, the non-defaulting party may send the defaulting party a notice oftermination, terminating this Agreement as of the date specified in the Notice.

 

B.            Terminationby CAM. If CAM terminates this Agreement by reason of the breach or defaultby Comstock of its obligations under this Agreement, the parties agree that itwould be difficult to compute the actual damages incurred by CAM as a resultthereof.  Consequently, CAM and Comstockagree that, in the event of such breach, CAM’s sole remedy shall be theretention by CAM of the Project Fees not yet paid to Comstock by CAM at thetime of such breach and the termination of the Purchase Opportunity, suchremedies representing

 

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reasonable compensation to CAM for any such breach.  In any event, CAM shall remain responsiblefor the payment of Vendor fees set forth in 4.03.

 

C.            Terminationby Comstock. In the event Comstock terminates this Agreement by reason ofthe breach or default by CAM of its obligation under this Agreement, theProject Fees remaining unpaid plus future Project Fees for a period of sixmonths from the time of the issuance of the Notice of Termination shallaccelerate and become immediately due and payable. In addition, the PurchaseOpportunity shall remain an obligation of CAM and shall survive termination ofthe Agreement as provided for herein.

 

5.03         Termination Due toConvenience Prior to Expiration

 

A.            CAMtermination for convenience Prior to Expiration On ninety (90) days writtennotice (the “CAM Notice Period”) to Comstock, CAM may terminate this Agreementat any time, for its convenience.  In theevent of termination of the Agreement under this Section 5.03(A), CAM shall paywithin thirty (30) days of the date of the termination notice to Comstock andComstock agrees to accept; (i) all unpaid Project Fees calculated through theend of the CAM Notice Period, and (ii) reimbursement of all expenses as setforth in Section 4.03 of this Agreement. In addition, the Purchase Opportunity shall remain in effect as providedfor herein.

 

B.            ComstockTermination for Convenience Prior to Expiration.  At any time after six (6) months from theEffective Date, Comstock may terminate this Agreement at any time, for itsconvenience, on ninety (90) days written notice to CAM (the “Comstock NoticePeriod”), in which event Comstock shall accept in full compensation of allclaims by it against CAM the amounts to be paid by CAM to Comstock through theactual date of termination.  Comstockshall continue to perform its services under this Agreement during the ComstockNotice Period. In such event the Purchase Opportunity shall be void at theoption of CAM.

 

**ARTICLE VI**

**Assignment and Sub-Contracting**

 

6.01         Comstock may assignor transfer this Agreement to a parent or affiliated entity provided all rightsand obligations are transferred therewith.

 

**ARTICLE VII**

**Independent Contractor Status**

 

7.01         The parties to thisAgreement agree that the relationship of Comstock to CAM is that of independentcontractor.  Except as otherwise statedin this Agreement, no agency is created by this Agreement, and the employeesand agents of Comstock are not to be considered as employees or agents of CAM,and shall not enter into any vendor agreements without the prior consent ofCAM.

 

**ARTICLE VIII**

**Compliance withNon-Discrimination Laws**

 

8.01         Comstock shall complywith all federal, State and County laws, codes, ordinances and regulationsrequiring non-discrimination in employment and in the provision of services.

 

**ARTICLE IX**

**Entire Agreement**

 

9.01         Except as otherwisestated in this Agreement, this Agreement constitutes the entire agreement ofthe parties with respect to the matters dealt with herein.

 

**ARTICLE X**

**Indemnification**

 

10.01       Comstock shall holdCAM harmless from, and indemnify CAM against loss, personal injury or deathresulting from the gross negligence or willful act of any employee or agent orContractor of Comstock, but not from the gross negligence or willful act of anyemployee, agent or Contractor of CAM. CAM shall hold Comstock harmless from, and indemnify Comstock against,any claims made by third parties under any agreements with CAM.  The protections agreed to under this sectionshall include, without limitation, all costs of litigation, including courtcosts, arbitration and mediation costs and attorneys’ fees.

 

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**ARTICLE XI**

**Notices**

 

11.01       All notices, demandsand requests which may be given or which are required to be given by eitherparty to the other must be in writing. Notices, demands or requests shall bedeemed to have been properly given for all purposes if (i) delivered against awritten receipt of delivery, (ii) mailed by express, registered or certifiedmail of the United States Postal Service, return receipt requested, postageprepaid, or (iii) delivered to a nationally recognized overnight courier servicefor next business day delivery to the receiving party’s address as set forthabove or (iv) delivered via telecopier or facsimile transmission to thefacsimile number listed below, with an original counterpart of suchcommunication sent concurrently as specified in subsection (ii) or (iii) aboveand with written confirmation of receipt of transmission provided.  Each such notice, demand or request shall bedeemed to have been received upon the earlier of the actual receipt or refusalby the addressee or three (3) business days after deposit thereof at any mainor branch United States post office if sent in accordance with subsection (ii)above, and the next business day after deposit thereof with the courier if sentpursuant to subsection (iii) above. Notices shall be sent to the followingaddresses:

 

To CAM:

 

Comstock Asset Management, L.C.

11465 Sunset Hills Road, Suite 501

Reston, Virginia 20190

Attention: Christopher Clemente

Fax No: 703/935-1178

 

To Comstock:

 

Comstock Homebuilding Companies, Inc.

11465 Sunset Hills Road, Suite 501

Reston, Virginia 20190

Attention: Gregory Benson

Fax No: 703/760-1520

 

[SIGNATURES FOLLOW]

 

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IN WITNESS WHEREOF, CAM and Comstock have executed this Agreement as ofthe date indicated below.

 

 
| **CAM:**                             | **COMSTOCK:**                          |
|--------------------------------------|----------------------------------------|
|                                 |                                   |
|                                 |                                   |
| COMSTOCK ASSET MANAGEMENT, L.C.      | COMSTOCK HOMEBUILDING  COMPANIES, INC. |
| a Virginia limited liability company | a Delaware corporation                 |
|                                 |                                   |
|                                 |                                   |
| By:                                  | /s/ Christopher Clemente               |   | By: | /s/ Gregory Benson |   |
|                                 | Christopher Clemente                   |   | Gregory Benson |
|                                 | Manager                                |   | President |
|                                 |                                   |   |   |
|                                 |                                   | Dated: | March 4, 2005 |
|                                      |                                        |  |  |  |  |

 

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Exhibit A:  The Loudoun Station Properties

 

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