**Exhibit 10.2**

 

**AGREEMENTOF SALE**

 

THIS AGREEMENT, entered intoas of the 28th day of September, 2005, by and between COMSTOCK BELLEMEADE, L.C.,a Virginia limited liability company (“Purchaser”) and BELLEMEADE FARMS INVESTORS, LLC, a Delawarelimited liability company, FF BELLEMEADE FARMS, LLC, a Delaware limitedliability company and FF INVESTORS W-I LLC, a Delaware limited liabilitycompany (collectively, the “Seller”).

 

WITNESSETH:

 

1.                                       PURCHASE AND SALE.  Purchaser agrees to purchase and Selleragrees to sell at the price (the “Purchase Price”) of Forty Four Million EightyTwo Thousand and No/100 Dollars ($44,082,000.00), all of the following property(collectively, the “Property”):

 

a.                                       that certain parcel ofreal property located in Leesburg, Virginia, more particularly described on Exhibit Aattached hereto (the “Land”);

 

b.                                      the personal propertylocated on the Improvements (hereinafter defined) which is used for operationand maintenance of the apartment project and is owned by Seller, includingthose items set forth on Exhibit B, which shall be transferred toPurchaser at Closing (as hereinafter defined) by a Bill of Sale;

 

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c.                                       all rights andappurtenances pertaining to the Land, including, without limitation, any andall rights of Seller in and to all air and development rights, all mineralrights, roads, alleys, easements, streets and ways adjacent to the Land, rightsof ingress and egress thereto, any strips and gores within or bounding the Landand in the profits or rights or other appurtenances connected with thebeneficial use or enjoyment of the Land;

 

d.                                      those certain apartmentbuildings containing approximately 316 apartment units, and all of Seller’sright, title and interest in the other improvements, structures and fixturesplaced, constructed or installed on the Land (collectively, the “Improvements”);

 

e.                                       all of Seller’s right,title and interest in all leases, licenses and concession agreements(collectively, the “Leases”) covering space situated at or within the Land andImprovements under any existing Lease occupied by tenants (collectively, the “Tenants”)and all refundable security deposits deposited by Tenants with respect to theLeases;

 

f.                                         all of Seller’s rightsin and to contractual rights and intangibles with respect to the operation,maintenance, and repair of the Land and the Improvements, including service andmaintenance agreements (collectively, “Service Contracts”), utility agreements,manufacturers’ warranties, assignable governmental permits, licenses,certificates and approvals in connection with the ownership of the Property(collectively, the “Licenses”), and all development rights relating orappurtenant to the Land or the Improvements;

 

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g.                                      Seller’s right, if any,to the use of the trade name “Bellemeade Farms Apartments” or “Bellemeade Farms”(the “Trade Name”) in connection with the Property;

 

h.                                      the right, ifassignable, to the use of all telephone numbers used by Seller at the Property;and

 

i.                                          subject to the provisionsof Paragraph 6 of this Agreement, all rights to any award made or to be made orsettlement in lieu thereof for damage to the Land or Improvements by reason ofcondemnation, eminent domain, exercise of police power or change of grade ofany street.

 

2.                                       PURCHASE PRICE.  The Purchase Price shall be paid as follows:

 

a.                                       Upon the full executionof this Agreement, the sum of $2,000,000.00 (the “Earnest Money”) payable tothe “Escrow Agent” (as defined in the Escrow Agreement) to be held in escrow bythe Escrow Agent, by and in accordance with the provisions of the EscrowAgreement (“Escrow Agreement”) attached hereto as Exhibit C;

 

b.                                      on the Closing Date (ashereinafter defined), $44,082,000.00 (less a credit for all Earnest Moneyadjusted in accordance with the prorations by federally wired “immediatelyavailable” funds delivered to the Escrow Agent’s account as set forth in theEscrow Agreement no later than 12:00 Noon Central Time on the ClosingDate.  If the funds are not received bythe Escrow Agent by 12:00 Noon Central Time, then on the Closing Date,Purchaser shall pay Seller an amount equal to any additional mortgage per dieminterest costs (including, if required, the payment of interest due Seller’slender for the full month in which the Closing occurs) actually incurred bySeller.

 

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3.                                       TITLE COMMITMENT ANDSURVEY

 

a.                                       Attached hereto as Exhibit Eis a pro-forma title policy (“Pro-Forma Title Policy”) for an owner’s ALTAstandard coverage title insurance policy (“Title Policy”) issued by ChicagoTitle Insurance Company (“Title Insurer”). The owner’s Title Policy issued at Closing will be in the amount of thePurchase Price subject only to: (i) real estate taxes and assessments notyet due and payable**;** (ii) existingleases; and (iii) those matters shown in the Pro-Forma Title Policy.  All of the above are herein referred to asthe “Permitted Exceptions”.  The Pro-FormaTitle Policy shall be conclusive evidence of good title as therein shown as toall matters insured by the policy, subject only to the exceptions thereinstated.  On the Closing Date, the TitleInsurer shall issue the Title Policy or a “marked up” commitment in conformitywith the Pro-Forma Title Policy.  Purchasershall pay all costs of the Title Policy including any additional costs of an “extendedcoverage”****Title Policy and anyspecial endorsements which Purchaser requires.

 

b.                                      Purchaser acknowledgesreceipt of a survey (“Survey”) of the Property dated July 20, 2005prepared by Burgess & Niple, Inc. (“Surveyor”).  Purchaser acknowledges and accepts allmatters as shown on the Survey.  Purchasershall pay for all costs of the update to the Survey performed by the Surveyorwhich had updated the Survey from the survey dated October 7, 2003, as wellas the  costs for any recertification or forany additional work which Purchaser requires.

 

4.                                       CONDITION OFTITLE/CONVEYANCE.  Seller agrees to convey feesimple title to the Property by Special Warranty Deed (“Deed”) in recordableform

 

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subject only to the Permitted Exceptions.  If Seller is unable to convey title to theProperty subject only to the Permitted Exceptions hereof because of theexistence of an additional title exception (“Additional Unpermitted Exception”),then Purchaser can elect to take title to the Property subject to the AdditionalUnpermitted Exception or terminate this Agreement.  If Purchaser elects to terminate thisAgreement pursuant to this Paragraph, then the Earnest Money plus all accruedinterest shall be delivered to the Purchaser and except as specificallyprovided for elsewhere in this Agreement, neither party shall have any furtherobligation or liability hereunder. Notwithstanding the aforesaid, all liens of a definite ascertainableamount which are Additional Unpermitted Exceptions shall be paid for by Sellerat the Closing or “insured over” by the Title Insurer.  Seller agrees not to place any mortgage or deedof trust on the Property during the term of this Agreement without the consentof Purchaser.

 

5.                                       PAYMENT OF CLOSINGCOSTS.  Seller shall pay the grantor’s tax estimatedat One Dollar ($1.00) per each One Thousand Dollars ($1,000.00) of the PurchasePrice.  Purchaser shall pay the grantee’stax estimated at Two Dollars ($2.00) per each One Thousand Dollars ($1,000.00)of the Purchase Price and any other transfer taxes, documentary stamps orrecording fees incurred in connection with the sale of the Property and recordingof the Deed.  Purchaser shall pay theclosing costs with reference to any loan which Purchaser obtains.  Purchaser and Seller shall equally share theEscrow Agent’s escrow fees.

 

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6.                                       DAMAGE, CASUALTY ANDCONDEMNATION

 

a.                                       If the Property suffersdamage as a result of any casualty prior to the Closing Date and can berepaired or restored for $250,000 or less, then Seller shall commence therepair or restoration in an expeditious manner, in which event the Closing Datewill be extended until such date as may reasonably be required to complete therepair or restoration and Seller shall retain all insurance proceeds.  If the cost of repair or restoration exceedsthat amount, then Seller can elect to either: (a) repair and restore same,in which event the Closing Date will be extended until such date as mayreasonably be required to complete the repair or restoration; or (b) terminatethis Agreement upon notice to Purchaser served within twenty (20) business daysof such casualty.  If Seller elects toterminate this Agreement pursuant to this Paragraph, then Purchaser will havethe option to accept the Property in its damaged condition together with anassignment from Seller of all insurance proceeds and receive a credit atClosing in the amount of the deductible, provided Purchaser notifies Seller bynotice served within twenty (20) days after receipt of Seller’s notice ofelection to terminate.

 

b.                                      If condemnationproceedings (“Proceedings”) are instituted against the Property and the partiesreasonably believe that such Proceedings will result in an award in excess of$250,000.00, then Purchaser can elect to either take the Property subject tothe Proceedings along with an assignment of Seller’s interest in theProceedings or terminate this Agreement. If Purchaser elects to terminate this Agreement, it shall be by noticeto the Seller within five (5) days after Seller notifies Purchaser of theProceedings.

 

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c.                                       If the Agreement isterminated pursuant to this Paragraph, then the Earnest Money plus all accruedinterest shall be delivered to the Purchaser and except as specificallyprovided for elsewhere in this Agreement, neither party shall have any furtherobligation or liability hereunder.

 

7.                                       AS-IS CONDITION.

 

Except as may hereinafter bespecifically set forth in this Agreement, Purchaser is not relying on Sellerhaving made any inquiry as to the condition of the Property or the Leases.  Purchaser acknowledges and agrees that itwill be purchasing the Property based solely upon its inspection andinvestigations of the Property and that Purchaser will be purchasing theProperty “AS IS” and “WITH ALL FAULTS” based upon the condition of the Propertyas of August 12, 2005, subject to reasonable wear and tear and, subject tothe provisions of Paragraph 6, loss by fire or other casualty or condemnationfrom August 12, 2005 until the Closing Date.  Without limiting the foregoing, Purchaseracknowledges that, except as may otherwise be specifically set forth inParagraph 19 or elsewhere in this Agreement, neither Seller nor itsconsultants, brokers or agents have made any other representations orwarranties of any kind upon which Purchaser is relying as to any mattersconcerning the Property, including, but not limited to, any implied warranty asto the quality of the construction of the Property or its fitness for use as anapartment project, the condition of the Land or any of the Improvements,whether or not the Property is

 

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subject to airport corridornoise, the existence or nonexistence of asbestos, lead in water, lead in paint,radon, underground or above ground storage tanks, petroleum, toxic waste or anyHazardous Materials or Hazardous Substances (as such terms are defined below),the Tenants of the Property or the Leases affecting the Property, economicprojections or market studies concerning the Property, any development rights,taxes, bonds, covenants, conditions and restrictions affecting the Property,water or water rights, topography, drainage, soil, subsoil of the Property, theutilities serving the Property or any zoning, environmental or building laws, rules orregulations affecting the Property. Seller makes no representation that the Property complies with Title IIIof the Americans With Disabilities Act, the Fair Housing Act of 1968 asamended, or any fire codes, building codes or health codes.  Except with respect to a Claim as defined andas limited pursuant to Paragraph 19d hereof for a breach of any representation,warranty or covenant of Seller under this Agreement, Purchaser hereby releasesSeller, which release shall also inure to the benefit of any member, manager,or partner of Seller, FF Development L.P., FF Properties L.P. and theiraffiliates (collectively referred to herein as the “Related Parties”) from anyand all liability in connection with any claims (including but not limited toall health and medical claims) which Purchaser may have against Seller or anyof the Related Parties, and Purchaser hereby agrees not to assert any claims,for damage, loss, compensation, contribution, cost

 

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recovery or otherwise, againstSeller or any of the Related Parties, whether in tort, contract, or otherwise,relating directly or indirectly to the condition of the Property, includingwithout limitation (i) claims relating to the existence of asbestos; (ii) claimsattributable to indoor air quality issues, releases from building material andfurnishings, releases from cleaning, repairing, or decorating activities, andthe operation of heating and cooling systems and humidifiers; or (iii) claimsrelating to Hazardous Materials or Hazardous Substances on, or environmentalconditions of, the Property, or arising under the Environmental Laws (as suchterm is hereinafter defined), or relating in any way to the quality of theindoor or outdoor environment at the Property; or (iv) claims relating tomold, fungus, bacteria and/or other biological growth or biological growthfactors, or any other type of indoor contaminants that may exist on theProperty; or (v) claims relating to latent or patent construction defectsor any implied warranty as to fitness for use as an apartment project; or (vi) claimsrelating to the failure of Seller to disclose any information relating to theProperty, except as may otherwise be expressly set forth in Paragraph 19 orelsewhere in this Agreement.  As used inthis paragraph the term “affiliates” means, with respect to Seller or any manager,member or partner of Seller, any other entity or person which directly orindirectly through one or more intermediaries controls, or is controlled by, oris under common control with Seller or any manager, member or partner ofSeller.  As used in the previoussentence, “control”

 

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means the possession, directlyor indirectly, of the power to cause the direction of the management of Selleror any manager, member or partner of Seller, whether through voting securities,by contract, family relationship or otherwise. This release shall forever survive the Closing and the delivery andrecording of the Deed.  As used herein,the term “Hazardous Materials” or “Hazardous Substances” means (i) hazardouswastes, hazardous materials, hazardous substances, hazardous constituents,toxic substances or related materials, whether solids, liquids or gases,including but not limited to substances defined as “hazardous wastes,” “hazardousmaterials,” “hazardous substances,” “toxic substances,” “pollutants,” “contaminants,”“radioactive materials”, “toxic pollutants”, or other similar designations in,or otherwise subject to regulation under, the Comprehensive EnvironmentalResponse, Compensation and Liability Act of 1980, as amended (“CERCLA”), 42U.S.C. § 9601 et seq.; the Toxic Substance Control Act (“TSCA”), 15U.S.C. § 2601 et seq.; the Hazardous Materials Transportation Act,49 U.S.C. § 1802; the Resource Conservation and Recovery Act (“RCRA”), 42U.S.C. § 9601, et seq.; the Clean Water Act (“CWA”), 33 U.S.C. § 1251et seq.; the Safe Drinking Water Act, 42 U.S.C. § 300f etseq.; the Clean Air Act (“CAA”), 42 U.S.C. § 7401 et seq.; andin any permits, licenses, approvals, plans, rules, regulations or ordinancesadopted, or other criteria and guidelines promulgated pursuant to the precedinglaws or other similar federal, state or local laws,

 

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regulations, rules orordinance now or hereafter in effect relating to environmental matters(collectively the “Environmental Laws”); and (ii) any other substances,constituents or wastes subject to any applicable federal, state or local law,regulation or ordinance, including any Environmental Law, now or hereafter ineffect, including but not limited to (A) petroleum, (B) refined petroleum products, (C) wasteoil, (D) waste aviation or motor vehicle fuel and their byproducts, (E) asbestos,(F) lead in water, paint or elsewhere, (G) radon, (H) PolychlorinatedBiphenyls (PCB’s), (I) ureaformaldehyde, (J) volatile organiccompounds (VOC), (K) total petroleum hydrocarbons (TPH), (L)benzine derivative (BTEX), and (M) petroleum byproducts.

 

Purchaser hereby specificallyacknowledges that Purchaser has carefully reviewed this subsection, and discussedits import with legal counsel, is fully aware of its consequences, and that theprovisions of this subsection are a material part of this Agreement;PROVIDED, HOWEVER, such release, waiver or discharge shall not apply and shallbe of no force or effect for any claims arising out of Seller’s fraud.

 

Purchaser’sInitials 

 

b.                                      Seller has provided toPurchaser certain unaudited historical financial information regarding theProperty relating to certain periods of time in which Seller owned the Property.  Except as may be otherwise specifically setforth elsewhere in this Agreement, Seller makes no representation or warrantythat such material is complete or accurate or that Purchaser will achievesimilar financial or other results with

 

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respect to the operations of the Property, it beingacknowledged by Purchaser that Seller’s operation of the Property andallocations of revenues or expenses may be vastly different than Purchaser maybe able to attain.  Purchaseracknowledges that it is a sophisticated and experienced purchaser of realestate and further that Purchaser has relied upon its own investigation andinquiry with respect to the operation of the Property and releases Seller andthe Related Parties from any liability with respect to such historicalinformation; provided however, such release, waiver or discharge shall notapply and shall be of no force or effect for any claims arising out of Seller’sfraud.

 

Purchaser’sInitials 

 

8.                                       CLOSING

 

The closing (“Closing”) ofthis transaction shall be on September 28, 2005 (“Closing Date”), at whichtime Seller shall deliver possession of the Property to Purchaser.

 

9.                                       CLOSING DOCUMENTS

 

a.                                       On or before theClosing Date, Purchaser shall deliver to Escrow Agent the balance of thePurchase Price plus or minus prorations, in accordance with the closingstatement.

 

b.                                      On the Closing Date,Seller shall deliver to Purchaser possession of the Property; all keys used inconnection with the Property; copies of the Tenants Lease files (which will beavailable at the Property).

 

c.                                       On or before theClosing Date, Seller and Purchaser shall deliver to Escrow Agent or the otherparty, as applicable, executed originals of the following: the

 

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Deed (in the form of Exhibit F attached hereto)subject to the Permitted Exceptions; the Bill of Sale (in the form of Exhibit Gattached hereto); a closing statement; an assignment and assumption of allService Contracts (in the form of Exhibit H attached hereto); anassignment and assumption of all Leases and security deposits (in the form of Exhibit Iattached hereto); updated certified rent roll; a notice to the tenants of thetransfer of title and the assumption by Purchaser of the landlord’s obligationsunder the Leases and the obligation to refund the security deposits (in theform of Exhibit J attached hereto); a non-foreign affidavit (in the formof Exhibit K attached hereto); an assignment of intangible property (inthe form of Exhibit L attached hereto); and an assignment of warrantiesand guaranties relating to the Personal Property (in the form of Exhibit M-1attached hereto); and such other documents as may be reasonably required by theTitle Insurer in order to consummate the transaction as set forth in thisAgreement.

 

10.                                 SELLER’S RIGHT TO CURE.  Intentionally Deleted.

 

11.                                 DEFAULT BY PURCHASER.  ALL EARNEST MONEY DEPOSITED INTO THE ESCROWIS TO SECURE THE TIMELY PERFORMANCE BY PURCHASER OF ITS OBLIGATIONS ANDUNDERTAKINGS UNDER THIS AGREEMENT.  INTHE EVENT OF ANY DEFAULT OF THE PURCHASER UNDER THE PROVISIONS OF THISAGREEMENT (PROVIDED PURCHASER SHALL NOT BE CONSIDERED IN DEFAULT UNDER THISAGREEMENT IF IT HAS WITHIN FIVE (5) DAYS AFTER RECEIPT OF WRITTEN NOTICEFROM SELLER CURED ANY FAILURE TO MAINTAIN THE CONFIDENTIALITY REQUIRED UNDERPARAGRAHS 17 AND 36.)  SELLER SHALLRETAIN ALL OF THE

 

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EARNEST MONEY AND THE INTEREST THEREON AS SELLER’S SOLERIGHT TO DAMAGES OR ANY OTHER REMEDY AND PURCHASER SHALL HAVE NO FURTHER RIGHTSTO PURCHASE THE PROPERTY.  THE PARTIES HAVEAGREED THAT SELLER’S ACTUAL DAMAGES, IN THE EVENT OF A DEFAULT BY PURCHASER,WOULD BE EXTREMELY DIFFICULT OR IMPRACTICAL TO DETERMINE.  THEREFORE, BY PLACING THEIR INITIALS BELOW,THE PARTIES ACKNOWLEDGE THAT THE EARNEST MONEY HAS BEEN AGREED UPON, AFTERNEGOTIATION, AS THE PARTIES’ REASONABLE ESTIMATE OF SELLER’S DAMAGES.

 
| Seller’s Initials | Purchaser’s Initials |
|------------------------|---------------------------|

 

12.                                 SELLER’S DEFAULT.  IF THIS SALE IS NOT COMPLETED BECAUSE OFSELLER’S UNCURED DEFAULT, PURCHASER’S SOLE REMEDY SHALL BE THE RIGHT TO SUE FORACTUAL DAMAGES NOT TO EXCEED $250,000.00 AND THE RETURN OF ALL EARNEST MONEYTOGETHER WITH ANY INTEREST ACCRUED THEREON, AND THIS AGREEMENT SHALL TERMINATEAND EXCEPT AS SPECIFICALLY PROVIDED FOR ELSEWHERE IN THIS AGREEMENT, NEITHERPARTY SHALL HAVE ANY FURTHER OBLIGATION OR LIABILITY TO EACH OTHER AT LAW OR INEQUITY.  NOTWITHSTANDING ANYTHINGCONTAINED HEREIN TO THE CONTRARY, IF SELLER’S DEFAULT IS ITS REFUSAL TO DELIVERTHE DEED AND THE OTHER DOCUMENTS REQUIRED TO BE DELIVERED AT CLOSING ANDWRONGFULLY REFUSES TO CONVEY THE PROPERTY TO PURCHASER AS A

 

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RESULT THEREOF, THEN PURCHASER WILL BE ENTITLED TO SUE FORSPECIFIC PERFORMANCE.

 
| Seller’s Initials | Purchaser’s Initials |
|------------------------|---------------------------|

 

13.                                 a.                                       PRORATIONS.  Rents (exclusive of Delinquent Rent, ashereinafter defined, but including prepaid rents); refundable security depositsand interest thereon if required by law (which will be assigned to and assumedby Purchaser and credited to Purchaser at Closing); water and other utilitycharges; fuels; prepaid operating expenses; real and personal property taxes;and other similar items shall be adjusted ratably as of 11:59 P.M. on theClosing Date, and credited or debited to the balance of the cash due atClosing.  All supplemental taxes andassessments attributable to the period prior to the Closing Date for thecalendar year in which the Closing occurs shall be prorated to the ClosingDate; provided, however, in no event shall Seller be charged with or (andPurchaser shall) be responsible for any increase in the taxes on the Propertyresulting from the sale of the Property or from any improvements made at anytime from and after the Closing Date.  Ifthe amount of any of the items to be prorated is not then ascertainable, theadjustment thereof shall be on the basis of the most recent ascertainable dataand all prorations shall be final.  Ifspecial assessments have been levied against the Property for completedimprovements, then the amount of any installments which are due prior to theClosing Date shall be paid by the Seller; and the amount of installments whichare due after the Closing Date shall be paid by the Purchaser.  All assessments for incomplete improvementsshall be paid by Purchaser.

 

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b.                                      DELINQUENT RENTS.  If, asof the Closing Date, basic rent is in arrears (“Delinquent Rent”) for thecalendar month in which the Closing occurs, then Seller’s portion of the firstrent collected by Purchaser during that calendar month will be delivered toSeller for the Delinquent Rent.  IfDelinquent Rent is in arrears for a period prior to the calendar month in whichthe Closing occurs, then rents collected by Purchaser shall first be applied tocurrent rent and then to Delinquent Rent. Purchaser shall deliver Seller’s pro rata share within 10 days ofPurchaser’s receipt of that Delinquent Rent except that the Delinquent Rentreceived for the calendar month in which Closing occurs shall be paid in onelump sum within ten (10) days of the last day of the calendar month.  This subparagraph of this Agreement shallsurvive the Closing and the delivery and recording of the Deed.

 

14.                                 RECORDING.  This Agreement shall not be recorded and theact of recording by Purchaser shall be an act of default hereunder by Purchaserand shall be subject to the provisions of Paragraph 11.

 

15.                                 ASSIGNMENT.  The Purchaser shall not have the right toassign its interest in this Agreement without the prior written consent of theSeller.  Any assignment or transfer of,or attempt to assign or transfer, Purchaser’s interest in this Agreement shallbe an act of default hereunder by Purchaser and subject to the provisions ofParagraph 11.  Seller hereby consents toan assignment to an entity, the ownership and control of which is held by thesame persons owning and controlling Purchaser. However, Purchaser shall remain liable for all of the Purchaser’sobligations and undertakings set forth in this Agreement and the exhibitsattached hereto.  Purchaser shall

 

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notify Seller of any assignment no later than ten (10) businessdays prior to the Closing Date.

 

16.                                 BROKER. The parties heretoacknowledge that Ideal Realty Group (“Broker”) is the only real estate brokerinvolved in this transaction.  Theforegoing does not apply to any fee which may be paid by Seller to anyaffiliate of Seller or FF Properties L.P. or an exclusive broker engaged by anaffiliate of Seller as a result of this transaction for which Seller shall beresponsible and Purchaser has no obligations relating to said fees.  Seller agrees to pay Broker a commission orfee (“Fee”) pursuant to an agreement between Seller and Broker.  Purchaser agrees to indemnify, defend andhold harmless the Seller and any member, partner or affiliate or parent ofSeller, and all shareholders, employees, officers and directors of Seller orSeller’s partner(s), or member(s), or parent or affiliate (each of the above isindividually referred to as a “Seller Indemnitee”) from all claims, includingattorneys’ fees and costs incurred by a Seller Indemnitee as a result of anyone’sclaiming by or through Purchaser any fee, commission or compensation on accountof this Agreement, its negotiation or the sale

 

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hereby contemplated. Purchaser does now and shall at all times consent to a Seller Indemnitee’sselection of defense counsel.  Selleragrees to indemnify, defend and hold harmless the Purchaser and allshareholders, employees, officers and directors of Purchaser or Purchaser’sparent or affiliate (each of the above is individually referred to as a “PurchaserIndemnitee”) from all claims, including attorneys’ fees and costs incurred by aPurchaser Indemnitee as a result of anyone’s claiming by or through Seller anyfee, commission or compensation on account of this Agreement, its negotiationor the sale hereby contemplated.  Sellerdoes now and shall at all times consent to a Purchaser Indemnitee’s selectionof defense counsel.  Notwithstandinganything contained in this Agreement to the contrary, the provisions of thisParagraph shall forever survive the Closing and delivery of the Deed or earliertermination of this Agreement.

 

17.                                 DOCUMENTS, INSPECTIONOF PROPERTY AND APPROVAL PERIOD.

 

a.                                       Seller has heretoforedelivered or shall deliver or make available to Purchaser, originals or copiesof the following documents to the extent that they are in Seller’s possession(collectively the “Documents”):

 

i.                                          Copies of allcertificates of occupancy.

 

ii.                                       Copies of any thirdparty environmental and seismic or soils (as applicable) reports relating tothe Property.

 

iii.                                    Copies of the mostrecent real estate and personal property tax bills.

 

iv.                                   Copies of all ServiceContracts pertaining to the Property and a schedule listing all suchService Contracts.

 

v.                                      A schedule listingall Personal Property.

 

vi.                                   True, correct andcomplete copies of any Leases and licenses which are located at the Propertyfor Purchaser’s review.

 

vii.                                A current rent roll (“RentRoll”).

 

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viii.          Unaudited income and expensestatements of operations (hereinafter referred to as the “Financial Statements”)for the Property for the prior calendar year and the latest available currentcalendar year.

 

ix.            Such other non-confidentialdocuments as Purchaser may reasonably require and which are in Seller’spossession.

 

Purchaser by its execution of this Agreement herebyacknowledges that it has approved all of the Documents and has prior to thedate hereof inspected and by its execution hereof does approve the condition ofthe Property.  Purchaser agrees toindemnify, defend, protect and hold Seller, its partners, members,shareholders, affiliates, officers, managers, employees, trustees andbeneficiaries, and FF Properties L.P. and the respective successors and assignsof each of the foregoing (“Indemnified Parties”) harmless from any and allloss, costs, including attorneys’ fees, liability or damages which any of theIndemnified Parties may incur or suffer as a result of Purchaser’s priorinspection and investigation of the Property including the entry of Purchaser,its employees or agents and its lender onto the Property, including withoutlimitation, liability for mechanics’ lien claims.  Purchaser shall keep all information or datareceived or discovered in connection with any of the inspections, reviews orexaminations strictly confidential. Notwithstanding anything contained in this Agreement to the contrary,Purchaser’s indemnity obligations under this Paragraph shall forever survivethe Closing and delivery and recording of the Deed or the earlier terminationof this Agreement.

 

b.             Purchaser acknowledges that it is a sophisticated andexperienced purchaser of real estate; that numerous apartment complexes containmold; water

 

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damage, fungi, bacteriaand/or other biological growth or biological growth factors; and that theProperty may contain mold, water damage, fungi, bacteria, and/or otherbiological growth or biological growth factors which Purchaser may not havediscovered during its inspection of the Property.  Purchaser agrees that in purchasing theProperty from the Seller, it is assuming the risk that the Property may containmold, water damage, fungi, bacteria, and/or other biological growth orbiological growth factors even as a result of a patent or latent constructiondefect.

 

c.             Purchaser agrees to repair to the reasonablesatisfaction of Seller any damage to the Property which may arise as a resultof Purchaser’s prior inspection of the Property.

 

d.             If at anytime during its prior inspection of theProperty Purchaser discovered or was advised of any fact or circumstance whichwould cause a representation or warranty of Seller to be untrue or misleading,or with the passage of time would become untrue or misleading, then Purchasershall be deemed to have waived its right to seek damages or termination of thisAgreement.

 

e.             As a result of Purchaser’s prior inspection of theProperty, it is conclusively presumed that Purchaser (i) has approved theDocuments and the condition of the Property, (ii) has acknowledged andagreed that all Earnest Money plus the interest accrued thereon shall belong toSeller unless Seller is in default hereunder or this Agreement is terminated inaccordance with its terms, (iii) has acknowledged and agreed that, priorto purchase, Purchaser has been given adequate access to inspect the Property,including the opportunity to conduct invasive testing to discover any patent orlatent

 

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defects in or on theProperty, examine the books and records relating to the Property; conductinterviews or take any other necessary steps to fully and adequately discoverany and all latent or patent defects with the Property, (iv) hasacknowledged that it has the full and complete knowledge necessary to purchasethe Property, or has chosen not to obtain the full and complete knowledge,although provided with the opportunity by Seller, and (v) has conducted,or had the opportunity to conduct, sufficient examination of the building,building envelope, building systems, building grounds, building components andsurrounding conditions including but not limited to soils.

 

18.           INDEMNIFICATIONAND INSURANCE REQUIREMENTS.  Inaddition to all other covenants contained herein binding on Purchaser,Purchaser hereby further agrees:

 

a.             To indemnify, defend and hold harmless the Seller,Fairfield Properties, Fairfield Financial A LLC, Fairfield Residential LLC, FFDevelopment L.P., FF Properties L.P., FF Properties, Inc., FairfieldBellemeade Farms LP and FF Bellemeade Farms LLC, the Roland and Dawn ArnallLiving Trust, Roland Edmund Arnall, Dawn Lynn Arnall and any other SellerRelated Parties and the members, partners, officers, directors, trustees,affiliates, parents, subsidiaries, shareholders, managers, beneficiaries,employees and agents of each of the foregoing entities (individually, the “SellerIndemnified Party” or collectively, the “Seller Indemnified Parties”), to theextent enforceable under applicable law, from any and all losses, liabilities,damages, penalties, fines, liens, judgments, costs or expenses whatsoever,whether in tort, contract or otherwise (including without limitation, courtcosts and

 

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reasonable attorneys’fees and disbursements) (collectively, “Losses”) that (i) are actuallyincurred by a Seller Indemnified Party; (ii) arise out of, or in any wayrelate to claims made or brought by any party or parties who acquire orcontract to acquire any ownership interest in the Property following theClosing (including but not limited to any unit owner or owners or anycondominium association or associations); (iii) arise out of claimsasserted at any time after the conversion of the Property into a condominiumform of ownership, cooperative housing corporation, community apartmentproperty or stock corporation, including but not limited to claims by any unitowner or owners or any condominium association or associations, their agents,employees and successors and assigns in connection with or related thereto and (iv) relateto either (A) the physical condition of the Property including, withoutlimitation, latent or patent defects, and claims relating to the existence ofasbestos, any other construction defects, claims relating to mold, allstructural and seismic elements, all mechanical, electrical, plumbing, sewage,heating, ventilating, air conditioning and other systems, or (B) any lawor regulation applicable to the Property, including, without limitation, anyEnvironmental Law and any other federal, state or local law.  The insurance to be provided by Purchaser asdescribed in this Section below shall in no way be construed to limitPurchaser’s indemnity obligations under this Paragraph 18(a) or Purchaser’sother obligations under other provisions of Paragraph 18 or under otherParagraphs of this Agreement.  Purchaserdoes now and shall at all times consent to the Indemnified Parties’ selectionof defense counsel.  The indemnificationobligations contained in this Paragraph 18 shall not apply to any Lossesresulting from (i) governmental enforcement of chain-of-title liability

 

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under CERCLA or othersimilar Environmental Laws or (ii) a breach of Seller’s representationsand warranties as stated in and as limited by Paragraph 19 herein.  The provisions of this Paragraph 18 shallsurvive the Closing and the delivery and recording of the Deed.

 

b.             Purchaser has delivered to Seller a certificate ofinsurance attached hereto as Exhibit X containing insurance coverages (“InsuranceCoverages”) to be maintained by Purchaser. By no later than ninety (90) days after the Closing, Purchaser shalldeliver to Seller certified copies of all of the insurance policies showing theagreed upon Insurance Coverages. Purchaser at its own cost and expense shall maintain all of saidInsurance Coverages including keeping the Seller Indemnified Parties as additionalinsureds thereunder for a period of five (5) years after the Closing Dateand shall provide written evidence of same to Seller no later than the date oftermination of any insurance policy fulfilling the required InsuranceCoverages.

 

c.             Purchaser shall cause to be delivered at Closing toSeller either (i) a Guaranty (“Guaranty”) executed by ComstockHomebuilding Companies, Inc., in favor of the Seller Indemnified Partiesin the form of Exhibit T-1 attached hereto guarantying the obligations ofPurchaser under Paragraphs 18(a) and 18(b) above or (ii) anirrevocable stand-by Letter of Credit (“Letter of Credit”) issued by a bankreasonably acceptable to Seller with an expiration date of no later than five (5) yearsfrom its issuance (or one (1) year from its issuance, provided thatreplacement one (1) year letters of credit are issued to Seller thirty(30) days prior to the expiration of the then existing letter of credit) in theface amount of $1,000,000.00 to secure Purchaser’s obligations

 

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under Paragraphs 18a.and 18b.  The Letter of Credit shall besubstantially in the form as shown on Exhibit S attached hereto (asmodified to reflect reasonable bank requirements) and will allow Seller to drawon the Letter of Credit (subject to refund of any amounts to Purchaserfollowing a draw under the Letter of Credit that exceed Seller IndemnifiedParties actual damages under Sections 18(a) and 18(b))by presentation of:

 

(i)            a sight draft in the face amount of the Letter of Credit,and

 

(ii)           a statement executed by Seller or anySeller Indemnified Party stating that “COMSTOCK BELLEMEADE L.C. (“Comstock”) orits successors and assigns have (a) breached the provisions of eitherParagraph 18a. or Paragraph 18b. of that certain Agreement of Sale dated August 28,2005, as amended between BELLEMEADEFARMS INVESTORS, LLC, a Delaware limited liability company, FF BELLEMEADEFARMS, LLC, a Delaware limited liability company and FF INVESTORS W-I LLC, aDelaware limited liability company asSeller and COMSTOCK BELLEMEADE L.C. as Purchaser relating to the Propertycommonly known as Bellemeade Farms Apartments, Leesburg, Virginia and Comstockhas failed to cure said breach within five (5) days of written noticegiven to Comstock in the manner described in Paragraph 22 of said Agreement ofSale or (b) failed to deliver an acceptable replacement Letter of Creditto the undersigned by thirty (30) days prior to the expiration date of thisLetter of Credit.

 

Following the Closing, Purchaser may from time to timedeliver a written request (the “Substitution Request”) to Seller asking thatany Guaranty then held by Seller be replaced by a Letter of Creditsubstantially in the Form of Exhibit S (the “Substitution

 

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Letter of Credit”) or that any Letter of Credit thenheld by Seller be replaced by an executed Guaranty in the form of Exhibit T-1(the “Substitution Guaranty”).  TheSubstitution Request shall be accompanied by either the Substitution Guarantyor the Substitution Letter of Credit. Provided that if at the time Seller received the Substitution Requestand the required Substitution Guaranty or Substitution Letter of Credit, (i) Purchaserhas not breached any of the Purchaser’s obligations or liabilities underParagraph 18a. or 18b. and (ii) there is not then any pending claimsagainst any Indemnified Party covered by the indemnification given underParagraph 18a., Seller shall honor said Substitution Request and return theLetter of Credit or Guaranty then in Seller’s possession.  It is expressly acknowledged and agreed thatthe return of any Letter of Credit by Seller shall be good and sufficientconsideration for the execution and deliver of any Substitution Guaranty orSubstitution Letter of Credit.

 

19.           SELLER’SREPRESENTATIONS, WARRANTIES AND COVENANTS

 

a.             Any reference herein to Seller’s knowledge or to thebest of Seller’s knowledge shall only mean such knowledge or notice that hasactually been received by Gino Barra or James Flanagan not having made and withno duty to make a diligent inquiry and any representation or warranty of theSeller is based upon those matters of which Gino Barra or James Flanagan hasactual knowledge as opposed to constructive or imputed knowledge.  Any knowledge or notice given, had or receivedby any of Seller’s agents, servants or employees shall not be construed orimputed to Seller or the individual partners or the general partner of Seller.

 

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b.             Subject to the limitations set forth in subparagraph aabove, Seller hereby makes the following representations, warranties andcovenants, all of which are made to the best of Seller’s knowledge:

 

i.              Seller has not received writtennotice from any governmental authority that the present use and occupancy ofthe Property do not conform with applicable building and zoning laws.

 

ii.             Except as may be set forth on thetax bills and the Title Commitment, there are presently no pending, and Sellerhas received no written notice of, special assessments of any nature withrespect to the Property or any part thereof, nor has Seller received anywritten notice of any special assessments being contemplated.

 

iii.            The Rent Roll attached hereto as Exhibit Ois true and accurate and contains information regarding the security depositsheld in connection with each lease and a delinquency report for the Leases andwill be updated and certified as of the Closing Date.

 

iv.            Seller has not received writtennotice of any pending litigation affecting the Property, except as may be setforth on Exhibit P attached hereto.

 

v.             The existing casualty insurance forthe Property is for full replacement value.

 

vi.            This Agreement has been dulyauthorized and executed on behalf of Seller and constitutes a valid and bindingagreement, enforceable against

 

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Seller in accordance with itsterms.  The performance by Seller of itsobligations hereunder does not and will not violate any law; and neither thisAgreement nor the performance by Seller of its obligations hereunder violatesany agreement or contract to which Seller is bound or a party.  Seller has obtained (or will obtain prior toClosing) all consents, releases and permissions and given all requirednotifications, related to the transactions herein contemplated.

 

vii.           Seller does not have any employees onsite at the Property.

 

viii.          The Financial Statements delivered toPurchaser by Seller are copies of the Financial Statements which Seller or itsaffiliate relies upon for the purposes of reporting to its investors and filingFederal income tax statements and Seller has no reason to believe that they areincorrect.

 

ix.            The Property is connected with andhas water, sewage disposal, telephone, gas and electrical services.

 

x.             Attached hereto as Exhibit Qis a list of all current Service Contracts (excepting the property managementagreement which will be terminated at Closing) entered into by Seller and/orits property manager or leasing agent relating to the management, maintenance,leasing or operation of the Property.

 

xi.            None of the Property is subject toany option to purchase or right of first refusal, recorded or unrecorded.

 

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xii.           Seller has not received any written noticefrom any governmental authority of any pending or threatened condemnationproceeding affecting the Property or any part thereof.

 

xiii.          Seller is the sole owner of theProperty.

 

xiv.          Other then the occupancy by the Sellerand the tenants shown on the Rent Roll (as adjusted over time), occupancy byany party with a right of entry or possession under the Service Contracts andany party given any rights to use or occupy the Property under any of thePermitted Exceptions, all of the Property is vacant and free of any writtenleases, tenancies, licenses or other rights of present or future occupancy forany portion of the Property.

 

xv.           Seller has not received any writtennotices of any default by Seller with respect to the Leases which has not beencured.

 

c.             Seller hereby covenants that from August 12, 2005(except as provided in sub-paragraph iv. below) and up to including theClosing:

 

i.              Seller shall operate, lease andmanage the Property (or to cause its property manager to do so) in at least thesame manner that Seller (or its property manager, as the case may be) hasheretofore operated, leased and managed the Property (wear and tear, andcasualty excepted).

 

ii.             Seller will not, without the priorwritten consent of Purchaser, which consent shall not be unreasonably withheld,delayed or conditioned, permit any material structural modifications oradditions to the Property.

 

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iii.            Seller will not remove any PersonalProperty, unless it is replaced by similar personal property of at least equalvalue.

 

iv.            After August 31, 2005 and untilthe Closing Date, Seller will not enter into any new Lease or extend anyexisting Lease for a term in excess of six (6) months except for theLeases shown on Exhibit Z.

 

v.             Seller shall, at Purchaser’s solecost and expense, reasonably cooperate with Purchaser in the termination of anyService Contracts by Purchaser following the Closing Date.

 

d.             Purchaser’s right to make a claim against Seller for abreach of an indemnity (except for Seller’s indemnity for a brokeragecommission), representation, warranty or covenant under this Agreement or theExhibits attached hereto (“Claim”) shall expire two hundred seventy (270) daysafter the Closing and delivery of the Deed (“Survival Date”).  As to any Claim, Purchaser must: (i) notifySeller of the existence of the Claim in question, which notification (“ClaimNotice”) shall contain a reasonable description of the nature of the Claim orthe facts, circumstances, conditions or events then known to Purchaser whichgive rise to the claim in question; and (ii) institute legal proceedingsin a court of competent jurisdiction within sixty (60) days after the SurvivalDate (“Judicial Proceedings Date”).  AnyClaim for which a Claim Notice is not delivered by Purchaser to Seller on orprior to the Survival Date or for which legal proceedings are not instituted onor prior to the Judicial Proceedings Date, then such Claim shall be deemed tohave been waived by Purchaser and rendered null and void and of no furtherforce or effect.  Seller’s totalliability in the aggregate for all Claims shall

 

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not exceed Two HundredFifty Thousand and No/100 ($250,000.00) Dollars.  Seller shall not be liable for any Claim(s)which in the aggregate do(es) not exceed Twenty Five Thousand ($25,000.00)Dollars.

 

20.           COMPLIANCEWITH OFAC.

 

a.             To the best knowledge of Purchaser, without any duty tomake diligent inquiry, Purchaser is in compliance with all laws, statutes, rules andregulations or any federal, state or local governmental authority in the UnitedStates of America applicable to Purchaser and all beneficial owners ofPurchaser, including, without limitation, the requirements of Executive Order No. 133224,66 Fed Reg. 49079 (September 25, 2001) (the “Order”) and other similarrequirements contained in the rules and regulations of the Office ofForeign Asset Control, Department of the Treasury (“OFAC”) and in any enablinglegislation or other Executive Orders in respect thereof (the Order and suchother rules, regulations, legislation, or orders are collectively called the “Orders”).  Purchaser agrees to make its policies,procedures and practices regarding compliance with the Orders available toSeller for its review and inspection during normal business hours and uponreasonable prior notice.

 

b.             Neither Purchaser nor any beneficial owner of Purchaser:

 

i.              is listed on the SpeciallyDesignated Nationals and Blocked Persons List maintained by OFAC pursuant tothe Order and/or on any other list of terrorists or terrorist organizationsmaintained pursuant to any of the rules and regulations of OFAC orpursuant to any other applicable Orders (such lists are collectively referredto as the “Lists”);

 

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ii.             has been determined by competentauthority to be subject to the prohibitions contained in the Orders;

 

iii.            is owned or controlled by, nor actsfor or on behalf of, any person or entity on the Lists or any other person orentity who has been determined by competent authority to be subject to theprohibitions contained in the Orders; or

 

iv.            shall transfer or permit thetransfer of any interest in Purchaser or any beneficial owner in Purchaser toany person who is or whose beneficial owners are listed on the Lists.

 

If Purchaser obtains knowledgethat Purchaser or any beneficial owner in Purchaser has become listed on theLists or has been indicted, arraigned, or custodially detained on chargesinvolving money laundering or predicate crimes to money laundering, Purchasershall immediately notify Seller.

 

21.           CONDITIONSPRECEDENT TO CLOSING.

 

a.             In addition to any conditions provided in otherprovisions of this Agreement, Purchaser’s obligation to purchase the Propertyis and shall be conditioned on the following:

 

i.              That at no time prior to theClosing shall any of the following have been done by or against or with respectto Seller: (i) the commencement of a case under Title 11 of the U.S. Code,as now constituted or hereafter amended, or under any other applicable federalor state bankruptcy law or other similar law; (ii)

 

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the appointment of a trusteeor receiver of any property interest; or (iii) an assignment for thebenefit of creditors.

 

ii.             On the Closing Date, there shallnot be any uncured Unpermitted Exception or any violation of law, ordinance,order or requirement relating to the Property which is imposed in writing anddelivered to Seller by any governmental authority relating to the Property,which is not remedied by Seller.

 

iii.            If the transaction contemplatedhereby shall require authorization or approval of any governmental agencyhaving jurisdiction, all such authorizations and approvals shall have beenobtained and shall be in full force and effect on and as of the ClosingDate.  If such authorizations andapprovals shall not have been obtained on or prior to the last day for Closinghereinabove provided, the Closing Date may be deferred, at the election ofeither party, for an additional period of time, not to exceed 30 days, as shallbe necessary to obtain any authorizations or approvals not then obtained.

 

iv.            Seller shall deliver to Purchaser onthe Closing Date an executed Certification as to Representations, Warranties,Covenants and Conditions in the form of Exhibit U attached hereof.

 

v.             All services required to beperformed by Phoenix Renovation Corp. (“Phoenix”) under that certain Multi-UnitRepipe Contract (“Contract”) dated February 2, 2005 shall have beencompleted by the Closing Date and all amounts due Phoenix under the Contractshall have been paid for by Seller.

 

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b.             Ifthere is a failure of a condition precedent, Purchaser can either (i) waivesuch failure and close this transaction, or (ii) notify Seller within two (2) businessdays after Purchaser is aware of such failure that Purchaser has elected toterminate this Agreement and obtain a return of the Earnest Money.  In event of termination, except as may bespecifically set forth elsewhere in this Agreement, neither party shall haveany further liability hereunder.

 

c.             IfPurchaser elects not to closebecause of an alleged failure of a condition precedent, then Purchaser shallfirst deliver to Seller a written statement setting forth in detail suchfailure.

 

22.           ENVIRONMENTALAND PROPERTY CONDITION REPORTS. Seller has delivered to Purchaser at Purchaser’s request the followingenvironmental and property condition reports (“Reports”) of the Property:

 

a.             Property Condition Report dated August 14, 2003prepared by Pan Western Corporation;

 

b.             Structural Review dated August 20, 2003 prepared byR. D. Boyens Engineering;

 

c.             Phase I Environmental Site Assessment dated October 13,2003 prepared by ATC Associates, Inc.;

 

d.             National Account Termite report dated September 18,2003 prepared by Terminix International Company L.P.;

 

e.             Asbestos Management Plan V2.1 dated October 8, 2003prepared by ATC Associates Inc.

 

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f.              Survey for Visible AMG and Remediation Recommendations,Bellemeade Farms, Building 7, Apartment 714 dated November 29, 2004prepared by Searchlight Safety LLC.

 

g.             Mold Incident Report dated March 17, 2004 for 775Gateway Drive, Apt. 101.

 

Sellermakes no representation or warranty that the Reports are accurate orcomplete.  Purchaser hereby releasesSeller from any liability whatsoever with respect to the Reports, including,without limitation, the matters set forth in the Reports or the accuracy and/orcompleteness of the Reports.

 

23.           ORGANIZATIONALDOCUMENTS.  At least ten (10) daysprior to the Closing Date, Purchaser and Seller will provide Title Insurer withcopies of their respective organizational documents as required by TitleInsurer.

 

24.           TIMEOF ESSENCE.  Time is of the essenceof this Agreement.

 

25.           NOTICES.  Any notice or demand which either partyhereto is required or may desire to give or deliver to or make upon the otherparty shall be in writing and may be personally delivered or given or made byovernight courier such as Federal Express or by facsimile or made by UnitedStates registered or certified mail addressed as follows:

 

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| TO SELLER:      |   | Fairfield Residential LLC              |
|-----------------|--------|----------------------------------------|
|            |   | 5510 Morehouse Drive                   |
|            |   | Suite 200                         |
|            |   | San Diego, California 92121            |
|            |   | Attn: Gino A. Barra                    |
|            |   | 858/457-2123                           |
|            |   | 858/457-3982 (FAX)                     |
|            |   | E-mail:  gbarra@ffres.com              |
|            |   |                                   |
| with a copy to: |   | Robbins, Salomon & Patt, Ltd. |
|            |   | 25 East Washington Street              |
|            |   | Suite 1000                        |
|            |   | Chicago, Illinois 60602                |
|            |   | Attn: John T. Duax                     |
|            |   | 312/782-9000                           |
|            |   | 312/782-6690 (FAX)                     |
|            |   | E-mail: jduax@rsplaw.com               |
|            |   |                                   |
| TO PURCHASER:   |   | Comstock Bellemeade, L.C.              |
|            |   | 11465 Sunset Hills Road, 5th Floor     |
|            |   | Reston, Virginia 20190                 |
|            |   | Attn: Christopher Clemente             |
|            |   | 703/883-1700 ext. 215                  |
|            |   | 703/760-1520 (FAX)                     |
|            |   |                                   |
| with a copy to: |   | Comstock Bellemeade, L.C.              |
|            |   | 11465 Sunset Hills Road, 5th Floor     |
|            |   | Reston, Virginia 20190                 |
|            |   | Attn: Jubal Thompson                   |
|            |   | 703/883-1700 ext. 135                  |
|            |   | 703/760-1520 (FAX)                     |

 

subject to the right of either party to designate adifferent address for itself by notice similarly given.  Any notice or demand so given shall be deemedto be delivered or made on the next business day if sent by overnight courier,or on the same day if sent by facsimile (with facsimile confirmation sheet)before the close of business, or the next day if sent by facsimile after theclose of business, or on the 4th business day after the same is deposited inthe United States Mail as registered or certified matter, addressed as above 

 

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provided, with postage thereon fully prepaid.  Any such notice, demand or document notgiven, delivered or made by registered or certified mail or by overnightcourier or by facsimile as aforesaid shall be deemed to be given, delivered ormade upon receipt of the same by the party to whom the same is to be given,delivered or made.  Copies of all noticesshall be served upon the Escrow Agent.

 

26.           EXECUTIONOF AGREEMENT AND ESCROW AGREEMENT. The parties hereto will each execute three (3) copies of thisAgreement and the Escrow Agreement and forward them to the Escrow Agent.  Purchaser’s three (3) executed copies ofthis Agreement and the Escrow Agreements will be accompanied by the EarnestMoney.  Seller’s three (3) executedcopies of this Agreement and the Escrow Agreements will be accompanied with adirection to deliver a fully executed copy of this Agreement to the Purchaserand to the Seller, each accompanied by an Escrow Agreement executed by theSeller, the Purchaser and the Escrow Agent.

 

27.           GOVERNINGLAW.  The provisions of thisAgreement shall be governed by the laws of the state in which the Property islocated without regard to principles of conflicts of laws.

 

28.           ENTIREAGREEMENT.  This Agreementconstitutes the entire agreement between the parties and supersedes all othernegotiations, understandings and representations made by and between theparties and the agents, servants and employees.

 

29.           COUNTERPARTS.  This Agreement may be executed in multiplecounterparts, each of which shall be deemed an original but all of which shallconstitute one and the same instrument.

 

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30.           CAPTIONSParagraph titles or captions contained herein are inserted as a matter ofconvenience and for reference, and in no way define, limit, extend or describethe scope of this Agreement or any provision hereof.

 

31.           NON-BUSINESSDAYS.  Whenever action must be taken(including the giving of notice of the delivery of documents) under thisAgreement during a certain period of time (or by a particular date) that ends(or occurs) on a non-business day, then such period (or date) shall be extendeduntil the immediately following business day. As used herein, “business day” means any day other than a Saturday,Sunday or federal holiday.

 

32.           SEVERABILITY.  If any term or provision of this Agreement orthe application thereof to any person or circumstance shall, to any extent, beinvalid or unenforceable, the remainder of this Agreement, or the applicationof such term or provision to persons or circumstances other than those as towhich it is held invalid or unenforceable, shall not be affected thereby, andeach such term and provision of this Agreement shall be valid and be enforcedto the fullest extent permitted by law.

 

33.           NOWAIVER.  No waiver by a party of anybreach of this Agreement or of any warranty or representation hereunder by theother party shall be deemed to be a waiver of any other breach by such other party(whether preceding or succeeding and whether or not of the same or similarnature), and no acceptance of payment or performance by a party after anybreach by the other party shall be deemed to be a waiver of any breach of thisAgreement or of any representation or warranty hereunder by such other party,whether or not the first party knows of such breach at the time it accepts such

 

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payment orperformance.  No failure or delay by aparty to exercise any right it may have by reason of the default of the otherparty shall operate as a waiver of default or modification of this Agreement orshall prevent the exercise of any right by the first party while the otherparty continues to be so in default.

 

34.           ATTORNEYS’FEES.  In the event either partycommences legal proceedings against the other party pursuant to any right to doso under this Agreement, then the prevailing party shall be entitled to recoverreasonable attorneys’ fees and costs.

 

35.           TAXDEFERRED EXCHANGE.  Purchaser andSeller may use this Property in connection with a 1031 or 1033 tax deferredexchange.  The parties agree to cooperatewith each other and will execute such documents as may reasonably be requiredby each other in order to effectuate such tax deferred exchange, provided thatneither Purchaser nor Seller will assume any liability or cost in connectionwith the tax deferred exchange and provided that the Closing will not bedelayed.  Either party’s inability toobtain any benefits for a tax deferred exchange under Section 1031 or 1033of I.R.C. will not relieve such party of any of its obligations under thisAgreement.

 

36.           CONFIDENTIALITY.  Purchaser and Seller each hereby agree tokeep the terms and conditions of this Agreement and any information obtainedwith reference to the Property, including but not limited to the Reports,confidential, provided that the parties may reveal such information regardingthe terms and provisions of this Agreement as may be necessary in their reasonablediscretion to comply with the provisions of this Agreement or in the ordinarycourse of business.

 

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37.           SURVIVALOF INDEMNIFICATION.  Notwithstandinganything contained in this Agreement to the contrary, all of Purchaser’sindemnity obligations contained in this Agreement and the Exhibits attachedhereto shall forever survive the Closing and the delivery and recording of theDeed or the earlier termination of this Agreement.

 

38.           MISCELLANEOUSPROVISIONS.

 

a.             This Agreement shall not be construed more strictlyagainst any party merely by virtue of the fact that the same has been preparedby such party or its counsel, it being recognized that each party hereto hascontributed substantially and materially to the preparation of this Agreement,and that each party hereto acknowledges and waives any claim contesting theexistence and the adequacy of the consideration given by the other partieshereto in entering into this Agreement.

 

b.             Except as to those obligations which specificallysurvive the Closing, all of Seller’s other obligations hereunder shall mergewith the Deed.

 

c.             In the event of a dispute, the parties hereto waive atrial by jury.

 

39.           RIGHTTO CONTINUE TO MARKET.  IntentionallyDeleted.

 

40.           THIRDPARTY BENEFICIARY.  It is expresslyagreed and it is the intention of Purchaser and Seller that no party acquiringthe Property from Purchaser following the conversion of the Property into acondominium form of ownership, cooperative housing corporation, communityapartment property or stock corporation, including but not limited to any unitowner or owners or any condominium association or association, their agents,employees and successors and assigns shall be considered to be

 

39

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a third partybeneficiary to any and all of the obligations and/or liabilities of Purchaseror Seller under this Agreement.

 

IN WITNESS WHEREOF, theparties hereto have put their hand and seal as of the date set forth above.

 
| Executed by Purchaser on | PURCHASER:                           |
|--------------------------|--------------------------------------|
| September 28, 2005. |                                 |
|                     | COMSTOCK BELLEMEADE, L.C.            |
|                     | a Virginia limited liability company |
|                     |                                 |
|                     | By:                                  | Comstock Homebuilding Companies, Inc., |
|                     |                                 | its manager |
|                     |                                 |
|                     |                                 |
|                     | By:                                  | /s/ Christopher Clemente |   |
|                     |                                 | Christopher Clemente |
|                     |                                 | Chief Executive Officer |
|                     |                                 |
|                     |                                 |
|                     | Witness:                             | /s/ Bruce Labovitz |   |
|                     | Name:                                | Bruce Labovitz |   |
|                          |                                      |  |  |  |  |  |

 

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| Executed by Seller on    | SELLER:                                       |
|--------------------------|-----------------------------------------------|
| September 28, 2005. |                                          |
|                     |                                          |
|                     |                                          |
|                     | FF BELLEMEADE FARMS, LLC, a                   |
|                     | Delaware limited liability company            |
|                     |                                          |
|                     | By:                                           | FF PROPERTIES, INC., a Delaware |
|                     |                                          | Corporation, its Manager |
|                     |                                          |   |
|                     |                                          | By: | /s/ Gino Barra |   |
|                     |                                          |   | Name: | Gino Barra |   |
|                     |                                          |   | Title: | Vice President |   |
|                     |                                          |
|                     |                                          |
|                     | FF INVESTORS W-I LLC, a Delaware limited      |
|                     | Liability company, on behalf of the Archstone |
|                     | Mid-Atlantic Portfolio Series                 |
|                     |                                          |
|                     | By:                                           | FF PROPERTIES, INC., a Delaware corporation, |
|                     |                                          | its Manager |
|                     |                                          |   |
|                     |                                          |   |
|                     |                                          | By: | /s/ Gino Barra |   |
|                     |                                          |   | Name: | Gino Barra |   |
|                     |                                          |   | Title: | Vice President |   |
|                          |                                               |  |  |  |  |  |  |

 

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|   | BELLEMEADE FARMS INVESTORS, LLC, a  |
|--------|-------------------------------------|
|   | Delaware limited liability company, |
|   |                                |
|   | By:                                 | /s/ Stuart Isen |   |
|   |                                | Title: Authorized Representative |

 

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Ideal Realty Group (“Broker”) executes this Agreement inits capacity as a real estate broker and acknowledges that the fee orcommission (“Fee”) due to it as a result of the transaction described in thisAgreement is the amount as set forth in the agreement between Broker andSeller.  Broker also acknowledges thatpayment of the aforesaid Fee is conditioned upon the Closing and the receipt ofthe Purchase Price by the Seller.  Brokeragrees to deliver a receipt to the Seller at the Closing for the Fee and arelease stating that no other fees or commissions are due to Broker from Selleror Purchaser.

 
|   | IDEAL REALTY GROUP |
|--------|--------------------|
|   |               |
|   | By:                | /s/  Allen Manesh |   |
|   | Title:             | President |

 

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EXHIBITS

 
| A     | -     | Legal                                                                       |
|-------|-------|-----------------------------------------------------------------------------|
| B     | -     | Personal Property                                                           |
| C     | -     | Escrow Agreement                                                            |
| D     | -     | Intentionally Deleted                                                       |
| E     | -     | Pro-forma Title Policy                                                      |
| F     | -     | Deed                                                                        |
| G     | -     | Bill of Sale                                                                |
| H     | -     | Assignment and Assumption of Service Contracts                              |
| I     | -     | Assignment and Assumption of Leases and  Security Deposits                  |
| J     | -     | Notice to Tenants                                                           |
| K     | -     | Non-Foreign Affidavit                                                       |
| L     | -     | Assignment of Intangible Property                                           |
| **M** | **-** | **Intentionally  Deleted**                                                  |
| M-1   | -     | Assignment of Guaranties, Warranties, Permits,  Licenses and Approvals      |
| N     | -     | Intentionally Deleted                                                       |
| O     | -     | Rent Roll                                                                   |
| P     | -     | Litigation                                                                  |
| Q     | -     | Service Contracts                                                           |
| **R** | **-** | **Intentionally  Deleted**                                                  |
| S     | -     | Letter of Credit                                                            |
| T-1   | -     | Guaranty                                                                    |
| U     | -     | Intentionally Deleted                                                       |
| V     | -     | Certifications as to Representations,  Warranties, Covenants and Conditions |
| X     | -     | Certificate of Insurance                                                    |
| Z     | -     | Extended Leases                                                             |

 

----

 

**TABLEOF CONTENTS**

 

 
| 1.         | PURCHASE AND SALE                                            | ** ** |
|------------|--------------------------------------------------------------|------------|
| ** ** | ** **                                                   | ** ** |
| **2.**     | **PURCHASE PRICE**                                           | ** ** |
| ** ** | ** **                                                   | ** ** |
| **3.**     | **TITLE COMMITMENT  AND SURVEY**                             | ** ** |
| ** ** | ** **                                                   | ** ** |
| **4.**     | **CONDITION  OF TITLE/CONVEYANCE**                           | ** ** |
| ** ** | ** **                                                   | ** ** |
| **5.**     | **PAYMENT OF  CLOSING COSTS**                                | ** ** |
| ** ** | ** **                                                   | ** ** |
| **6.**     | **DAMAGE,  CASUALTY AND CONDEMNATION**                       | ** ** |
| ** ** | ** **                                                   | ** ** |
| **7.**     | **AS-IS CONDITION**                                          | ** ** |
| ** ** | ** **                                                   | ** ** |
| **8.**     | **CLOSING**                                                  | ** ** |
| ** ** | ** **                                                   | ** ** |
| **9.**     | **CLOSING DOCUMENTS**                                        | ** ** |
| ** ** | ** **                                                   | ** ** |
| **10.**    | **SELLER’S  RIGHT TO CURE**                             | ** ** |
| ** ** | ** **                                                   | ** ** |
| **11.**    | **DEFAULT BY PURCHASER**                                     | ** ** |
| ** ** | ** **                                                   | ** ** |
| **12.**    | **SELLER’S DEFAULT**                                    | ** ** |
| ** ** | ** **                                                   | ** ** |
| **13.**    | **PRORATIONS**                                               | ** ** |
| ** ** | ** **                                                   | ** ** |
| **14.**    | **DELINQUENT RENTS**                                         | ** ** |
| ** ** | ** **                                                   | ** ** |
| **15.**    | **RECORDING**                                                | ** ** |
| ** ** | ** **                                                   | ** ** |
| **16.**    | **ASSIGNMENT**                                               | ** ** |
| ** ** | ** **                                                   | ** ** |
| **17.**    | **BROKER.**                                                  | ** ** |
| ** ** | ** **                                                   | ** ** |
| **18.**    | **DOCUMENTS,  INSPECTION OF PROPERTY AND APPROVAL PERIOD.**  | ** ** |
| ** ** | ** **                                                   | ** ** |
| **19.**    | **INDEMNIFICATION AND INSURANCE  REQUIREMENTS**              | ** ** |
| ** ** | ** **                                                   | ** ** |
| **20.**    | **SELLER’S REPRESENTATIONS,  WARRANTIES AND COVENANTS** | ** ** |
| ** ** | ** **                                                   | ** ** |
| **21.**    | **COMPLIANCE WITH OFAC**                                     | ** ** |
| ** ** | ** **                                                   | ** ** |
| **22.**    | **CONDITIONS PRECEDENT TO  CLOSING**                         | ** ** |
| ** ** | ** **                                                   | ** ** |
| **23.**    | **ENVIRONMENTAL AND PROPERTY  CONDITION REPORTS**            | ** ** |
| ** ** | ** **                                                   | ** ** |
| **24.**    | **ORGANIZATIONAL DOCUMENTS**                                 | ** ** |
| ** ** | ** **                                                   | ** ** |
| **25.**    | **TIME OF ESSENCE**                                          | ** ** |
| ** ** | ** **                                                   | ** ** |
| **26.**    | **NOTICES**                                                  | ** ** |
| ** ** | ** **                                                   | ** ** |
| **27.**    | **EXECUTION OF AGREEMENT AND  ESCROW AGREEMENT**             | ** ** |
| ** ** | ** **                                                   | ** ** |
| **28.**    | **GOVERNING LAW**                                            | ** ** |
| ** ** | ** **                                                   | ** ** |
| **29.**    | **ENTIRE AGREEMENT**                                         | ** ** |
| ** ** | ** **                                                   | ** ** |
| **30.**    | **COUNTERPARTS**                                             | ** ** |

 

i

----

 
| **31.**    | **CAPTIONS**                    | ** ** |
|------------|---------------------------------|------------|
| ** ** | ** **                      | ** ** |
| **32.**    | **NON-BUSINESS DAYS**           | ** ** |
| ** ** | ** **                      | ** ** |
| **33.**    | **SEVERABILITY**                | ** ** |
| ** ** | ** **                      | ** ** |
| **34.**    | **NO WAIVER**                   | ** ** |
| ** ** | ** **                      | ** ** |
| **35.**    | **ATTORNEYS’ FEES**        | ** ** |
| ** ** | ** **                      | ** ** |
| **36.**    | **TAX DEFERRED EXCHANGE**       | ** ** |
| ** ** | ** **                      | ** ** |
| **37.**    | **CONFIDENTIALITY**             | ** ** |
| ** ** | ** **                      | ** ** |
| **38.**    | **SURVIVAL OF INDEMNIFICATION** | ** ** |
| ** ** | ** **                      | ** ** |
| **39.**    | **MISCELLANEOUS PROVISIONS**    | ** ** |
| ** ** | ** **                      | ** ** |
| **40.**    | **RIGHT TO CONTINUE TO MARKET** | ** ** |
| ** ** | ** **                      | ** ** |
| **41.**    | **THIRD PARTY BENEFICIARY**     | ** ** |

 

ii

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