exv10w1



 







Exhibit 10.1




EXECUTION

VERSION




NOTE PURCHASE AGREEMENT




by and between




COMSTOCK HOMEBUILDING COMPANIES, INC.




and




KODIAK WAREHOUSE LLC




 






Dated as of May 4, 2006




 







 









 








TABLE OF CONTENTS




	 	 	 	 	 	 	 
	 	 	 	 	Page
	1.

	 	Definitions. This Purchase
Agreement, the Indenture and the Notes
are collectively referred to herein as
the “Operative Documents.” All other
capitalized terms used but not defined
in this Purchase Agreement shall have
the respective meanings ascribed
thereto in the Indenture.
	 	 	1	 
	 
	 	 	 	 	 	 
	2

	 	Purchase and Sale of the Notes.
	 	 	1	 
	 
	 	 	 	 	 	 
	3.

	 	Conditions. The obligations of
the parties under this Purchase
Agreement are subject to the following
conditions:
	 	 	2	 
	 
	 	 	 	 	 	 
	4.

	 	Representations and Warranties
of the Company. The Company represents
and warrants to, and agrees with the
Purchaser, as of the date hereof and
as of the Closing Date, as follows:
	 	 	3	 
	 
	 	 	 	 	 	 
	5.

	 	Representations and Warranties
of the Purchaser. The Purchaser
represents and warrants to, and agrees
with, the Company as follows:
	 	 	11	 
	 
	 	 	 	 	 	 
	6.

	 	Covenants and Agreements of the
Company. The Company covenants and
agrees with the Purchaser as follows:
	 	 	12	 
	 
	 	 	 	 	 	 
	7.

	 	Payment of Expenses. The
Company agrees to pay all costs and
expenses incident to the performance
of the obligations of the Company
under this Purchase Agreement, whether
or not the transactions contemplated
herein are consummated or this
Purchase Agreement is terminated,
including all costs and expenses
incident to (i) the fees and expenses
of qualifying the Notes under the
securities laws of the several
jurisdictions as provided in Section 6(b),
(iii) the fees and expenses of
the counsel, the accountants and any
other experts or advisors retained by
the Company, (iv) the fees and all
reasonable expenses of the Trustee and
any other trustee or paying agent
appointed under the Operative
Documents, including the fees and
disbursements of counsel for such
trustees or paying agent, which fees
shall not exceed a $2,000 acceptance
fee, $4,000 in administrative fees
annually and the fees and expenses of
Potter Anderson & Corroon LLP, (v) the
fees and expenses of Winston & Strawn
LLP, special counsel retained by the
Purchaser, not to exceed $30,000 and
(vi) a due diligence fee in an amount
equal to $12,500 payable as the
Purchaser directs.
	 	 	15	 
	 
	 	 	 	 	 	 
	8.

	 	Indemnification. (a) The
Company agrees to indemnify and hold
harmless the Purchaser, the
Purchaser’s Affiliates and Kodiak
Capital Management Company LLC
(collectively, the “Indemnified Parties”),
each person, if any, who
“controls” any of the Indemnified
Parties within the meaning of either
the Securities Act or the Exchange
Act, and the Indemnified Parties’
respective directors, officers,
employees and agents, against any and
all losses, claims, damages or
liabilities, joint or several, to
which the Indemnified Parties or any
of them may become subject under the
Securities Act, the Exchange Act or
other federal or state statutory law
or regulation, at common law or
otherwise, insofar as such losses,
claims, damages or liabilities
(or	 	 	 	 






i









 






	 	 	 	 	 	 	 
	 	 	 	 	Page
	 

	 	actions in respect thereof) arise out of, are based
upon or connected with (i) any untrue statement or alleged untrue
statement of a material fact contained in any information or
documents furnished or made available to the Purchaser by or on
behalf of the Company, (ii) the omission or alleged omission to state
therein a material fact required to be stated therein or necessary to
make the statements therein not misleading, (iii) the breach or
alleged breach of any representation, warranty or agreement of the
Company contained herein or (iv) the execution and delivery by the
Company of this Purchase Agreement or any of the other Operative
Documents and/or the consummation of the transactions contemplated
hereby and thereby, and agrees to reimburse each such Indemnified
Party, as incurred, for any legal or other expenses reasonably
incurred by it in connection with investigating or defending any such
loss, claim, damage, liability or action. The indemnity agreements
contained in this Section 8 are in addition to any liability which
the Company may otherwise have.
	 	 	15	 
	 
	 	 	 	 	 	 
	9.

	 	Termination; Representations and Indemnities to Survive. This
Purchase Agreement shall be subject to termination in the absolute discretion
of the Purchaser, by notice given to the Company prior to delivery of and
payment for the Notes, if prior to such time (i) a downgrading shall have
occurred in the rating accorded the Company’s debt securities by any
“nationally recognized statistical rating organization,” as that term is used
by the Commission in Rule 15c3-l(c)(2)(vi)(F) under the Exchange Act, or such
organization shall have publicly announced that it has under surveillance or
review, with possible negative implications, its rating of the Company’s debt
securities, (ii) the Company shall be unable to sell and deliver to the
Purchaser at least Thirty Million Dollars ($30,000,000) in aggregate principal
amount of the Notes, (iii) a
suspension or material limitation in trading in securities
generally shall have occurred on the New York Stock Exchange, (iv) a
suspension or material limitation in trading in any of the Company’s
securities shall have occurred on the exchange or quotation system
upon which the Company’ securities are traded, if any, (v) a general
moratorium on commercial business activities shall have been
declared either by federal or Delaware authorities or (vi) there
shall have occurred any outbreak or escalation of hostilities, or
declaration by the United States of a national emergency or war or
other calamity or crisis the effect of which on financial markets is
such as to make it, in the Purchaser’s judgment, impracticable or
inadvisable to proceed with the offering or purchase of the Notes.
The respective agreements, representations, warranties, indemnities
and other statements of the Company or its officers or trustees and
of the Purchaser set forth in or made pursuant to this Purchase
Agreement will remain in full force and effect, regardless of any
investigation made by or on behalf of the Purchaser or the Company
or any of the their respective officers, directors or controlling
persons, and will survive delivery of and payment for the Notes. The
provisions of Sections 7 and 8 shall survive the termination or
cancellation of this Purchase Agreement.
	 	 	16	 
	 
	 	 	 	 	 	 
	10.

	 	Amendments. This Purchase Agreement may not be modified,
amended, altered or supplemented, except upon the execution and delivery of a
written agreement by each of the parties hereto.
	 	 	17	 






 









 








	 	 	 	 	 	 	 
	 	 	 	 	Page
	11.

	 	Notices. All
communications hereunder
shall be in writing and
effective only on receipt,
and shall be mailed,
delivered by hand or
courier or sent by
facsimile and confirmed:
	 	 	17	 
	 
	 	 	 	 	 	 
	12.

	 	Parties in
Interest; Successors and
Assigns. This Purchase
Agreement will inure to
the benefit of and be
binding upon the parties
hereto and their
respective successors and
permitted assigns. Nothing
expressed or mentioned in
this Purchase Agreement is
intended or shall be
construed to give any
person other than the
parties hereto and the
affiliates, directors,
officers, employees,
agents and controlling
persons referred to in
Section 8 and their
successors, assigns, heirs
and legal representatives,
any right or obligation
hereunder. None of the
rights or obligations of
the Company under this
Purchase Agreement may be
assigned, whether by
operation of law or
otherwise, without the
Purchaser’s prior written
consent. The rights and
obligations of the
Purchaser under this
Purchase Agreement may be
assigned by the Purchaser
without the Company’s
consent; provided, that
the assignee assumes the
obligations of the
Purchaser under this
Purchase Agreement.
	 	 	18	 
	 
	 	 	 	 	 	 
	13.

	 	Applicable Law.
This Purchase Agreement
will be governed by and
construed and enforced in
accordance with the law of
the State of New York
without reference to
principles of conflicts of
law (other than Section
5-1401 of the General
Obligations Law).
	 	 	18	 
	 
	 	 	 	 	 	 
	14.

	 	Submission to
Jurisdiction. ANY LEGAL
ACTION OR PROCEEDING BY OR
AGAINST ANY PARTY HERETO
OR WITH RESPECT TO OR
ARISING OUT OF THIS
PURCHASE AGREEMENT MAY BE
BROUGHT IN OR REMOVED TO
THE COURTS OF THE STATE OF
NEW YORK, IN AND FOR THE
COUNTY OF NEW YORK, OR OF
THE UNITED STATES OF
AMERICA FOR THE SOUTHERN
DISTRICT OF NEW YORK (IN
EACH CASE SITTING IN THE
BOROUGH OF MANHATTAN). BY
EXECUTION AND DELIVERY OF
THIS PURCHASE AGREEMENT,
EACH PARTY ACCEPTS, FOR
ITSELF AND IN RESPECT OF
ITS PROPERTY, GENERALLY
AND UNCONDITIONALLY, THE
JURISDICTION OF THE
AFORESAID COURTS (AND
COURTS OF APPEALS
THEREFROM) FOR LEGAL
PROCEEDINGS ARISING OUT OF
OR IN CONNECTION WITH THIS
PURCHASE AGREEMENT.
	 	 	18	 
	 
	 	 	 	 	 	 
	15.

	 	Counterparts and
Facsimile. This Purchase
Agreement may be executed
by any one or more of the
parties hereto in any
number of counterparts,
each of which shall be
deemed to be an original,
but all such counterparts
shall together constitute
one and the same
instrument. This Purchase
Agreement may be executed
by any one or more of the
parties hereto by
facsimile.
	 	 	19	 





SCHEDULES AND EXHIBITS




	 	 	 	 	 
	Schedule 4(1)

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

	 	—
	 	Legal Proceedings






 









 






	 	 	 	 	 
	Schedule 4(u)

	 	—
	 	Certain Documents Subject to Future Filing as Exhibits to 1934 Act
Reports
	 
	 	 	 	 
	Schedule 4(x)

	 	—
	 	Claims Against Real Property
	 
	 	 	 	 
	Schedule 4(ee)

	 	—
	 	Environmental Matters
	 
	 	 	 	 
	Exhibit A

	 	—
	 	Form of Company Counsel’s Opinion Pursuant to Section 3(b)(i)
	 
	 	 	 	 
	Exhibit B

	 	—
	 	Form of General Counsel Opinion or Officers’ Certificate Pursuant to
Section 3(b)(ii)
	 
	 	 	 	 
	Exhibit C

	 	—
	 	Form of Tax Counsel Opinion Pursuant to Section 3(c)
	 
	 	 	 	 
	Exhibit D

	 	—
	 	Form of Trustee Counsel Opinion Pursuant to Section 3(d)
	 
	 	 	 	 
	Exhibit E

	 	—
	 	Form of Officer’s Financial Certificate Pursuant to Section 6(h)







 









 








NOTE PURCHASE AGREEMENT




     This NOTE PURCHASE AGREEMENT, dated as of May 4, 2006 (this “Purchase Agreement”), is
entered into by and between Comstock Homebuilding Companies, Inc., a Delaware corporation (the
“Company”), and Kodiak Warehouse LLC, a Delaware limited liability company, or its
assignee (the “Purchaser”).



W I T N E S S E T H:




     WHEREAS, the Company proposes to issue and sell to the Purchaser Thirty Million Dollars
($30,000,000) in aggregate principal amount of the Company’s junior subordinated notes, bearing
interest at a fixed rate of 9.72% per annum through the interest payment date in June, 2011 and
thereafter at a variable rate, reset quarterly, equal to LIBOR (as defined in the Indenture (as
defined below)) plus 4.20% per annum (the “Notes”); and



     WHEREAS, the Notes will be issued pursuant to a Junior Subordinated Indenture, dated as of
the Closing Date (the “Indenture”), between the Company and Wells Fargo Bank, N.A., as
indenture trustee (in such capacity, the “Trustee”).



     NOW, THEREFORE, in consideration of the foregoing and the mutual agreements and subject to
the terms and conditions herein set forth, the parties hereto agree as follows:



          1. Definitions. This Purchase Agreement, the Indenture and the Notes are
collectively referred to herein as the “Operative Documents.” All other capitalized terms
used but not defined in this Purchase Agreement shall have the respective meanings ascribed thereto
in the Indenture.




          2. Purchase and Sale of the Notes.




          (a) The Company agrees to sell to the Purchaser, and the Purchaser agrees to purchase from the
Company, Thirty Million Dollars ($30,000,000) in aggregate principal amount of the Notes for an
amount (the “Purchase Price”) equal to Thirty Million Dollars ($30,000,000). The Purchaser
shall be responsible for the rating agency costs and expenses.




          (b) Delivery or transfer of, and payment for, the Notes shall be made at 10:00 A.M. Chicago
time (11:00 A.M. New York City time), on May 4, 2006 or such later date (not later than June 4,
2006) as the parties may designate (such date and time of delivery and payment for the Notes being
herein called the “Closing Date”). The Notes shall be transferred and delivered to the
Purchaser against the payment of the Purchase Price to the Company made by wire transfer in
immediately available funds on the Closing Date to a U.S. account designated in writing by the
Company at least two Business Days prior to the Closing Date.




          (c) Delivery of the Notes shall be made at such location, and in such names and denominations,
as the Purchaser shall designate at least two Business Days in advance of the Closing Date. The
Company agrees to have the Notes available for inspection and checking by the Purchaser in Chicago,
Illinois, not later than 1:00 P.M., Chicago time (2:00 P.M. New York City time), on the Business
Day prior to the Closing Date. The closing for the purchase and sale





 









 







of the Notes (the “Closing”) shall occur at the offices of Winston & Strawn LLP, 35 West
Wacker Drive, Chicago, Illinois 60601, or such other place as the parties hereto shall agree.




          3. Conditions. The obligations of the parties under this Purchase Agreement
are subject to the following conditions:




          (a) The representations and warranties contained herein shall be accurate as of the date of
delivery of the Notes.




          (b) (i) Greenberg Traurig LLP, counsel for the Company (the “Company Counsel”), shall
have delivered an opinion, dated the Closing Date, addressed to the Purchaser, its successors and
assigns and the Trustee, in substantially the form set out in Exhibit A hereto and (ii) the
Company shall have furnished to the Purchaser the opinion of the Company’s General Counsel or a
certificate signed by the Company’s Chief Executive Officer, President or an Executive Vice
President and the Company’s Chief Financial Officer, Treasurer or Assistant Treasurer, dated the
Closing Date, addressed to the Purchaser, in substantially the form set out in Exhibit B
hereto. In rendering their opinion, the Company Counsel may rely as to factual matters upon
certificates or other documents furnished by officers and directors of the Company and by
government officials (provided, however, that copies of any such certificates or
documents are delivered to the Purchaser) and by and upon such other documents as such counsel may,
in their reasonable opinion, deem appropriate as a basis for the Company Counsel’s opinion. The
Company Counsel may specify the jurisdictions in which they are admitted to practice and that they
are not admitted to practice in any other jurisdiction and are not experts in the law of any other
jurisdiction. Such Company Counsel opinions shall not state that they are to be governed or
qualified by, or that they are otherwise subject to, any treatise, written policy or other document
relating to legal opinions, including, without limitation, the Legal Opinion Accord of the ABA
Section of Business Law (1991).




          (c) The Purchaser shall have been furnished the opinion of Winston & Strawn LLP, special tax
counsel for the Purchaser, dated the Closing Date, addressed to the Purchaser and the Trustee,
addressing the matters set out in Exhibit C hereto (subject to customary assumptions and
qualifications).




          (d) The Purchaser shall have received the opinion of Potter Anderson & Corroon LLP, special
counsel for the Trustee, dated the Closing Date, addressed to the Purchaser and its successors and
assigns, in substantially the form set out in Exhibit D hereto.




          (e) The Company shall have furnished to the Purchaser a certificate of the Company, signed by
the Chief Executive Officer, President or an Executive Vice President, and Chief Financial Officer
or Treasurer of the Company, dated the Closing Date, as to clauses (i) and (ii) below:





          (i) the representations and warranties of the Company in this Purchase Agreement are
true and correct on and as of the Closing Date with the same effect as if made on the
Closing Date, and the Company has complied with all the agreements and satisfied all the
conditions on its part to be performed or satisfied at or prior to the Closing Date; and




2









 









          (ii) since the date of the Financial Statements (as defined in Section 4(r)),
there has been no occurrence that has or would prospectively result in a material adverse
change in or had or would prospectively result in a material adverse effect on the
condition (financial or otherwise), earnings, business, liabilities or assets of the
Company and its subsidiaries, whether or not arising from transactions occurring in the
ordinary course of business (a “Material Adverse Effect”).



          (f) Subsequent to the execution of this Purchase Agreement, there shall not have been any
change in or affecting the condition (financial or otherwise), earnings, business, liabilities or
assets of the Company and its subsidiaries, whether or not occurring in the ordinary course of
business, the effect of which is, in the Purchaser’s judgment, so material and adverse as to make
it impractical or inadvisable to proceed with the purchase of the Notes.




          (g) The purchase of and payment for the Notes as described in this Purchase Agreement shall
(a) not be prohibited by any applicable law or governmental regulation, (b) not subject the
Purchaser to any penalty or, in the reasonable judgment of the Purchaser, other onerous conditions
under or pursuant to any applicable law or governmental regulation and (c) be permitted by the laws
and regulations of the jurisdictions to which the Purchaser is subject.




          (h) The Company shall have received all consents, permits and other authorizations, and made
all such filings and declarations, as may be required on or before the Closing Date from any
person or entity pursuant to any law, statute, regulation or rule (federal, state, local and
foreign), or pursuant to any agreement, order or decree to which the Company is a party or to
which it is subject, in connection with the transactions contemplated by this Purchase Agreement.




          (i) Prior to the Closing Date, the Company shall have furnished to the Purchaser and its
counsel such further information, certificates and documents as the Purchaser or its counsel may
reasonably request.




          If any of the conditions specified in this Section 3 shall not have been fulfilled
when and as required by this Purchase Agreement, or if any of the opinions, certificates and
documents mentioned above or elsewhere in this Purchase Agreement shall not be reasonably
satisfactory in form and substance to the Purchaser or its counsel, this Purchase Agreement and all
the Purchaser’s obligations hereunder may be canceled at, or at any time prior to, the Closing Date
by the Purchaser. Notice of such cancellation shall be given to the Company in writing or by
telephone or facsimile confirmed in writing.




          Each certificate signed by any officer of the Company and delivered to the Purchaser or the
Purchaser’s counsel in connection with the Operative Documents and the transactions contemplated
hereby and thereby shall be deemed to be a representation and warranty of the Company and not by
such officer in any individual capacity.




          4. Representations and Warranties of the Company. The Company represents and warrants
to, and agrees with the Purchaser, as of the date hereof and as of the Closing Date, as follows:




3









 





          (a) Neither the Company nor any of its “Affiliates” (as defined in Rule 501(b) of Regulation D
(“Regulation D”) under the Securities Act (as defined below)), nor any person acting on its
or their behalf, has, directly or indirectly, made offers or sales of any security, or solicited
offers to buy any security, under circumstances that would require the registration of any of the
Notes under the Securities Act of 1933, as amended (the “Securities Act”).




          (b) Neither the Company nor any of its Affiliates, nor any person acting on its or their
behalf, has (i) offered for sale or solicited offers to purchase the Notes or (ii) engaged in any
form of “general solicitation” or “general advertising” (within the meaning of Regulation D) in
connection with any offer or sale of any of the Notes.




          (c) The Notes (i) are not and have not been listed on a national securities exchange
registered under Section 6 of the Securities Exchange Act of 1934, as amended (the “Exchange
Act”), or quoted on a U.S. automated inter-dealer quotation system and (ii) are not of an
open-end investment company, unit investment trust or face-amount certificate company that is, or
is required to be, registered under Section 8 of the Investment Company Act of 1940, as amended
(the “Investment Company Act”), and the Notes otherwise satisfy the eligibility
requirements of Rule 144A(d)(3) promulgated pursuant to the Securities Act
(“Rule 144A(d)(3)”).




          (d) Neither the Company nor any of its Affiliates, nor any person acting on its or their
behalf, has engaged, or will engage, in any “directed selling efforts” within the meaning of
Regulation S under the Securities Act with respect to the Notes.




          (e) The Company is not, and, immediately following consummation of the transactions
contemplated hereby and the other Operative Documents and the application of the net proceeds
therefrom, will not be, an “investment company” or an entity “controlled” by an “investment
company,” in each case within the meaning of Section 3(a) of the Investment Company Act.




          (f) The Company has not paid or agreed to pay to any person or entity, directly or indirectly,
any fees or other compensation for soliciting another to purchase any of the Notes, except for the
fee the Company has agreed to pay to TBC Securities, LLC pursuant to the letter agreement between
the Company and TBC Securities, LLC, dated March 31, 2006.




          (g) The Indenture has been duly authorized by the Company and, on the Closing Date, will have
been duly executed and delivered by the Company and, assuming due authorization, execution and
delivery thereof by the Trustee, will be a legal, valid and binding obligation of the Company,
enforceable against the Company in accordance with its terms, subject to applicable bankruptcy,
insolvency and similar laws affecting creditors’ rights generally and to general principles of
equity (the “Enforceability Exceptions”).




          (h) The Notes have been duly authorized by the Company and, on the Closing Date, will have
been duly executed and delivered to the Trustee for authentication in accordance with the Indenture
and, when authenticated in the manner provided for in the Indenture and delivered to the Purchaser
against payment therefor in accordance with this Purchase Agreement, will constitute legal, valid
and binding obligations of the Company entitled to the benefits of the





4









 







Indenture, enforceable against the Company in accordance with their terms, subject to the
Enforceability Exceptions.




          (i) This Purchase Agreement has been duly authorized, executed and delivered by the Company
and is a legal, valid and binding obligation of the Company, enforceable against the Company in
accordance with its terms, subject to the Enforceability Exceptions and the effect of any
applicable public policy against the enforcement of the indemnification provisions of this
Purchase Agreement set forth in Section 8.




          (j) Neither the issue and sale of the Notes, nor the execution and delivery of and compliance
with the Operative Documents by the Company, nor the consummation of the transactions contemplated
hereby or thereby, or the use of the proceeds therefrom, (i) will conflict with or constitute a
violation or breach of the charter or bylaws or similar organizational documents of the Company or
any subsidiary of the Company or any applicable law, statute, rule, regulation, judgment, order,
writ or decree of any government, governmental authority, agency or instrumentality or court,
domestic or foreign (collectively, the “Governmental Entities”), or of any arbitrator, in
each case having jurisdiction over the Company or any of its subsidiaries or their respective
properties or assets, (ii) will conflict with or constitute a violation or breach of, or a default
or Repayment Event (as defined below) under, or result in the creation or imposition of any pledge,
security interest, claim, lien or other encumbrance of any kind (each, a “Lien”) upon any
property or assets of the Company or any of its subsidiaries pursuant to, any contract, indenture,
mortgage, loan agreement, note, lease or other agreement or instrument to which (A) the Company or
any of its subsidiaries is a party or by which it or any of them may be bound, or (B) any of the
property or assets of the Company or any of its subsidiaries is subject, except, in the case of
this clause (ii), for such conflicts, violations, breaches, defaults, Repayment Events or Liens
which (X) would not, singly or in the aggregate, adversely affect the consummation of the
transactions contemplated by the Operative Documents and (Y) would not, singly or in the aggregate,
have a Material Adverse Effect or (iii) require the consent, approval, authorization or order of
any court or Governmental Entity. As used herein, a “Repayment Event” means any event or
condition which gives the holder of any note, debenture or other evidence of indebtedness (or any
person acting on such holder’s behalf) the right to require the repurchase, redemption or repayment
of all or a portion of such indebtedness by the Company or any of its subsidiaries prior to its
scheduled maturity.




          (k) The Company has been duly incorporated and is validly existing as a corporation in good
standing under the laws Delaware, with all requisite corporate power and authority to own, lease
and operate its properties and conduct the business it transacts and proposes to transact, and is
duly qualified to transact business and is in good standing as a foreign corporation in each
jurisdiction where the nature of its activities requires such qualification, except where the
failure of the Company to be so qualified would not, singly or in the aggregate, have a Material
Adverse Effect.




          (1) The Company has no subsidiaries that are material to its business, financial condition or
earnings other than those subsidiaries listed in Schedule 4(1) hereto (collectively, the
“Significant Subsidiaries”). Each Significant Subsidiary has been duly organized and is
validly existing as a corporation, limited liability company, limited partnership or statutory
trust in good standing under the laws of the jurisdiction in which it is chartered,





5









 







organized or formed, with all requisite power and authority to own, lease and operate its
properties and conduct the business it transacts and proposes to transact. Each Significant
Subsidiary is duly qualified to transact business and is in good standing as a foreign
corporation, limited liability company, limited partnership or statutory trust in each
jurisdiction where the nature of its activities requires such qualification, except where the
failure to be so qualified would not, singly or in the aggregate, have a Material Adverse Effect.
Except as set forth on Schedule 4(1) hereto, no subsidiary of the Company is currently
prohibited, directly or indirectly, under any agreement or other instrument to which it is a party
or is subject, from paying any dividends to the Company, from making any other distribution on
such subsidiary’s capital stock or other Equity Interests, from repaying to the Company any loans
or advances to such subsidiary from the Company or from transferring any of such subsidiary’s
properties or assets to the Company or any other subsidiary of the Company.




          (m) The Company and each of the Company’s subsidiaries hold all necessary approvals,
authorizations, orders, licenses, consents, registrations, qualifications, certificates and
permits (collectively, the “Governmental Licenses”) of and from Governmental Entities
necessary to conduct their respective businesses as now being conducted, and neither the Company
nor any of the Company’s subsidiaries has received any notice of proceedings relating to the
revocation or modification of any such Government License, except where the failure to be so
licensed or approved or the receipt of an unfavorable decision, ruling or finding, would not,
singly or in the aggregate, have a Material Adverse Effect; all of the Governmental Licenses are
valid and in full force and effect, except where the invalidity or the failure of such
Governmental Licenses to be in full force and effect, would not, singly or in the aggregate, have
a Material Adverse Effect; and the Company and its subsidiaries are in compliance with all
applicable laws, rules, regulations, judgments, orders, decrees and consents, except where the
failure to be in compliance would not, singly or in the aggregate, have a Material Adverse Effect.




          (n) All of the issued and outstanding Equity Interests of the Company and each of its
subsidiaries are validly issued, fully paid and nonassessable; all of the issued and outstanding
Equity Interests of each subsidiary of the Company is owned by the Company, directly or through
subsidiaries, free and clear of any Lien, claim or equitable right; and none of the issued and
outstanding Equity Interests of the Company or any subsidiary of the Company was issued in
violation of any preemptive or similar rights arising by operation of law, under the charter,
by-laws, certificate of formation, limited liability company agreement, certificate of limited
partnership, agreement of limited partnership or similar organizational document of such entity or
under any agreement to which the Company or any of its subsidiaries is a party.




          (o) Neither the Company nor any of its subsidiaries is (i) in violation of its respective
charter, by-laws, certificate of formation, limited liability company agreement, certificate of
limited partnership, agreement of limited partnership or similar organizational document or (ii)
in default in the performance or observance of any obligation, agreement, covenant or condition
contained in any contract, indenture, mortgage, loan agreement, note, lease or other agreement or
instrument to which the Company or any such subsidiary is a party or by which it or any of them
may be bound or to which any of the property or assets of any of them is subject, except, in the
case of clause (ii), where such violation or default would not, singly or in the aggregate, have a
Material Adverse Effect.




6









 





          (p) Except as set forth on Schedule 4(p) hereto, there is no action, suit or
proceeding before or by any Governmental Entity or arbitrator, now pending or, to the knowledge of
the Company, threatened against or affecting the Company or any of the Company’s subsidiaries,
except for such actions, suits or proceedings that, if adversely determined, would not, singly or
in the aggregate, adversely affect the consummation of the transactions contemplated by the
Operative Documents or have a Material Adverse Effect; and the aggregate of all pending legal or
governmental proceedings to which the Company or any of its subsidiaries is a party or of which
any of their respective properties or assets is subject, including ordinary routine litigation
incidental to the Company’s and its subsidiaries’ business, are not expected to result in a
Material Adverse Effect.




          (q) The accountants of the Company who certified the Financial Statements are independent
public accountants of the Company and its subsidiaries within the meaning of the Securities Act,
and the rules and regulations of the Securities and Exchange Commission (the “Commission”)
thereunder.




          (r) The audited consolidated financial statements (including the notes thereto) and schedules
of the Company and its consolidated subsidiaries for the three (3) fiscal years ended December 31,
2005 (the “Financial Statements”) provided to the Purchaser are the most recent available
audited and unaudited consolidated financial statements of the Company and its consolidated
subsidiaries, respectively, and fairly present in all material respects, in accordance with U.S.
generally accepted accounting principles (“GAAP’’), the financial position of the Company
and its consolidated subsidiaries, and the results of operations and changes in financial
condition as of the dates and for the periods therein specified. Such consolidated financial
statements and schedules have been prepared in accordance with GAAP consistently applied
throughout the periods involved (except as otherwise noted therein).




          (s) Neither the Company nor any of its subsidiaries has any material liability, whether known
or unknown, whether asserted or unasserted, whether absolute or contingent, whether accrued or
unaccrued, whether liquidated or unliquidated, and whether due or to become due, including any
liability for taxes (and there is no past or present fact, situation, circumstance, condition or
other basis for any present or future action, suit, proceeding, hearing, charge, complaint, claim
or demand against the Company or its subsidiaries that could give rise to any such liability),
except for (i) liabilities set forth in the Financial Statements and (ii) normal fluctuations in
the amount of the liabilities referred to in clause (i) above occurring in the ordinary course of
business of the Company and its subsidiaries since the date of the most recent balance sheet
included in such Financial Statements.




          (t) Since the date of the Financial Statements, there has not been (A) any Material Adverse
Effect or (B) any dividend or distribution of any kind declared, paid or made by the Company on
any class of its capital stock.




          (u) The documents of the Company filed with the Commission in accordance with the Exchange
Act, from and including the commencement of the fiscal year covered by the Company’s most recent
Annual Report on Form 10-K, at the time they were or hereafter are filed by the Company with the
Commission (collectively, the “1934 Act Reports”), complied and will comply in all material
respects with the requirements of the Exchange Act and the rules and





7









 







regulations of the Commission thereunder (the “1934 Act Regulations”), and, at the date of
this Purchase Agreement and on the Closing Date, do not and will not include an untrue statement
of a material fact or omit to state a material fact required to be stated therein or necessary to
make the statements therein, in the light of the circumstances under which they were made, not
misleading; and other than such instruments, agreements, contracts and other documents as are
filed as exhibits to the Company’s Annual Report on Form 10-K, Quarterly Reports on Form 10-Q or
Current Reports on Form 8-K, there are no instruments, agreements, contracts or other documents of
a character described in Item 601 of Regulation S-K promulgated by the Commission to which the
Company or any of its subsidiaries is a party, and which the Company is required to file, other
than such as are permitted to be filed with the Company’s next periodic report under the 1934 Act
Regulations, and set forth on Schedule 4(u) attached hereto. The Company is in compliance
with all currently applicable requirements of the Exchange Act and the currently applicable rules
and regulations promulgated thereunder that were added by or resulted from the Sarbanes-Oxley Act
of 2002.




          (v) No labor dispute with the employees of the Company or any of its subsidiaries exists or,
to the knowledge of the executive officers of the Company, is imminent, except those which would
not, singly or in the aggregate, have a Material Adverse Effect.




          (w) No filing with, or authorization, approval, consent, license, order, registration,
qualification or decree of, any Governmental Entity, other than those that have been made or
obtained, is necessary or required for the performance by the Company of its obligations under the
Operative Documents or the consummation by the Company of the transactions contemplated by the
Operative Documents.




          (x) Except as set forth on Schedule 4(x), the Company and each Significant Subsidiary
have (a) good and marketable title in fee simple to all real property owned by them, (b) good and
marketable title to all real property-related interests owned by them and (c) good and marketable
title to all personal property owned by them, in each case free and clear of all Liens and defects,
except such as do not materially affect the value of such property and do not interfere with the
use made and proposed to be made by the Company and the Significant Subsidiaries; and all of the
leases and subleases under which the Company or any subsidiary of the Company holds properties are
in full force and effect, except where the failure of such leases and subleases to be in full force
and effect would not, singly or in the aggregate, have a Material Adverse Effect, and none of the
Company or any subsidiary of the Company has any notice of any claim of any sort that has been
asserted by anyone adverse to the rights of the Company or any subsidiary of the Company under any
such leases or subleases, or affecting or questioning the rights of such entity to the continued
possession of the leased or subleased premises under any such lease or sublease, except for such
claims that would not, singly or in the aggregate, have a Material Adverse Effect.




          (y) The Company and each of the Significant Subsidiaries have timely and duly filed all Tax
Returns (as defined below) required to be filed by them, and all such Tax Returns are true,
correct and complete in all material respects. The Company and each of the Significant
Subsidiaries have timely and duly paid in full all material Taxes required to be paid by them
(whether or not such amounts are shown as due on any Tax Return). To the knowledge of the Company,
there are no federal, state or other Tax audits or deficiency assessments





8









 







proposed or pending with respect to the Company or any of the Significant Subsidiaries. As used
herein, the terms “Tax” or “Taxes” mean (i) all federal, state, local and foreign
taxes, and other assessments of a similar nature (whether imposed directly or through
withholding), including any interest, additions to tax or penalties applicable thereto imposed by
any Governmental Entity, and (ii) all liabilities in respect of such amounts arising as a result
of being a member of any affiliated, consolidated, combined, unitary or similar group, as a
successor to another person or by contract. As used herein, the term “Tax Returns” means
all federal, state, local and foreign Tax returns, declarations, statements, reports, schedules,
forms and information returns and any amendments thereto filed or required to be filed with any
Governmental Entity.




          (z) Interest payable by the Company on the Notes is deductible by the Company for United
States federal income tax purposes. There are no rulemaking or similar proceedings before the
United States Internal Revenue Service or comparable federal, state, local or foreign government
bodies which involve or affect the Company or any of its subsidiaries, which, if the subject of an
action unfavorable to the Company or any such subsidiary, could result in a Material Adverse
Effect.




          (aa) The books, records and accounts of the Company and its subsidiaries accurately and
fairly reflect, in reasonable detail, the transactions in, and dispositions of, the assets of, and
the results of operations of, the Company and its subsidiaries. The Company and each of its
subsidiaries maintains a system of internal accounting controls sufficient to provide reasonable
assurances that (i) transactions are executed in accordance with management’s general or specific
authorizations, (ii) transactions are recorded as necessary to permit preparation of financial
statements in accordance with GAAP and to maintain asset accountability, (iii) access to assets is
permitted only in accordance with management’s general or specific authorization and (iv) the
recorded accountability for assets is compared with the existing assets at reasonable intervals
and appropriate action is taken with respect to any differences.




          (bb) The Company and the Significant Subsidiaries are insured by insurers of recognized
financial responsibility against such losses and risks and in such amounts in all material respects
as are customary in the businesses in which they are engaged. All policies of insurance and
fidelity or surety bonds insuring the Company or any of the Significant Subsidiaries or the
Company’s or Significant Subsidiaries’ respective businesses, assets, employees, officers and
directors are in full force and effect. The Company and each of the subsidiaries are in compliance
with the terms of such policies and instruments in all material respects. Neither the Company nor
any Significant Subsidiary has reason to believe that it will not be able to renew its existing
insurance coverage in all material respects as and when such coverage expires or to obtain similar
coverage from similar insurers as may be necessary to continue its business at a cost that would
not have a Material Adverse Effect. Within the past twelve months, neither the Company nor any
Significant Subsidiary has been denied any insurance coverage which it has sought or for which it
has applied.




          (cc) The Company and its subsidiaries or any person acting on behalf of the Company and its
subsidiaries including, without limitation, any director, officer, agent or employee of the
Company or its subsidiaries has not, directly or indirectly, while acting on behalf of the Company
and its subsidiaries (i) used any corporate funds for unlawful contributions, gifts, entertainment
or other unlawful expenses relating to political activity, (ii)





9









 







made any unlawful payment to foreign or domestic government officials or employees or to foreign
or domestic political parties or campaigns from corporate funds, (iii) violated any provision of
the Foreign Corrupt Practices Act of 1977, as amended, or (iv) made any other unlawful payment.




          (dd) The information provided by the Company pursuant to this Purchase Agreement, the other
Operative Documents and the transactions contemplated hereby and thereby does not, as of the date
hereof, and will not as of the Closing Date, contain any untrue statement of a material fact or
omit to state any material fact necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading.




          (ee) Except as set forth on Schedule 4(ee) hereto, (i) the Company and its
subsidiaries have been and are in material compliance with applicable Environmental Laws (as
defined below), (ii) none of the Company, any of its subsidiaries or, to the best of the Company’s
knowledge, any other owners of any of the real properties currently or previously owned, leased or
operated by the Company or any of its subsidiaries (collectively, the “Properties”) at any
time or any other party, has at any time “released” (as such term is defined in CERCLA (as defined
below)) or otherwise disposed of a material quantity of Hazardous Materials (as defined below) on,
to, in, under or from the Properties, (iii) neither the Company nor any of its subsidiaries has
used or intends to use the Properties or any subsequently acquired properties, other than in
material compliance with applicable Environmental Laws, (iv) neither the Company nor any of its
subsidiaries has received any notice of, or has any knowledge of any occurrence or circumstance
which, with notice or passage of time or both, would give rise to a material claim under or
pursuant to any Environmental Law with respect to the Properties or their respective assets or
arising out of the conduct of the Company or its subsidiaries, (v) none of the Properties are
included or, to the best of the Company’s knowledge, proposed for inclusion on the National
Priorities List issued pursuant to CERCLA by the United States Environmental Protection Agency or,
to the best of the Company’s knowledge, proposed for inclusion on any similar list or inventory
issued pursuant to any other Environmental Law or issued by any other Governmental Entity, (vi)
none of the Company, any of its subsidiaries or agents or, to the best of the Company’s knowledge,
any other person or entity for whose conduct any of them is or may be held responsible, has
generated, manufactured, refined, transported, treated, stored, handled, disposed, transferred,
produced or processed any Hazardous Material at any of the Properties, except in material
compliance with all applicable Environmental Laws, and has not transported or arranged for the
transport of any Hazardous Material from the Properties to another property, except in material
compliance with all applicable Environmental Laws, (vii) no lien has been imposed on the Properties
by any Governmental Entity in connection with the presence on or off such Property of any Hazardous
Material or with respect to an Environmental Law, and (viii) none of the Company, any of its
subsidiaries or, to the best of the Company’s knowledge, any other person or entity for whose
conduct any of them is or may be held responsible, has entered into or been subject to any consent
decree, compliance order, or administrative order with respect to material liabilities or
violations at the Properties or any facilities or improvements or any operations or activities
thereon.




          As used herein, “Hazardous Material” shall include, without limitation, any flammable
materials, explosives, radioactive materials, hazardous materials, hazardous substances, hazardous
wastes, toxic substances or related materials, asbestos, petroleum,





10









 







petroleum products and any hazardous material as defined by any federal, state or local
environmental law, statute, ordinance, rule or regulation, including, without limitation, the
Comprehensive Environmental Response, Compensation, and Liability Act of 1980, as amended, 42
U.S.C. §§ 9601-9675 (“CERCLA”), the Hazardous Materials Transportation Act, as amended, 49
U.S.C. §§ 5101-5127, the Resource Conservation and Recovery Act, as amended, 42 U.S.C. §§
6901-6992k, the Emergency Planning and Community Right-to-Know Act of 1986, as amended, 42 U.S.C.
§§ 11001-11050, the Toxic Substances Control Act, as amended, 15 U.S.C. §§ 2601-2692, the Federal
Insecticide, Fungicide and Rodenticide Act, as amended, 7 U.S.C. §§ 136-136y, the Clean Air Act,
as amended, 42 U.S.C. §§ 7401-7642, the Clean Water Act, as amended (Federal Water Pollution
Control Act), 33 U.S.C. §§ 1251-1387, the Safe Drinking Water Act, as amended, 42 U.S.C. §§
300f-300j-26, and the Occupational Safety and Health Act, as amended, 29 U.S.C. §§ 651-678, and
any analogous state laws, as any of the above may be amended from time to time and in the
regulations promulgated pursuant to each of the foregoing (including environmental statutes and
laws not specifically defined herein) (individually, an “Environmental Law” and
collectively, the “Environmental Laws”) or by any Governmental Entity.




          (ff) In the ordinary course of its business, the Company periodically reviews the effect of
Environmental Laws on the business, operations and properties of the Company and its subsidiaries,
and periodically identifies and evaluates associated costs and liabilities (including, without
limitation, any capital or operating expenditures required for clean-up, closure of properties or
compliance with Environmental Laws or any permit, license or approval, any related constraints on
operating activities and any potential liabilities to third parties). On the basis of such reviews
and the amount of its established reserves, the Company has reasonably concluded that such
associated costs and liabilities would not, individually or in the aggregate, result in a Material
Adverse Effect.




          5. Representations and Warranties of the Purchaser. The Purchaser represents and
warrants to, and agrees with, the Company as follows:




          (a) The Purchaser is aware that the Notes have not been and will not be registered under the
Securities Act and may not be offered or sold within the United States or to “U.S. persons” (as
defined in Regulation S under the Securities Act) except in accordance with Rule 903 of Regulation
S under the Securities Act or pursuant to an exemption from the registration requirements of the
Securities Act.




          (b) The Purchaser is an “accredited investor,” as such term is defined in Rule 501 (a) of
Regulation D under the Securities Act.




          (c) Neither the Purchaser, nor any of the Purchaser’s Affiliates, nor any person acting on the
Purchaser’s or the Purchaser’s Affiliate’s behalf has engaged, or will engage, in any form of
“general solicitation” or “general advertising” (within the meaning of Regulation D promulgated
under the Securities Act) in connection with any offer or sale of the Notes.




          (d) The Purchaser understands and acknowledges that (i) no public market exists for any of the
Notes and that it is unlikely that a public market will ever exist for the Notes, (ii) the
Purchaser is purchasing the Notes for its own account, for investment and not with




11









 




a view to, or for offer or sale in connection with, any distribution thereof in violation of the
Securities Act or other applicable securities laws, subject to any requirement of law that the
disposition of its property be at all times within its control and subject to its ability to
resell such Notes pursuant to an effective registration statement under the Securities Act or
pursuant to an exemption therefrom or in a transaction not subject thereto, and the Purchaser
agrees to the legends and transfer restrictions applicable to the Notes contained in the
Indenture, and (iii) the Purchaser has had the opportunity to ask questions of, and receive
answers and request additional information from, the Company and is aware that it may be required
to bear the economic risk of an investment in the Notes.




          (e) The Purchaser is a limited liability company duly formed, validly existing and in good
standing under the laws of the State of Delaware with all requisite limited liability company power
and authority to execute, deliver and perform the Operative Documents to which it is a party, to
make the representations and warranties specified herein and therein and to consummate the
transactions contemplated herein.




          (f) This Purchase Agreement has been duly authorized, executed and delivered by the
Purchaser and no filing with, or authorization, approval, consent, license, order, registration,
qualification or decree of, any governmental body, agency or court having jurisdiction over the
Purchaser, other than those that have been made or obtained, is necessary or required for the
performance by the Purchaser of its obligations under this Purchase Agreement or to consummate the
transactions contemplated herein.




          6. Covenants and Agreements of the Company. The Company covenants and
agrees with the Purchaser as follows:




          (a) During the period from the date of this Purchase Agreement to the Closing Date, the
Company shall use its best efforts and take all action necessary or appropriate to cause its
representations and warranties contained in Section 4 to be true as of the Closing Date,
after giving effect to the transactions contemplated by this Purchase Agreement, as if made on and
as of the Closing Date.




          (b) The Company will arrange for the qualification of the Notes for sale under the laws of
such jurisdictions as the Purchaser may designate and will maintain such qualifications in effect
so long as required for the sale of the Notes. The Company will promptly advise the Purchaser of
the receipt by the Company of any notification with respect to the suspension of the qualification
of the Notes for sale in any jurisdiction or the initiation or threatening of any proceeding for
such purpose.




          (c) The Company will not, nor will it permit any of its Affiliates to, nor will the Company
permit any person acting on its behalf (other than the Purchaser and its Affiliates) to, directly
or indirectly, resell any Notes that have been acquired by any of them.




          (d) The Company will not, nor will it permit any of its Affiliates or any person acting on its
behalf (other than the Purchaser and its Affiliates) to, engage in any “directed selling efforts”
within the meaning of Regulation S under the Securities Act with respect to the Notes.




12









 





          (e) The Company will not, nor will it permit any of its Affiliates or any person acting on
its behalf to, directly or indirectly, (i) sell, offer for sale or solicit offers to buy or
otherwise negotiate in respect of any security (as defined in the Securities Act) that would or
could be integrated with the sale of the Notes in any manner that would require the registration
of the Notes under the Securities Act or (ii) make offers or sales of any security, or solicit
offers to buy any security, under circumstances that would require the registration of any of the
Notes under the Securities Act.




          (f) The Company will not, nor will it permit any of its Affiliates or any person acting on
its behalf (other than the Purchaser and its Affiliates) to, engage in any form of “general
solicitation” or “general advertising” (within the meaning of Regulation D) in connection with any
offer or sale of the any of the Notes.




          (g) So long as any of the Notes are outstanding, (i) the Notes shall not be listed on a
national securities exchange registered under Section 6 of the Exchange Act or quoted in a U.S.
automated inter-dealer quotation system, (ii) the Company shall not be an open-end investment
company, unit investment trust or face-amount certificate company that is, or is required to be,
registered under Section 8 of the Investment Company Act, and, the Notes shall otherwise satisfy
the eligibility requirements of Rule 144A(d)(3) and (iii) the Company shall not engage, nor permit
any of its subsidiaries to engage, in any activity that would cause it or any such subsidiary to
be an “investment company” under the provisions of the Investment Company Act.




          (h) The Company shall furnish to (i) the holder, and subsequent holders, of the Notes, (ii)
Kodiak Capital Management Company LLC, 2107 Wilson Boulevard, Suite 450, Arlington, Virginia 22201,
Attention: Robert M. Hurley, or such other address as designated by Kodiak Capital Management
Company LLC) and (iii) any beneficial owner of the Notes reasonably identified to the Company
(which identification may be made by either such beneficial owner or by Kodiak Capital Management
Company LLC), a duly completed and executed officer’s financial certificate in the form attached
hereto as Exhibit E, including the financial statements referenced in such Exhibit, which
certificate and financial statements shall be so furnished by the Company not later than forty-five
(45) days after the end of each of the first three fiscal quarters of each fiscal year of the
Company and not later than ninety (90) days after the end of each fiscal year of the Company, or,
if applicable, such shorter respective periods as may then be required by the Commission for the
filing by the Company of Quarterly Reports on Form 10-Q and Annual Reports on Form 10-K.




          (i) During any period in which the Company is not subject to and in compliance with Section
13 or 15(d) of the Exchange Act, or the Company is not exempt from such reporting requirements
pursuant to and in compliance with Rule 12g3-2(b) under the Exchange Act, the Company shall
provide to each holder of the Notes and to each prospective purchaser (as designated by such
holder) of the Notes, upon the request of such holder or prospective purchaser, any information
required to be provided by Rule 144A(d)(4) under the Securities Act, if applicable. Any
information provided by the Company pursuant to this Section 6(i) will not, at the date
thereof, contain any untrue statement of a material fact or omit to state any material fact
necessary to make the statements therein, in light of the circumstances under which they were
made, not misleading. If the Company is required to register under the





13









 







Exchange Act, such reports filed in compliance with Rule 12g3-2(b) shall be sufficient information
as required above. This covenant is intended to be for the benefit of the Purchaser, the holders
of the Notes, and the prospective purchasers designated by the Purchaser and such holders, from
time to time, of the Notes.




          (j) The Company covenants and agrees with Purchaser that the Company will not, without the
prior written consent of Purchaser, offer, sell, contract to sell, grant any option to purchase or
otherwise dispose of, directly or indirectly, (i) any Notes or junior subordinated notes or trust
preferred securities or (ii) any other securities convertible into, or exercisable or exchangeable
for, any Notes or junior subordinated notes or trust preferred securities unless the aggregate
amount of Notes outstanding together with such Notes or junior subordinated notes, trust preferred
securities or other securities proposed to be offered, sold, contracted for sale, granted or
otherwise disposed of does not exceed twenty-five percent (25%) of the aggregate of (x) the
Company’s Consolidated Tangible Net Worth (after taking into account such Notes, junior
subordinated notes, trust preferred securities or other securities proposed to be offered, sold,
granted or otherwise disposed of). For purposes hereof, “Consolidated Tangible Net Worth”
shall mean (i) the consolidated net worth of the Company and its consolidated subsidiaries minus
(ii) the consolidated intangibles of the Company and its consolidated subsidiaries including,
without limitation, goodwill, trademarks, trade names, copyrights, patents, patent applications,
licenses, and rights in any of the foregoing and other items treated as intangibles in accordance
with generally accepted accounting principles, as reported in the Company’s balance sheet
contained in its most recent 1934 Act Report.




          (k) The Company will not identify any of Indemnified Parties (as defined below) in a press
release or any other public statement without the consent of such Indemnified Party.




          (l) The Purchaser shall have the right under this Purchase Agreement and the Indenture to
request the substitution of new notes for all or a portion of the Notes held by the Purchaser (the
“Replacement Notes”). The Replacement Notes shall bear terms identical to the Notes with
the sole exception of interest payment dates (and corresponding redemption date and maturity
date), which will be specified by the Purchaser. In no event will the interest payment dates (and
corresponding redemption date and maturity date) on the Replacement Notes vary by more than sixty
(60) calendar days from the original interest payment dates (and corresponding redemption date and
maturity date) under the Notes. The Company agrees to cooperate with all reasonable requests of
the Purchaser in connection with any of the foregoing; provided, that no action requested
of the Company in connection with such cooperation shall materially increase the obligations or
materially decrease the rights of the Company pursuant to such documents.




          (m) Notwithstanding anything to the contrary otherwise contained herein or in any other
Operative Document, prior to earlier of (i) the date eighteen (18) months from the date hereof and
(ii) the occurrence of a Change-in-Control (as defined in the Indenture), the Company shall not
offer to issue any other Debt (as such term is defined in the Indenture) which ranks pari passu with
the Notes (including the Notes, any junior subordinated notes, trust preferred securities or
securities convertible into, or exercisable or exchangeable for the same) to any other Person,
unless the Company shall first offer to Purchaser the opportunity to purchase such Debt, and shall
first provide to Purchaser a written notice thereof stating the proposed terms and





14









 







conditions (the “Offered Terms”). The Purchaser shall have the right to accept the Offered
Terms by written notice to the Company given within ten (10) days after the Purchaser’s receipt of
the Offered Terms. If the Purchaser does not accept the Offered Terms within such period, the
Purchaser shall be deemed to have rejected the Offered Terms and the Company may consummate such
issuance of Debt during the sixty (60) month period beginning on the date of the expiration of the
applicable period; provided, that such issuance of Debt shall be consummated on
substantially the same terms as the Offered Terms and shall otherwise be in accordance with the
terms hereof, including Section 6(j). If such issuance of Debt is not consummated within
such sixty (60) month period, the provisions of this Section 6(m) shall again apply in
respect of any issuance of Debt which ranks pari passu with the Notes whether made during such
sixty (60) month period or thereafter.




          7. Payment of Expenses. The Company agrees to pay all costs and expenses incident to
the performance of the obligations of the Company under this Purchase Agreement, whether or not the
transactions contemplated herein are consummated or this Purchase Agreement is terminated,
including all costs and expenses incident to (i) the fees and expenses of qualifying the Notes
under the securities laws of the several jurisdictions as provided in Section 6(b), (iii)
the fees and expenses of the counsel, the accountants and any other experts or advisors retained by
the Company, (iv) the fees and all reasonable expenses of the Trustee and any other trustee or
paying agent appointed under the Operative Documents, including the fees and disbursements of
counsel for such trustees or paying agent, which fees shall not exceed a $2,000 acceptance fee,
$4,000 in administrative fees annually and the fees and expenses of Potter Anderson & Corroon LLP,
(v) the fees and expenses of Winston & Strawn LLP, special counsel retained by the Purchaser, not
to exceed $30,000 and (vi) a due diligence fee in an amount equal to $12,500 payable as the
Purchaser directs.




          If the sale of the Notes provided for in this Purchase Agreement is not consummated because
any condition set forth in Section 3 to be satisfied by the Company is not satisfied,
because this Purchase Agreement is terminated pursuant to Section 9 or because of any
failure, refusal or inability on the part of the Company to perform all obligations and satisfy
all conditions on its part to be performed or satisfied hereunder other than by reason of a
default by the Purchaser, the Company will reimburse the Purchaser upon demand for all reasonable
out-of-pocket expenses (including the fees and expenses of the Purchaser’s counsel specified in
clause (v) and the due diligence fee specified in clause (vi), in each case, of the immediately
preceding paragraph) that shall have been incurred by the Purchaser in connection with the
proposed purchase and sale of the Notes.




          8.
Indemnification. (a) The Company agrees to indemnify and hold harmless the
Purchaser, the Purchaser’s Affiliates and Kodiak Capital Management Company LLC (collectively, the
“Indemnified Parties”), each person, if any, who “controls” any of the Indemnified Parties
within the meaning of either the Securities Act or the Exchange Act, and the Indemnified Parties’
respective directors, officers, employees and agents, against any and all losses, claims, damages
or liabilities, joint or several, to which the Indemnified Parties or any of them may become
subject under the Securities Act, the Exchange Act or other federal or state statutory law or
regulation, at common law or otherwise, insofar as such losses, claims, damages or liabilities (or
actions in respect thereof) arise out of, are based upon or connected with (i) any untrue statement
or alleged untrue statement of a material fact contained in any information or





15









 







documents furnished or made available to the Purchaser by or on behalf of the Company, (ii) the
omission or alleged omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, (iii) the breach or alleged breach of any
representation, warranty or agreement of the Company contained herein or (iv) the execution and
delivery by the Company of this Purchase Agreement or any of the other Operative Documents and/or
the consummation of the transactions contemplated hereby and thereby, and agrees to reimburse each
such Indemnified Party, as incurred, for any legal or other expenses reasonably incurred by it in
connection with investigating or defending any such loss, claim, damage, liability or action. The
indemnity agreements contained in this Section 8 are in addition to any liability which
the Company may otherwise have.




          (b) Promptly after receipt by an Indemnified Party under this Section 8 of notice of
the commencement of any action, such Indemnified Party will, if a claim in respect thereof is to
be made against the Company under this Section 8, promptly notify the Company in writing
of the commencement thereof; but the failure so to notify the Company (i) will not relieve the
Company from liability under paragraph (a) above unless and to the extent that such failure
results in the forfeiture by the Company of material rights and defenses and (ii) will not, in any
event, relieve the Company from any obligations to any Indemnified Party other than the
indemnification obligation provided in paragraph (a) above. The Purchaser shall be entitled to
appoint counsel to represent the Indemnified Party in any action for which indemnification is
sought. The Company may participate at its own expense in the defense of any such action;
provided, that counsel to the Company shall not (except with the consent of the
Indemnified Party) also be counsel to the Indemnified Party. In no event shall the Company be
liable for fees and expenses of more than one counsel (in addition to any local counsel) separate
from its own counsel for all Indemnified Parties in connection with any one action or separate but
similar or related actions in the same jurisdiction arising out of the same general allegations or
circumstances, unless an Indemnified Party believes that his, her or its interests are not aligned
with the interests of another Indemnified Party or that a conflict of interest might result. The
Company will not, without the prior written consent of the Indemnified Parties, settle or
compromise or consent to the entry of any judgment with respect to any pending or threatened
claim, action, suit or proceeding in respect of which indemnification may be sought hereunder
(whether or not the Indemnified Parties are actual or potential parties to such claim, action,
suit or proceeding) unless such settlement, compromise or consent includes an unconditional
release of each Indemnified Party from all liability arising out of such claim, action, suit or
proceeding.




          9.
Termination; Representations and Indemnities to Survive; This Purchase Agreement
shall be subject to termination in the absolute discretion of the Purchaser, by notice given to the
Company prior to delivery of and payment for the Notes, if prior to such time (i) a downgrading
shall have occurred in the rating accorded the Company’s debt securities by any “nationally
recognized statistical rating organization,” as that term is used by the Commission in Rule
15c3-l(c)(2)(vi)(F) under the Exchange Act, or such organization shall have publicly announced that
it has under surveillance or review, with possible negative implications, its rating of the
Company’s debt securities, (ii) the Company shall be unable to sell and deliver to the Purchaser at
least Thirty Million Dollars ($30,000,000) in aggregate principal amount of the Notes, (iii) a
suspension or material limitation in trading in securities generally shall have occurred on the New
York Stock Exchange, (iv) a suspension or material limitation in trading in any of the Company’s
securities shall have occurred on the exchange or quotation system upon





16









 







which the Company’ securities are traded, if any, (v) a general moratorium on commercial business
activities shall have been declared either by federal or Delaware authorities or (vi) there shall
have occurred any outbreak or escalation of hostilities, or declaration by the United States of a
national emergency or war or other calamity or crisis the effect of which on financial markets is
such as to make it, in the Purchaser’s judgment, impracticable or inadvisable to proceed with the
offering or purchase of the Notes. The respective agreements, representations, warranties,
indemnities and other statements of the Company or its officers or trustees and of the Purchaser
set forth in or made pursuant to this Purchase Agreement will remain in full force and effect,
regardless of any investigation made by or on behalf of the Purchaser or the Company or any of the
their respective officers, directors or controlling persons, and will survive delivery of and
payment for the Notes. The provisions of Sections 7 and
8 shall survive the termination or
cancellation of this Purchase Agreement.




          10. Amendments. This Purchase Agreement may not be modified, amended, altered or
supplemented, except upon the execution and delivery of a written agreement by each of the parties
hereto.




          11. Notices. All communications hereunder shall be in writing and effective only on
receipt, and shall be mailed, delivered by hand or courier or sent by facsimile and confirmed:




          If to the Purchaser, to:



c/o Kodiak Capital Management Company, LLC

2107 Wilson Boulevard

Suite 450

Arlington, Virginia 22201

Attention: Robert M. Hurley

Facsimile: (703) 351-7901




          with a copy to:



Winston
& Strawn LLP 
35 West Wacker Drive 
Chicago, Illinois 60601 

Attention: Wayne D. Boberg 
Facsimile:
(312) 558-5700




          if to the Company, to:



Comstock Homebuilding Companies, Inc.

11465 Sunset Hills Road

Suite 510

Reston, Virginia 20190

Facsimile: (703) 760-1520

Attention: Bruce Labovitz, Chief Financial Officer





17









 








          with a copy to:



Greenberg Traurig, LLP

800 Connecticut Avenue, NW

Suite 500

Washington, D.C. 20006

Facsimile: (202) 331-3101

Attention: Stephen A. Riddick, Esq.




          All such notices and communications shall be deemed to have been duly given (i) at the time
delivered by hand, if personally delivered, (ii) five (5) Business Days after being deposited in
the mail, postage prepaid, if mailed, (iii) the next Business Day after being telecopied or (iv)
the next Business Day after timely delivery to a courier, if sent by overnight air courier
guaranteeing next-day delivery. From and after the Closing, the foregoing notice provisions shall
be superseded by any notice provisions of the Operative Documents under which notice is given. The
Purchaser and the Company, and their respective counsel, may change their respective notice
addresses, from time to time, by written notice to all of the foregoing persons.




          12. Parties in Interest; Successors and Assigns. This Purchase Agreement will inure to
the benefit of and be binding upon the parties hereto and their respective successors and permitted
assigns. Nothing expressed or mentioned in this Purchase Agreement is intended or shall be
construed to give any person other than the parties hereto and the affiliates, directors, officers,
employees, agents and controlling persons referred to in Section 8 and their successors,
assigns, heirs and legal representatives, any right or obligation hereunder. None of the rights or
obligations of the Company under this Purchase Agreement may be assigned, whether by operation of
law or otherwise, without the Purchaser’s prior written consent. The rights and obligations of the
Purchaser under this Purchase Agreement may be assigned by the Purchaser without the Company’s
consent; provided, that the assignee assumes the obligations of the Purchaser under this
Purchase Agreement.




          13. Applicable Law. This Purchase Agreement will be governed by and construed and
enforced in accordance with the law of the State of New York without reference to principles of
conflicts of law (other than Section 5-1401 of the General Obligations Law).




          14. Submission to Jurisdiction. ANY LEGAL ACTION OR PROCEEDING BY OR AGAINST ANY
PARTY HERETO OR WITH RESPECT TO OR ARISING OUT OF THIS PURCHASE AGREEMENT MAY BE BROUGHT IN OR
REMOVED TO THE COURTS OF THE STATE OF NEW YORK, IN AND FOR THE COUNTY OF NEW YORK, OR OF THE UNITED
STATES OF AMERICA FOR THE SOUTHERN DISTRICT OF NEW YORK (IN EACH CASE SITTING IN THE
BOROUGH OF MANHATTAN). BY EXECUTION AND DELIVERY OF THIS PURCHASE AGREEMENT, EACH PARTY
ACCEPTS, FOR ITSELF AND IN RESPECT OF ITS PROPERTY, GENERALLY AND UNCONDITIONALLY, THE
JURISDICTION OF THE AFORESAID COURTS (AND COURTS OF APPEALS THEREFROM) FOR LEGAL PROCEEDINGS
ARISING OUT OF OR IN CONNECTION WITH THIS PURCHASE AGREEMENT.




18









 





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




[signature page follows]





19









 







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



	 	 	 	 	 	 	 	 	 
	 	 	COMSTOCK HOMEBUILDING COMPANIES, INC.
	 
	 	 	 	 	 	 	 	 
	 	 	By:	 	/s/ Bruce Labovitz	 	 
	 	 	 	 	 	 	 
	 	 	Name: Bruce Labovitz	 	 
	 	 	Title:   Chief Financial Officer	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	KODIAK WAREHOUSE LLC	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	By:	 	Kodiak Funding, LP	 	 
	 	 	 	 	Its: Sole Member	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	By:	 	Kodiak Funding Company, Inc.	 	 
	 

	 	 	 	 	 	Its: General Partner	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	By:	 	/s/ Robert M. Hurley	 	 
	 	 	 	 	 	 	 
	 	 	Name: Robert M. Hurley	 	 
	 	 	Title: Chief Financial Officer	 	 






 









 






Schedule 4(1)




List of Significant Subsidiaries




	 	 	 
	 	 	State of lncorporation
	Name	 	or Organization
	1. Buckhead Overlook, LLC

	 	Georgia
	2. Comstock Acquisitions, L.C.

	 	Virginia
	3. Comstock Station View, L.C.

	 	Virginia
	4. Comstock Aldie, L.C.

	 	Virginia
	5. Comstock Barrington Park, L.C.

	 	Virginia
	6. Comstock Bellemeade, L.C.

	 	Virginia
	7. Comstock Belmont Bay 5, L.C.

	 	Virginia
	8. Comstock Belmont Bay 89, L.C.

	 	Virginia
	9. Comstock East Capitol, L.L.C.

	 	Virginia
	10. Comstock Blooms Mill II, L.C.

	 	Virginia
	11. Comstock Brandy Station, L.C.

	 	Virginia
	12. Comstock Carter Lake, L.C.

	 	Virginia
	13. Comstock Cascades, L.C.

	 	Virginia
	14. Comstock Communities, L.C.

	 	Virginia
	15. Comstock Countryside, L.C.

	 	Virginia
	16. Comstock Culpeper, L.C.

	 	Virginia
	17. Comstock Delta Ridge II, L.L.C.

	 	Virginia
	18. Comstock Emerald Farm, L.C.

	 	Virginia
	19. Comstock Fairfax I, L.C.

	 	Virginia
	20. Comstock Flynn’s Crossing, L.C.

	 	Virginia
	21. Comstock Hamlets of Blue Ridge, L.C.

	 	Virginia
	22. Comstock Holland Road, L.L.C.

	 	Virginia
	23. Comstock Homes of North Carolina, L.L.C.

	 	North Carolina
	24. Comstock Homes of Raleigh, L.L.C.

	 	North Carolina
	25. Comstock Homes of Washington, L.C.

	 	Virginia
	26. Comstock Investors III, L.P.

	 	Virginia
	27. Comstock Investors V, L.C.

	 	Virginia
	28. Comstock Investors VI, L.C.

	 	Virginia
	29. Comstock Kelton II, L.C.

	 	Virginia
	30. Comstock Lake Pelham, L.C.

	 	Virginia
	31. Comstock Landing, L.L.C.

	 	Virginia
	32. Comstock Loudoun Condos 1, L.C.

	 	Virginia
	33. Comstock North Carolina, L.L.C.

	 	North Carolina
	34. Comstock Penderbrook, L.C.

	 	Virginia
	35. Comstock Potomac Yard, L.C.

	 	Virginia
	36. Comstock Ryan Park, L.C.

	 	Virginia
	37. Comstock Sherbrooke, L.C.

	 	Virginia
	38. Comstock Summerland, L.C.

	 	Virginia
	39. Comstock Wakefield, L.L.C.

	 	Virginia
	40. Comstock Wakefield II, L.L.C.

	 	Virginia
	41. Highland Avenue Properties, LLC

	 	Georgia
	42. Highland Station Partners, LLC

	 	Georgia
	43. Mathis Partners, LLC

	 	Georgia






 









 






	 	 	 
	44. North Shore Investors, L.L.C.

	 	Virginia
	45. North Shore Raleigh, L.L.C.

	 	Virginia
	46. North Shore Raleigh II, L.L.C.

	 	Virginia
	47. Parker-Chandler Homes, Inc.

	 	Georgia
	48. Parker Chandler Homes/Florida, LLC

	 	Florida
	49. Parker Chandler Homes/North Carolina, LLC

	 	North Carolina
	50. Parker Chandler Homes/South Carolina, LLC

	 	South Carolina
	51. Parker Chandler Realty, LLC

	 	Georgia
	52. PCH Development, LLC

	 	Georgia
	53. PCH James Road, LLC

	 	Georgia
	54. Post Preserve, LLC

	 	Georgia
	55. Raleigh Resolution, L.L.C.

	 	Virginia
	56. Settlement Title Services, L.L.C.

	 	Virginia
	57. TCG Debt Fund II, L.C.

	 	Virginia
	58. TCG Fund I, L.C.

	 	Virginia
	59. Tribble Road Development, LLC

	 	Georgia






Certain Prohibitions Against the Payment of

Distributions, the Repayment of Debt or

the Transfer of Assets




[to follow, if any]





2









 








Schedule 4(p)




Legal Proceedings




None.





 









 








Schedule 4(u)




Certain Documents Subject to Future

Filing as Exhibits to 1934 Act Reports




None.




 









 





Schedule 4(x)




Claims Against Real Property



The Company is involved in a disagreement with its 50% joint venture partner in the North Shore
project located in Raleigh, North Carolina, whereby the Company’s joint venture partner has filed a
lis pendens asserting a right to the Company’s membership interest in the joint venture.





 









 








Schedule 4(ee)




Environmental Matters 




None.




 









 





Exhibit A




FORM OF COMPANY COUNSEL’S OPINION




          Pursuant to Section 3(b)(i) of the Note Purchase Agreement, Greenberg Traurig LLP, special
counsel for the Company, shall deliver an opinion to the effect that:





          (i) the Company and each Significant Subsidiary is validly existing as a corporation,
limited liability company, limited partnership or statutory trust in good standing under the
laws of the jurisdiction in which it is chartered or organized; each of the Company and the
Significant Subsidiaries has full corporate, limited liability company, limited partnership
or statutory trust power and authority to own or lease its properties and to conduct its
business as such business is currently conducted in all material respects; all outstanding
shares of capital stock, equity or membership interests of the Significant Subsidiaries have
been duly authorized and validly issued, and are fully paid and nonassessable and owned of
record and beneficially, directly or indirectly by the Company; the Company has the
corporate, limited liability company, limited partnership or statutory trust power and
authority to (A) execute and deliver, and to perform its obligations under, the Operative
Documents to which it is a party and (B) issue and perform its obligations under the Notes;




          (ii) neither the issue and sale of the Notes, nor the execution and delivery of and
compliance with the Operative Documents by the Company nor the consummation of the
transactions contemplated thereby will constitute a breach or violation of the charter,
by-laws, certificate of formation, limited liability company agreement, certificate of
limited partnership or agreement of limited partnership, as applicable, of the Company;




          (iii) the Indenture has been duly authorized, executed and delivered by the Company
and, assuming it has been duly authorized, executed and delivered by the Trustee,
constitutes a legal, valid and binding obligation of the Company, enforceable against the
Company in accordance with its terms, subject to applicable bankruptcy, insolvency and
similar laws affecting creditors’ rights generally and to general principles of equity;




          (iv) the Notes have been duly authorized and executed by the Company and delivered to
the Trustee for authentication in accordance with the Indenture and, when authenticated by
the Trustee in accordance with the provisions of the Indenture and delivered to the
Purchaser against payment therefor, will constitute legal, valid and binding obligations
of the Company entitled to the benefits of the Indenture and enforceable against the
Company in accordance with their terms, subject to applicable bankruptcy, insolvency and
similar laws affecting creditors’ rights generally and to general principles of equity;




          (v) the Company is not, and, following the issuance of the Notes and the consummation
of the transactions contemplated by the Operative Documents and the application of the
proceeds therefrom, the Company will not be, an “investment




A-1









 









company” or, to such counsel’s knowledge, an entity “controlled” by an “investment company,” in
each case within the meaning of Section 3(a) of the Investment Company Act of 1940, as amended;




          (vi) assuming the truth and accuracy of the representations and warranties of the Purchaser
in the Purchase Agreement, it is not necessary in connection with the offer, sale and delivery of
the Notes to register the Notes under the Securities Act of 1933, as amended, under the
circumstances contemplated in the Purchase Agreement, or to require qualification of the Indenture
under the Trust Indenture Act of 1939, as amended;




          (vii) the Purchase Agreement has been duly authorized, executed and delivered by the Company
and constitutes a legal, valid and binding obligation of the Company, enforceable against the
Company in accordance with its terms, subject to applicable bankruptcy, insolvency and similar
laws affecting creditors’ rights generally and to general principles of equity and the effect of
any applicable public policy against the enforcement of the indemnification provisions of the
Purchase Agreement set forth in Section 8 thereof;




          (viii) the execution and delivery by the Company of, and the performance by the Company of
its obligations under, the Operative Documents and the consummation of the transactions
contemplated by the Purchase Agreement and the other Operative Documents, do not and will not (A)
result in the creation or imposition of any lien, claim, charge, encumbrance or restriction upon
any property or assets of the Company or the Significant Subsidiaries, or (B) conflict with,
constitute a breach or violation of, or constitute a default under, with or without notice or
lapse of time or both, any of the terms, provisions or conditions of (x) the charter, by-laws or
similar organizational documents of the Company or any Significant Subsidiary, or (y) any material
contract, indenture, mortgage, deed of trust, loan or credit agreement, note, lease, franchise,
license or any other agreement or instrument to which the Company or any Significant Subsidiary is
a party or by which any of them or any of their respective properties may be bound or (z) any
order, decree, judgment, franchise, license, permit, rule or regulation known to such counsel of
any court, arbitrator, government, or governmental agency or instrumentality, domestic or foreign,
having jurisdiction over the Company or any Significant Subsidiary or any of their respective
properties;




          (ix) except for filings, registrations or qualifications that may be required by applicable
federal securities laws, no authorization, approval, consent or order of, or filing, registration
or qualification with, any person (including, without limitation, any court, governmental body or
authority) is required under the laws of the State of Delaware in connection with the transactions
contemplated by the Operative Documents (including the offer and sale of the Notes); and




          (x) to such counsel’s knowledge, (A) no action, suit or proceeding at law or in equity is
pending or threatened to which the Company or any Significant Subsidiary is or may be a party, and
(B) no action, suit or proceeding is pending or threatened against or affecting the Company or the
Significant Subsidiaries or any of



A-2









 









their respective properties, before or by any court or governmental official, commission,
board or other administrative agency, authority or body, or any arbitrator, wherein an
unfavorable decision, ruling or finding could reasonably be expected to have a material
adverse effect on (x) the consummation of the transactions contemplated by the Operative
Documents or the issuance and sale of the Notes as contemplated therein or (y) the condition
(financial or otherwise), earnings, business, liabilities, assets or results of operations
of the Company and the Significant Subsidiaries on a consolidated basis.



          In rendering such opinions, such counsel may (A) provide for customary assumptions and
qualifications and (B) rely as to matters of fact, to the extent deemed appropriate, on
certificates of responsible officers of the Company and public officials.





A-3









 








Exhibit B




FORM OF GENERAL COUNSEL OPINION

OR OFFICERS’ CERTIFICATE




     Pursuant to Section 3(b)(ii) of the Note Purchase Agreement, General Counsel for the Company
shall deliver an opinion, or the [CHIEF EXECUTIVE OFFICER/PRESIDENT/EXECUTIVE VICE PRESIDENT] and
the [CHIEF FINANCIAL OFFICER/TREASURER/ASSISTANT TREASURER] of the Company shall provide an
Officers’ Certificate, to the effect that:




          (i) all of the issued and outstanding shares of capital stock, equity or membership
interests of each Significant Subsidiary are owned of record by the Company;




          (ii) no consent, approval, authorization or order of any court or Governmental Entity
is required for the issue and sale of the Notes, the execution and delivery of and
compliance with the Operative Documents by the Company or the consummation of the
transactions contemplated in the Operative Documents, except such approvals (specified in
such certificate) as have been obtained;




          (iii) to the knowledge of such officers, there is no action, suit or proceeding before
or by any government, governmental instrumentality, arbitrator or court, domestic or
foreign, now pending or threatened against or affecting the Company or any Significant
Subsidiary that could adversely affect the consummation of the transactions contemplated by
the Operative Documents or could have a Material Adverse Effect; and




          (iv) the execution and delivery by the Company of, and the performance by the Company
of its obligations under, the Operative Documents and the consummation by the Company of the
transactions contemplated by the Operative Documents, (i) will not result in any violation
of the charter or bylaws of the Company, the charter, bylaws or similar organizational
documents of the Company’s subsidiaries, and (ii) will not conflict with, or result in a
breach of any of the terms or provisions of, or constitute a default (or an event which,
with notice or lapse of time or both, would constitute a default) under, or result in the
creation or imposition of any lien, charge and encumbrance upon any assets or properties of
the Company or any Significant Subsidiary under, (a) any agreement, indenture, mortgage or
instrument that the Company or any Significant Subsidiary of the Company is a party to or by
which it may be bound or to which any of its assets or properties may be subject, or (b) any
existing applicable law, rule or administrative regulation of any court or governmental
agency or authority having jurisdiction over the Company or any Significant Subsidiary of
the Company or any of their respective assets or properties, except in case of (ii), where
any such violation, conflict, breach, default, lien, charge or encumbrance, would not have a
material adverse effect on the assets, liabilities, properties, business, results of
operations or condition (financial or otherwise) of the Company and its subsidiaries, taken
as whole.



B-1









 





Exhibit C




FORM OF TAX COUNSEL OPINION




     Pursuant to Section 3(c) of the Note Purchase Agreement, Winston & Strawn LLP, special tax
counsel for the Purchaser shall deliver an opinion to the effect that, for United States federal
income tax purposes, the Notes will constitute indebtedness of the Company.



     In rendering such opinion, such counsel may (A) provide for customary assumptions and
qualifications, (B) state that its opinion is limited to the federal income tax laws of the United
States and (C) rely as to matters of fact, to the extent deemed appropriate, on certificates of
responsible officers of the Company and public officials.



C-1









 





Exhibit D




FORM OF TRUSTEE COUNSEL OPINION




     Pursuant to Section 3(d) of the Note Purchase Agreement, special counsel for the Trustee
shall deliver an opinion to the effect that:




          (i) Wells Fargo Bank, N.A. is a national banking association with trust powers, duly
and validly existing under the laws of the United States of America, with corporate power
and authority to execute, deliver and perform its obligations under the Indenture and to
authenticate and deliver the Notes, and is duly eligible and qualified to act as Trustee
under the Indenture pursuant to Section 6.1 thereof;




          (ii) the Indenture has been duly authorized, executed and delivered by Wells Fargo
Bank, N.A. and constitutes the valid and binding obligation of Wells Fargo Bank, N.A.,
enforceable against it in accordance with its terms except (A) as may be limited by
bankruptcy, fraudulent conveyance, fraudulent transfer, insolvency, reorganization,
liquidation, receivership, moratorium or other similar laws now or hereafter in effect
relating to creditors’ rights generally, and by general equitable principles, regardless of
whether considered in a proceeding in equity or at law and (B) that the remedy of specific
performance and injunctive and other forms of equitable relief may be subject to equitable
defenses and to the discretion of the court before which any proceeding therefor may be
brought;




          (iii) neither the execution or delivery by Wells Fargo Bank, N.A. of the Indenture, the
authentication and delivery of the Notes by Wells Fargo Bank, N.A. pursuant to the terms of
the Indenture, nor the performance by Wells Fargo Bank, N.A. of its obligations under the
Indenture (A) requires the consent or approval of, the giving of notice to or the
registration or filing with, any Governmental Entity or agency under any existing law of the
State of New York governing the banking or trust powers of Wells Fargo Bank, N.A. or (B)
violates or conflicts with the Charter or By-laws of Wells Fargo Bank, N.A. or any law or
regulation of the State of New York governing the banking or trust powers of Wells Fargo
Bank, N.A.; and




          (iv) the Notes have been duly authenticated and delivered by Wells Fargo Bank, N.A..



     In rendering such opinions, such counsel may (A) provide for customary assumptions and
qualifications, (B) state that its opinion is limited to the laws of the State of New York and (C)
rely as to matters of fact, to the extent deemed proper, on certificates of responsible officers of
Wells Fargo Bank, N.A., the Company and public officials.



D-1









 





Exhibit E




FORM OF OFFICER’S FINANCIAL CERTIFICATE




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


As of [QUARTERLY/ANNUAL FINANCIAL DATE], [YEAR]




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





[FOR FISCAL YEAR END: Attached hereto are the audited consolidated financial statements
(including the balance sheet, income statement and statement of cash flows, and notes thereto,
together with the report of the independent accountants thereon) of the Company and its
consolidated subsidiaries for the three years ended [DATE], [YEAR].]



[FOR FISCAL QUARTER END: Attached hereto are the unaudited consolidated and consolidating
financial statements (including the balance sheet and income statement) of the Company and its
consolidated subsidiaries for the fiscal quarter ended [DATE],
[YEAR].]



The financial statements fairly present in all material respects, in accordance with U.S. generally
accepted accounting principles (“GAAP”), the financial position of the Company and its
consolidated subsidiaries, and the results of operations and changes in financial condition as of
the date, and for the [QUARTER] [YEAR] ended [DATE], [YEAR], and such financial statements have
been prepared in accordance with GAAP consistently applied throughout the period involved (expect
as otherwise noted therein).



There has been no monetary default with respect to any indebtedness owed by the Company and/or its
subsidiaries (other than those defaults cured within thirty (30) days of the occurrence of the
same) [except as set forth below:].



Attached hereto is a current organizational chart of the Company and its subsidiaries as of the
date hereof.




[signature page follows]




E-1









 





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



	 	 	 	 	 	 	 	 	 
	 	 	COMSTOCK HOMEBUILDING COMPANIES, INC.	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	By:	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	Name:	 	 	 	 
	 

	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	Title:	 	 	 	 
	 

	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	 	 	Comstock Homebuilding Companies, Inc.	 	 
	 	 	 	 	11465 Sunset Hills Road	 	 
	 	 	 	 	Suite 510	 	 
	 	 	 	 	Reston, Virginia 20190	 	 
	 	 	 	 	(703) 883-1700	 	 







E-2