Document:

exv10w38

 

EXHIBIT 10.38

EXECUTION COPY

STOCK PURCHASE AGREEMENT

DATED AS OF JANUARY 19, 2006

BY AND AMONG

COMSTOCK HOMEBUILDING COMPANIES, INC.

PARKER-CHANDLER HOMES, INC.,

AND

EACH OF THE SELLING SHAREHOLDERS IDENTIFIED HEREIN

 

 

TABLE OF CONTENTS

	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Page	 
	Article I DEFINITIONS
	 	 	1	 
	 	1.1	 	 	Definitions
	 	 	1	 
	 	1.2	 	 	Other Defined Terms
	 	 	7	 
	 	1.3	 	 	Accounting Principles
	 	 	7	 
	 	1.4	 	 	Construction
	 	 	7	 
	 	 	 	 	 
	 	 	 	 
	Article II PURCHASE AND SALE OF SHARES
	 	 	8	 
	 	2.1	 	 	The Acquisition
	 	 	8	 
	 	2.2	 	 	Purchase Price and Other Payments
	 	 	8	 
	 	 	 	 	 
	 	 	 	 
	Article III REPRESENTATIONS AND WARRANTIES	 	 	8	 
	 	3.1	 	 	General Statement
	 	 	8	 
	 	3.2	 	 	Representations and Warranties of Purchaser
	 	 	9	 
	 	3.3	 	 	Representations and Warranties of the Company and Sellers
	 	 	9	 
	 	3.4	 	 	Representations and Warranties of the Sellers
	 	 	24	 
	 	 	 	 	 
	 	 	 	 
	Article IV [INTENTIONALLY OMITTED.]	 	 	25	 
	 	 	 	 	 
	 	 	 	 
	Article V [INTENTIONALLY OMITTED.]	 	 	26	 
	 	 	 	 	 
	 	 	 	 
	Article VI CLOSING	 	 	26	 
	 	6.1	 	 	Closing Documents
	 	 	26	 
	 	6.2	 	 	Purchaser’s Deliveries
	 	 	26	 
	 	6.3	 	 	Company’s and Sellers’ Deliveries
	 	 	26	 
	 	 	 	 	 
	 	 	 	 
	Article VII POST-CLOSING AGREEMENTS	 	 	28	 
	 	7.1	 	 	Post-Closing Agreements
	 	 	28	 
	 	7.2	 	 	Inspection of Records
	 	 	28	 
	 	7.3	 	 	Use of Trademarks
	 	 	28	 
	 	7.4	 	 	Payments of Accounts Receivable
	 	 	28	 
	 	7.5	 	 	Third Party Claims
	 	 	28	 
	 	7.6	 	 	Further Assurances
	 	 	28	 
	 	7.7	 	 	Company’s Release
	 	 	29	 
	 	 	 	 	 
	 	 	 	 
	Article VIII OTHER AGREEMENTS	 	 	29	 
	 	8.1	 	 	Confidentiality
	 	 	29	 
	 	8.2	 	 	Publicity
	 	 	29	 
	 	8.3	 	 	Certain Tax Matters
	 	 	29	 
	 	8.4	 	 	Employee Matters
	 	 	30	 
	 	8.5	 	 	Personal Guarantees
	 	 	30	 
	 	8.6	 	 	Sellers’ Representatives
	 	 	30	 
	 	 	 	 	 
	 	 	 	 
	Article IX INDEMNIFICATION	 	 	31	 

i

 

	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Page	 
	 	9.1	 	 	The Company’s and Sellers’ Indemnification Obligations
	 	 	31	 
	 	9.2	 	 	Purchaser’s Indemnification Obligations
	 	 	32	 
	 	9.3	 	 	Cooperation
	 	 	33	 
	 	9.4	 	 	Third Party Claims
	 	 	33	 
	 	9.5	 	 	Assertion of Claims
	 	 	34	 
	 	9.6	 	 	Survival of Representations and Warranties
	 	 	34	 
	 	9.7	 	 	Limitation on Indemnification of the Company, the Sellers and Purchaser
	 	 	34	 
	 	9.8	 	 	Corporate Indemnification of Officers and Directors
	 	 	36	 
	 	9.9	 	 	Set-Off
	 	 	36	 
	 	 	 	 	 
	 	 	 	 
	Article X [INTENTIONALLY OMITTED]	 	 	36	 
	 	 	 	 	 
	 	 	 	 
	Article XI MISCELLANEOUS	 	 	36	 
	 	11.1	 	 	Notices
	 	 	36	 
	 	11.2	 	 	Expenses; Transfer Taxes
	 	 	37	 
	 	11.3	 	 	Entire Agreement
	 	 	37	 
	 	11.4	 	 	Non-Waiver
	 	 	38	 
	 	11.5	 	 	Counterparts
	 	 	38	 
	 	11.6	 	 	Severability
	 	 	38	 
	 	11.7	 	 	Applicable Law; Binding Arbitration
	 	 	38	 
	 	11.8	 	 	Binding Effect; Benefit
	 	 	38	 
	 	11.9	 	 	Assignability
	 	 	39	 
	 	11.10	 	 	Rule of Construction
	 	 	39	 
	 	11.11	 	 	Amendments
	 	 	39	 
	 	11.12	 	 	Headings
	 	 	39	 

ii

 

DISCLOSURE SCHEDULE

	 	 	 
	Schedule 2.2.1(a)

	 	Percentage Allocation
	 
	 	 
	Schedule 2.2.1(b)

	 	Assumed Institutional Debt
	 
	 	 
	Schedule 2.2.1(c)

	 	Assumed Shareholder Debt
	 
	 	 
	Schedule 3.3.5

	 	Consents
	 
	 	 
	Schedule 3.3.7

	 	Conflicts under Contracts
	 
	 	 
	Schedule 3.3.8

	 	Subsidiaries and Affiliates
	 
	 	 
	Schedule 3.3.9

	 	Directors and Officers
	 
	 	 
	Schedule 3.3.11

	 	Capitalization/Ownership of Shares
	 
	 	 
	Schedule 3.3.12

	 	Financial Statements
	 
	 	 
	Schedule 3.3.16

	 	Assets
	 
	 	 
	Schedule 3.3.18

	 	Insurance
	 
	 	 
	Schedule 3.3.19

	 	Bank Accounts
	 
	 	 
	Schedule 3.3.20

	 	Taxes
	 
	 	 
	Schedule 3.3.21

	 	Contracts
	 
	 	 
	Schedule 3.3.23

	 	Suppliers
	 
	 	 
	Schedule 3.3.24

	 	Related Party Transactions
	 
	 	 
	Schedule 3.3.25

	 	Permits/Operations Outside Georgia
	 
	 	 
	Schedule 3.3.26

	 	Benefit Plans
	 
	 	 
	Schedule 3.3.27

	 	Employee Relations
	 
	 	 
	Schedule 3.3.28

	 	Litigation and Claims
	 
	 	 
	Schedule 3.3.29

	 	Decrees, Orders and Arbitration Awards
	 
	 	 
	Schedule 3.3.31

	 	Environmental Matters
	 
	 	 
	Schedule 3.3.32(a)

	 	Real Property
	 
	 	 
	Schedule 3.3.32(e)

	 	Leased Real Estate
	 
	 	 
	Schedule 3.3.33

	 	Intellectual Property
	 
	 	 
	Schedule 3.3.34

	 	Product Liability
	 
	 	 
	Schedule 8.5

	 	Personal Guarantees

iii

 

EXHIBITS

	 	 	 	 	 
	Exhibit A

	 	-
	 	Form of Employment Agreement
	Exhibit B

	 	-
	 	Form of Noncompetition Agreement
	Exhibit C

	 	-
	 	Form of Escrow Agreement
	Exhibit D

	 	-
	 	Form of Seller Release
	Exhibit E

	 	-
	 	Form of Company Release
	Exhibit F

	 	-
	 	Form of Legal Opinion

i

 

STOCK PURCHASE AGREEMENT

     This STOCK PURCHASE AGREEMENT (this “Agreement”) is made as of January 19, 2006, by and
among COMSTOCK HOMEBUILDING COMPANIES, INC., a Delaware corporation (“Purchaser”), PARKER-CHANDLER
HOMES, INC., a Georgia corporation (the “Company”), and each of the following individuals who are
all of the shareholders of the Company on the date hereof, owning in the aggregate 1,429 shares
(the “Shares”) of the Company’s common stock, par value $1.00 per share (the “Common Stock”), which
Shares constitute all of the issued and outstanding capital stock of the Company: JAMES B. PARKER,
JR., ANDREW H. CHANDLER, JR., SUNDERRAJ M. KAMALESON, ROBERT A. FORSTER, RICHARD DOBKIN, EUGENE E.
PEARSON, JOHN D. PEARSON, DONALD SCHROELUCKE and JAMES SHIRAH (each a “Seller” and collectively,
the “Sellers”).

RECITALS

     Purchaser’s primary business is residential homebuilding in the Washington, D.C. and Raleigh,
North Carolina metropolitan areas. The Company is similarly engaged in the business of residential
homebuilding in the metropolitan Atlanta, Georgia area, with additional operations in Myrtle Beach,
South Carolina and Charlotte, North Carolina.

     The parties hereto have determined that it is in their best interests for Purchaser to acquire
all of the Shares. The Sellers have therefore agreed to sell, and Purchaser has agreed to
purchase, all such Shares on the terms, and subject to the conditions, contained in this Agreement.

AGREEMENTS

     Therefore, for good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties agree as follows:

ARTICLE I

DEFINITIONS

     1.1 Definitions. For purposes of this Agreement, the following terms have the
meanings set forth below.

     “Accounts Receivable” means all of the Company’s and the Subsidiaries’ respective accounts
receivable, notes receivable, negotiable instruments and chattel paper.

     “Affiliate” with respect to any Person means any other Person who directly or indirectly
Controls, is Controlled by, or is under common Control with such Person including in the case of
any Person who is an individual, his or her spouse, any of his or her descendants (lineal or
adopted) or ancestors, and any of their spouses.

     “Agreement” shall have the meaning ascribed to it in the Preamble.

 

 

     “Appurtenances” means all privileges, rights, easements, hereditaments and appurtenances
belonging to or for the benefit of any Real Property, including all easements appurtenant to and
for the benefit of any Real Property for, and as the primary means of access between, such Real
Property and a public way, or for any other use upon which lawful use of the Real Property for the
purposes for which it is presently being used is dependent, and all rights existing in and to any
streets, alleys, passages and other rights-of-way included thereon or adjacent thereto (before or
after vacation thereof) and vaults beneath any such streets.

     “Benefit Plan” means any pension, retirement, 401(K), bonus, deferred compensation, stock
option, severance, salary continuation, vacation, sick leave, fringe benefit, incentive, insurance,
welfare or similar plan.

     “Business Day” means a day other than Saturday, Sunday or any day on which banks located in
the Commonwealth of Virginia are authorized or obligated to close.

     “CERCLA” means the Comprehensive Environmental Response, Compensation and Liability Act of
1980, as amended.

     “Claims” means all rights, claims, security interests, encumbrances, liens, options,
judgments, pledges, charges, rights of first refusal or first offer, mortgages, and indentures, of
every kind and nature whatsoever, and, to the extent applicable, any and all proxies, voting
trusts, voting agreements, escrows, transfer and other restrictions and equities, in each case
whether arising by agreement, operation of law or otherwise.

     “Closing” means the consummation of the transactions contemplated by this Agreement.

     “Closing Date” means the date on which the Closing occurs, which shall be the date of
execution of this Agreement.

     “Code” means the Internal Revenue Code of 1986, as amended.

     “Common Stock” shall have the meaning ascribed to it in the Preamble.

     “Company” shall have the meaning ascribed to it in the Preamble.

     “Company Accountants” means Dixon Hughes, PLLC.

     “Contract” means any contract, agreement, arrangement, understanding or instrument, whether
oral or written.

     “Control” means the possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of a Person, whether through ownership of securities, by
Contract or otherwise.

     “Controlling Sellers” means James B. Parker, Jr. and Andrew H. Chandler, Jr.

     “Damages” means all actions, lawsuits, proceedings, hearings, investigations, charges,
complaints, Third Party Claims, demands, injunctions, judgments, orders, decrees, rulings, dues,

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Liabilities, obligations, Taxes, liens, assessments, levies, losses, fines, penalties, damages,
costs, fees and expenses, including reasonable attorneys’, accountants’, investigators’, and
experts’ fees and expenses incurred in investigating or defending any of the foregoing.

     “Disclosure Schedule” means the schedules delivered by the Company and the Sellers to the
Purchaser concurrently herewith and identified by the parties as the Disclosure Schedule.

     “Employment Agreement” means an Employment Agreement (including all documentation relating to
the grant of contingent restricted stock of Purchaser) to be entered into with each of James B.
Parker, Jr. and Andrew H. Chandler, Jr., respectively, in the form of Exhibit A attached
hereto.

     “Environmental Claim” means any and all administrative, regulatory or judicial actions, suits,
demands, demand letters, directives, claims, liens, investigations, proceedings or notices of
noncompliance or violation (written or oral) by any Person alleging potential liability (including
potential liability for enforcement, investigation costs, cleanup costs, governmental response
costs, removal costs, remedial costs, natural resources damages, property damages, personal
injuries or penalties) arising out of, based on or resulting from: (1) the presence or Release into
the environment of any Hazardous Substance at any location, whether or not owned by the Company;
(2) circumstances forming the basis of any violation or alleged violation of any Environmental Law;
or (3) any and all claims by any Person seeking damages, contribution, indemnification, cost
recovery, compensation or injunctive relief resulting from the presence or Release of any Hazardous
Substances.

     “Environmental Laws” means all federal, state or local statutes, laws, rules, ordinances,
codes, rule of common law, regulations, judgments and orders in effect on the Closing Date and
relating to protection of human health or the environment (including ambient air, surface water,
ground water, drinking water, wildlife, plants, land surface or subsurface strata), including laws
and regulations relating to Releases or threatened Releases of Hazardous Substances, or otherwise
relating to the manufacture, processing, distribution, use, treatment, storage, disposal, transport
or handling of Hazardous Substances.

     “Environmental Permits” means all environmental, health and safety permits, licenses,
registrations, and governmental approvals and authorizations.

     “ERISA” means the Employee Retirement Income Security Act of 1974, as amended.

     “Financial Statements” means, collectively, the Unaudited Financial Statements and the Interim
Financial Statements.

     “Fully Developed and Buildable Land” means, with respect to any tract, parcel or lot of Real
Property, that (1) the parcel or tract of land conforms to all applicable Laws so that the Company
or Purchaser is eligible to obtain, on a timely basis, all Permits necessary for building an
attached or detached home or homes thereon in compliance with all applicable Laws upon the proper
application by the Company or Purchaser and the Company’s or Purchaser’s payment of permit fees and
any utility connection or tap fees; (2) on each such lot within each such Real
Property there is or could be a home upon proper application; (3) all currently required
subdivision entitlements have been obtained; and (4) all off-site Improvements have been

- 3 -

 

constructed or bonded, to the extent such Improvements are required by any applicable Governmental
or Regulatory Authority for such parcel or tract of land.

     “GAAP” means generally accepted accounting principles as in effect from time to time in the
United States of America.

     “Governmental or Regulatory Authority” means any court, tribunal, arbitrator, authority,
agency, bureau, board, commission, department, official or other instrumentality of the United
States, any state thereof, any foreign country or any domestic or foreign state, county, city or
other political subdivision, and shall include all self regulatory organizations and insurance
authorities.

     “Ground Lease Property” means any Real Property, Improvements and Appurtenances subject to a
ground lease in favor of the Company or its Subsidiaries, used or usable in the conduct of the
Company’s or the Subsidiary’s business.

     “Hazardous Substances” means: (1) any petroleum or petroleum products, radioactive materials,
asbestos in any form, mold, mildew, urea formaldehyde foam insulation, transformers or other
equipment that contain dielectric fluid containing regulated levels of polychlorinated biphenyls
(PCBs) and radon gas; and (2) any chemicals, materials or substances which are now or ever have
been defined as or included in the definition of “medical wastes,” “hazardous substances,”
“hazardous wastes,” “hazardous materials,” “extremely hazardous wastes,” “restricted hazardous
wastes,” “toxic substances,” “toxic pollutants,” or other words of similar import; in all cases as
set forth in any Environmental Law.

     “Improvements” means all buildings, structures, fixtures, site improvements, or other
improvements located on Real Property, including those under construction.

     “Indebtedness” of any Person means all obligations of such Person (1) for borrowed money
evidenced by notes, bonds, debentures or similar instruments, (2) for the deferred purchase price
of goods or services, (3) under capital leases, and (4) in the nature of guarantees of the
obligations described in clauses (1) through (3) above of any other Person.

     “Indemnified Party” means, with respect to a particular matter, a Person who is entitled to
indemnification from another party hereto pursuant to ARTICLE IX.

     “Indemnifying Party” means, with respect to a particular matter, a party hereto who is
required to provide indemnification under ARTICLE IX to another Person.

     “Intellectual Property” means all intellectual property rights, including all patents,
trademarks, service marks, copyrights, designs, Internet domain names and websites, trade or
business names, trade dress and slogans (and all registrations of, and all applications for
registration of, any of the foregoing), Software, and all goodwill associated with such
intellectual property rights.

     “Intellectual Property Licenses” means all Contracts (other than Contracts with respect to
Software that have been purchased “off the shelf”) between the Company or any Subsidiary, on the
one hand, and any other Person, on the other hand, granting any right to use or practice

- 4 -

 

any rights
under any of the Intellectual Property owned by the Company, any Subsidiary or any other Person.

     “Interim Financial Statement Date” means November 30, 2005.

     “Interim Financial Statements” means the consolidated balance sheets, statements of income and
retained earnings and statements of cash flows of the Company and the Subsidiaries, as of and for
the eleven-month period ended on the Interim Financial Statement Date.

     “IRS” means the Internal Revenue Service.

     “Knowledge of the Company” means (a) the actual knowledge of the Controlling Sellers on the
date of this Agreement and (b) the constructive knowledge of facts, circumstances, events or
other matters the Controlling Sellers could be expected to discover or otherwise become aware of in
the normal discharge of their respective assigned duties and responsibilities, or after a
reasonable inquiry of any employees of and advisors to the Company and/or the Subsidiaries who have
principal responsibility for the matter in question.

     “Law” means any law, statute, order, decree, consent decree, judgment, rule, regulation,
ordinance or other pronouncement having the effect of law, whether in the United States, any
foreign country, or any domestic or foreign state, county, city or other political subdivision or
of any Governmental or Regulatory Authority.

     “Leased Real Estate” means all real property leased or subleased by the Company or any
Subsidiary.

     “Liabilities” means all Indebtedness, obligations and other liabilities of the Company or any
Subsidiary of any nature whatsoever, whether direct or indirect, matured or unmatured, absolute,
accrued, contingent (or based on any contingency), known or unknown, fixed or otherwise, or whether
due or to become due.

     “Material Adverse Effect” means any event, change, condition or matter that individually or in
the aggregate results in or could reasonably be expected to result in a material adverse change in
the (1) business, operations (including results of operations), assets, Liabilities, financial
condition, properties or prospects of the Company or any Subsidiary, or (2) the ability of any
party hereto to consummate the transactions contemplated hereby.

     “Noncompetition Agreement” means a Confidentiality and Noncompetition Agreement, to be entered
into with each of James B. Parker, Jr. and Andrew H. Chandler, Jr., respectively, in the form of
Exhibit B attached hereto.

     “Participating Sellers” shall mean the Sellers other than the Controlling Sellers.

     “Permits” means all licenses, permits, franchises, authorizations, registrations and
government approvals other than the Environmental Permits.

     “Permitted Liens” means all (1) statutory liens for Taxes not yet due or being contested in
good faith and for which there are adequate reserves on the books; (2) statutory liens of

- 5 -

 

landlords, carriers, warehousemen, mechanics and materialmen incurred in the ordinary course of
business for sums not yet due; (3) mortgages, trust deeds, chattel mortgages, security agreements,
financing statements or other instruments encumbering any of the assets of the Company, including
the Real Property, that have been recorded and filed with the appropriate jurisdiction and which
have been disclosed in the Disclosure Schedule; and (4) liens incurred or deposits made in the
ordinary course of business in connection with workers’ compensation, unemployment insurance and
other types of social security.

     “Person” means any individual, corporation, partnership, limited liability company, joint
venture, association, bank, trust company, trust or other entity, whether or not legal entities, or
any governmental entity, agency or political subdivision.

     “Proprietary Software” means Software which is owned by the Company or any Subsidiary.

     “Purchaser” shall have the meaning ascribed to it in the Preamble.

     “Purchaser Indemnitees” means Purchaser and its Affiliates, and their respective directors,
managers, officers, members, shareholders, partners, agents, representatives, successors and
assigns.

     “Real Property” means (1) all parcels and tracts of land (including any land lying in the bed
of any highway, street, road or avenue, opened or proposed, in front of, or abutting or adjoining,
such parcels and tracts of land) owned by the Company, its Subsidiaries or Affiliates, including
Fully Developed Land and Buildable Land or Undeveloped Land and (2) any Ground Lease Property used
or usable in the conduct of the Company’s business and all Improvements and Appurtenances thereto.

     “Related Parties” means (1) Sellers; (2) the Company’s present directors, officers and
shareholders; (3) any Affiliates of any of the foregoing; and (4) any Person of which any Seller or
the spouse or any lineal descendant or ancestor of any Seller is an officer, director, member,
partner, trustee, beneficiary or shareholder (other than, with respect to any Person which has
equity securities listed on a national securities exchange or traded in the over-the-counter
market, as a holder of not more than 2% of such Person’s outstanding equity securities).

     “Release” means any intentional or unintentional release, spill, emission, emptying, leaking,
injection, deposit, disposal, discharge, dispersal, dumping, leaching, pumping, pouring, or
migration into the environment, atmosphere, soil, surface water, groundwater or property.

     “Returns” means all returns, declarations, reports, statements and other documents required to
be filed in respect of Taxes.

     “Seller” shall have the meaning ascribed to it in the Preamble.

     “Seller Indemnitees” means each Seller and his respective successors and assigns.

     “Sellers’ Representatives” means the Sellers’ attorneys-in-fact and agents in connection with
the execution and performance of this Agreement.

- 6 -

 

     “Shares” shall have the meaning ascribed to it in the Preamble.

     “Software” means any and all: (1) computer programs, including any and all software
implementation of algorithms, models and methodologies whether in source code or object code; (2)
databases and computations, including any and all data and collections of data; (3) documentation,
including user manuals and training materials, relating to any of the foregoing; and (4) content
and information contained in any website.

     “Subsidiaries” means all of the entities in which the Company holds or beneficially owns any
direct or indirect interest, as such entities are specifically set forth on Schedule 3.3.8 of the
Disclosure Schedule.

     “Tax” or “Taxes” means all federal, state, local, foreign and other income, sales, use, ad
valorem, transfer or other taxes, fees, assessments or charges of any kind, together with any
interest and any penalties with respect thereto.

     “Third Party Claim” means any action, lawsuit, proceeding, investigation, hearing, or like
matter which is asserted or overtly threatened by a Person other than the parties hereto, their
successors and permitted assigns, against any Indemnified Party or to which any Indemnified Party
is subject.

     “Unaudited Financial Statements” means the consolidated balance sheets, statements of income
and retained earnings, statements of cash flows and notes to financial statements (together with
any supplementary information thereto) of the Company and the Subsidiaries as of and for the years
ended December 31, 2004 and December 31, 2003.

     “Undeveloped Land” means each parcel or tract of Real Property that is not Fully Developed and
Buildable Land.

     1.2 Other Defined Terms. Other capitalized terms used in this Agreement which are not
defined in this ARTICLE I shall have the meanings contained elsewhere in this Agreement.

     1.3 Accounting Principles. The classification, character and amount of all assets,
liabilities, capital accounts and reserves and of all items of income and expense to be determined,
and any consolidation or other accounting computations to be made, and the interpretation of any
definition containing any financial term, pursuant to this Agreement shall be determined and made
in accordance with GAAP. All references to “dollars” or “$” in this Agreement shall mean United
States dollars.

     1.4 Construction. Unless the context of this Agreement otherwise requires, (a) words
of any gender include each other gender, (b) words using the singular or plural number also include
the plural or singular number, respectively, (c) references to Sections and Articles refer to the
applicable
Sections and Articles of this Agreement, (d) the words “include,” “includes” and “including”
shall be deemed to be followed by the phrase “without limitation,” and (e) the predicate of any
noun or pronoun shall be the immediately preceding prior noun.

- 7 -

 

ARTICLE II

PURCHASE AND SALE OF SHARES

     2.1 The Acquisition. Each Seller hereby sells and delivers to Purchaser or a
subsidiary of Purchaser, and Purchaser or such subsidiary hereby purchases and accepts from each
Seller, all of the Sellers’ rights, title, interest in and to the Shares, free and clear of any
Claims.

     2.2 Purchase Price and Other Payments.

          2.2.1 As consideration for the purchase of the Shares, Purchaser shall pay to Sellers the sum
of $10,000,000.00 (the “Purchase Price”) in addition to other consideration as follows:

          (a) The sum of $9,000,000.00 being paid simultaneously with the execution of this Agreement
and delivery of the Shares (the “Closing Payment”), which shall be paid by wire transfer of
immediately available funds, in proportion to each Sellers’ respective percentage allocation as set
forth on Schedule 2.2.1(a) hereto (each such Seller’s “Percentage Interest”);

          (b) Assumption of all of the existing debt of the Company to institutional lenders, as set
forth on Schedule 2.2.1(b) of the Disclosure Schedule (the “Assumed Institutional Debt”); and

          (c) Assumption and pay-off of all of the existing debt of the Company (but not of any
Subsidiary) owed to the Company’s shareholders as set forth in Schedule 2.2.1(c) of the Disclosure
Schedule (the “Assumed Shareholder Debt”);

          2.2.2 The sum of $1,000,000 (the “Escrow Amount”) shall be paid to U.S. Bank, National
Association (the “Escrow Agent”, to be held in an account in accordance with the Escrow Agreement
attached hereto as Exhibit C (the “Escrow Agreement”). The Escrow Amount shall be used to
secure the Sellers’ indemnification obligations described under Article IX hereof. Subsequent
distribution of the Escrow Amount to the Sellers shall be made, pro rata, in accordance with
respect to their respective percentage allocation set forth on Schedule 2.2.1(a) hereof subject to
the terms and conditions provided in Section 9.9 and the Escrow Agreement.

ARTICLE III

REPRESENTATIONS AND WARRANTIES

     3.1 General Statement. The parties make the representations and warranties to each other which are set forth in this
ARTICLE III. All such representations and warranties and all representations and warranties which
are set forth elsewhere in this Agreement and in any financial statement, exhibit, certificate or
other document delivered by a party hereto to any other party pursuant to this Agreement or in
connection herewith shall survive the execution of this Agreement (and none shall merge into any
instrument of conveyance), regardless of any investigation or lack of investigation by any of the
parties to this Agreement. No specific representation or warranty shall limit the generality or
applicability of a more general representation or warranty. All representations and warranties of
the Company and the Sellers are made subject to the exceptions noted in the Disclosure Schedule.

- 8 -

 

     3.2 Representations and Warranties of Purchaser. Purchaser represents and warrants to
Sellers as follows:

          3.2.1 Organization, Existence and Good Standing. Purchaser is a corporation duly
organized, validly existing and in good standing under the Laws of the State of Delaware.

          3.2.2 Power and Authority. Purchaser has the corporate power and authority to
execute, deliver and perform this Agreement and each of the documents and instruments required to
be entered into pursuant to this Agreement, and to consummate the transactions contemplated hereby
and thereby. The execution, delivery and performance by Purchaser of this Agreement and each of
the documents and instruments required to be entered into pursuant to this Agreement, and the
consummation by Purchaser of the transactions contemplated hereby and thereby, has been duly and
validly authorized by all necessary corporate action and such authorization has not been withdrawn
or amended in any manner.

          3.2.3 Enforceability. This Agreement has been duly executed and delivered by
Purchaser. Assuming due and valid authorization, execution and delivery of this Agreement by the
Company and each Seller, this Agreement is or will be the legal, valid and binding obligation of
Purchaser, enforceable against Purchaser in accordance with its terms, except that (a) such
enforcement may be subject to applicable bankruptcy, insolvency, reorganization, moratorium or
other similar Laws, now or hereafter in effect, affecting creditors’ rights generally, and (b) 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.

          3.2.4 Consents. No consent, authorization, order or approval of, or filing or
registration with, any Governmental or Regulatory Authority is required for or in connection with
the execution of this Agreement by the Purchaser or the consummation by Purchaser of the
transactions contemplated hereby.

          3.2.5 Conflicts Under Constituent Documents or Laws. Neither the execution and
delivery of this Agreement by the Purchaser, nor the consummation by the Purchaser of the
transactions contemplated hereby, will conflict with or result in a breach of any of the terms,
conditions or provisions of the Purchaser’s articles of incorporation or bylaws, of any statute or
administrative regulation, or of any order, writ, injunction, judgment or decree of any
Governmental or Regulatory Authority or of any arbitration award to which the Purchaser is a
party to or by which the Purchaser is bound.

          3.2.6 Brokers. Neither Purchaser nor any of its Affiliates has dealt with any Person
who is entitled to a broker’s commission, finder’s fee, investment banker’s fee or similar payment
from Sellers or the Company for arranging the transactions contemplated hereby or introducing the
parties to each other.

     3.3 Representations and Warranties of the Company and Sellers. Each of the Company
and the Controlling Sellers jointly and severally, and each of the Participating Sellers severally,
and not jointly, and solely in respect of such Participating Seller’s Percentage Interest,
represent and warrant to Purchaser that, except as set forth in the Disclosure Schedule:

- 9 -

 

          3.3.1 Organization, Existence and Good Standing. The Company is a corporation duly
organized, validly existing and in good standing under the Laws of the State of Georgia. Each
Subsidiary is a duly organized corporation or limited liability company, as the case may be,
validly existing and in good standing under the Laws of its respective state of organization.

          3.3.2 Foreign Good Standing. The Company and each Subsidiary has qualified as a
foreign corporation, and is in good standing, under the Laws of all jurisdictions where the nature
of its respective business or the nature or location of its respective assets requires such
qualification.

          3.3.3 Power and Authority. The Company and each Subsidiary has all necessary
corporate power and authority to carry on its respective business as such business is now being
conducted. The Company has the corporate power and authority to execute, deliver and perform this
Agreement and each of the documents and instruments required to be entered into by it pursuant to
this Agreement, and to consummate the transactions contemplated hereby and thereby. The execution,
delivery and performance by the Company of this Agreement and each of the documents and instruments
required to be entered into pursuant to this Agreement, and the consummation by the Company of the
transactions contemplated hereby and thereby, have been duly and validly authorized by all
necessary corporate action and such authorization has not been withdrawn or amended in any manner.

          3.3.4 Enforceability. This Agreement has been duly executed and delivered by the
Company. Assuming due and valid authorization, execution and delivery of this Agreement by
Purchaser, this Agreement is or will be the legal, valid and binding obligation of the Company,
enforceable against the Company in accordance with its terms, except that (a) such enforcement may
be subject to applicable bankruptcy, insolvency, reorganization, moratorium or other similar Laws,
now or hereafter in effect, affecting creditors’ rights generally; and (b) the remedy of specific
performance and injunctive and other forms of equitable relief that may be subject to equitable
defenses and to the discretion of the court before which any proceeding therefor may be brought.

          3.3.5 Consents. No consent, authorization, order or approval of, or filing or
registration with, any Governmental or Regulatory Authority is required for or in connection with
the execution of this Agreement by the Company or the consummation by the Company of the
transactions contemplated hereby.

          3.3.6 Conflicts Under Constituent Documents or Laws. Neither the execution and
delivery of this Agreement by the Company, nor the consummation by the Company of the transactions
contemplated hereby, will conflict with or result in a breach of any of the terms, conditions or
provisions of the Company’s articles of incorporation or bylaws, the organization documents of any
of the Subsidiaries, of any statute or administrative regulation, or of any order, writ,
injunction, judgment or decree of any Governmental or Regulatory Authority or of any arbitration
award to which the Company and the Subsidiaries are party to or by which the Company or the
Subsidiaries are bound.

- 10 -

 

          3.3.7 Conflicts Under Contracts. None of the Company or the Subsidiaries is a party
to, or bound by, any unexpired, undischarged or unsatisfied Contract under the terms of which
performance by the Company or the Subsidiaries according to the terms of this Agreement will be a
default or an event of acceleration, or grounds for termination, modification or cancellation, or
whereby timely performance by the Company or the Subsidiaries according to the terms of this
Agreement may be prohibited, prevented or delayed.

          3.3.8 Subsidiaries and Affiliates. With the exception of those Subsidiaries and
Affiliates that are specifically set forth on Schedule 3.3.8 of the Disclosure Schedule, the
Company or any Subsidiary does not hold or beneficially own any direct or indirect interest
(whether a partnership, joint venture, common or preferred stock or any comparable ownership
interest in any Person that is not a corporation), or any subscriptions, options, warrants, rights,
calls, convertible securities or other agreements or commitments for any interest in any Person.

          3.3.9 Directors and Officers. The names of (i) each director and officer of the
Company and (ii) each member, manager and officer of each Subsidiary, in each case, along with his
or her respective position(s) in the Company or in any Subsidiary, are set forth on Schedule 3.3.9
of the Disclosure Schedule.

          3.3.10 Constituent Documents; Books and Records. True, correct and complete copies of
the articles of incorporation and all amendments thereto, the bylaws as amended and currently in
force, all stock records, and corporate minute books and records, of the Company have been made
available for inspection by Purchaser. Such stock records accurately reflect all Share
transactions, the current stock ownership and a listing of all of the current shareholders of the
Company. The corporate minute books and records of the Company contain true, correct and complete
copies of all resolutions adopted by the directors and shareholders of the Company and represent
actual, bona fide transactions. Such books and records have been maintained in accordance with
sound business practices, including the maintenance of an adequate system of internal controls.
True, correct and complete copies of articles of incorporation, articles of organization, bylaws,
operating agreements and other organization documents, as the case may be, of each of the Company’s
Subsidiaries, as amended and currently in force, have been made available for inspection by
Purchaser.

          3.3.11 Capitalization. The authorized capital stock of the Company consists solely of
100,000 shares of Common Stock. As of the date hereof, only 1,429 shares (constituting all of the
Shares) are issued and outstanding. There are no shares of capital stock of the Company of any
other class authorized, issued or outstanding. All of the issued and outstanding Shares have been
validly issued, are fully paid and nonassessable, and are solely owned beneficially and of record
by the Sellers, free and clear of any Claims of any kind, in the exact number and percentage
interests as set forth in Schedule 3.3.11 of the Disclosure Schedule. There are no outstanding
subscriptions, options, warrants, rights (including preemptive rights), calls, convertible
securities, contractual obligations to repurchase, redeem or otherwise acquire any capital stock of
the Company, voting trusts, shareholders’ agreements or other agreements or commitments of any
character relating to the issued or unissued capital stock or other securities of the Company or
obligating the Company to issue any securities of any kind. With the exception of the Amended and
Restated Shareholders Agreement, dated February 24, 2005, a true, correct and complete of which has
been made available for inspection by Purchaser, there

- 11 -

 

are no other agreements, voting trusts,
understandings or arrangements by and among the shareholders of the Company.

          3.3.12 Financial Statements. Complete and accurate copies of the Financial Statements
are contained in Schedule 3.3.12 of the Disclosure Schedule. The Financial Statements present
fairly, in all material respects, the financial position of the Company as of the dates thereof and
the results of operations and cash flows of the Company for the periods covered by said statements,
except for, in the case of the Interim Financial Statements, (a) normal year-end adjustments, which
adjustments will not be material in amount or significance, and (b) the omission of footnote
disclosures. The books and records of the Company and the Subsidiaries properly reflect all of the
transactions entered into by the Company and the Subsidiaries. The Company has furnished to
Purchaser complete and correct copies of any attorney’s responses to audit inquiry letters with
respect to the Company and all management letters from the Company Accountants since its inception.

          3.3.13 Conduct of Business. Since the Interim Financial Statement Date, (a) the
Company and each Subsidiary has conducted its business only in the ordinary course, (b) there has
not been any Material Adverse Effect, (c) there has been no non-renewal or material amendment of
any of the Permits held by or granted to the Company or any Subsidiary, and the Company and its
Subsidiaries have used commercially reasonable efforts to maintain such Permits, (d) there has been
no physical damage, destruction or other casualty loss (whether or not covered by insurance)
affecting any of the real or personal property or equipment of the Company or any Subsidiary in an
amount exceeding $10,000, individually or $50,000 in the aggregate; and (e) none of the Company,
the Subsidiaries or the Sellers has taken or permitted to be taken any of the following actions:
(i) amend the Company’s articles of incorporation or bylaws or any organizational documents of the
Subsidiaries; (ii) split, combine or reclassify the Shares, or make any change in the Company’s or
any Subsidiaries’ authorized capital stock or issue any shares of stock of any class or issue or
become a party to any subscriptions, warrants, rights, options, convertible securities or other
agreements or commitments of any character relating to the issued or unissued capital stock of the
Company or any Subsidiary, or to other equity securities of the Company or any Subsidiary, or grant
any stock appreciation or similar rights; (iii) enter into any Contract or commitment, or amend or
otherwise modify any of the terms of any of the Contracts outside the ordinary course of business
in accordance with past
practices that the Company has not disclosed to Purchaser; (iv) increase the compensation
payable to any employee, except in the ordinary course of business consistent with past practices
as described in the Disclosure Schedule; (v) establish or modify any targets, goals, bonuses, pools
or similar provisions under any Benefit Plan, employment Contract or other employee compensation
arrangement, independent contractor Contract or other compensation arrangement; (vi) incur or
commit to incur any capital expenditures not set forth in the Disclosure Schedule in excess of
$2,500 in any instance or $5,000 in the aggregate; (vii) sell, transfer or otherwise dispose of any
asset or property, including any Intellectual Property, other than transfers of cash in payment of
the Company’s or a Subsidiary’s Liabilities in the ordinary course of business in accordance with
past practices that the Company has previously disclosed to Purchaser; (viii) acquire any assets or
properties from any other Person, other than acquisitions in the ordinary course of business,
consistent with past practice; (ix) incur, assume or guarantee any long-term or short-term
Indebtedness, other than Indebtedness incurred in the ordinary course of business in accordance
with past practices that the Company has previously disclosed to Purchaser; (x)

- 12 -

 

enter into any
operating lease, other than in the ordinary course of business, consistent with past practice, and
any lease for real property; (xi) pay, discharge or satisfy any claim, obligation or Liability
arising other than in the ordinary course of business, other than the payment, discharge or
satisfaction of Liabilities reflected or reserved against in the Interim Financial Statements;
(xii) fail to pay or delay payment of any Claim or other Indebtedness when due (unless being
contested in good faith); (xiii) commence a lawsuit other than for the routine collection of bills;
(xiv) acquire or agree to acquire by merging or consolidating with, or by purchasing a substantial
portion of the assets of, or by any other manner, any business or any corporation, partnership,
association or other business organization or division thereof; (xv) make or change any election in
respect of Taxes, adopt or change any accounting method in respect of Taxes, file any Tax return or
any amendment to a Tax return, enter into any closing agreement, settle any claim or assessment in
respect of Taxes, or consent to any extension or waiver of the limitation period applicable to any
claim or assessment in respect of Taxes, or make any distribution of funds or other assets to the
Sellers; (xvi) reduce the amount of any insurance coverage provided by existing insurance policies,
or fail to renew any such insurance policy; (xvii) do any act or omit to do any act, or permit any
act or omission to occur, which will cause a breach by the Company, or any Subsidiary, of any
Contract to which it is party; (xviii) institute or amend any employee benefit program or fringe
benefit program with respect to the employees of the Company or any Subsidiary; (xix) enter into or
modify any written employment Contract with any Person; (xx) fail to maintain or renew any Permits
or fail to comply with any applicable Law; (xxi) make any change to the Company’s or any
Subsidiary’s accounting methods, principles or practices; (xxii) revalue any of its assets,
including writing off notes or Accounts Receivable or writing down any other assets; (xxiii)
terminate or waive any right of substantial value; (xxiv) alter the conduct or operations of its
business in any material respect; or (xxv) take or agree in writing or otherwise to take any of the
actions described in this Section 3.3.13.

          3.3.14 Liabilities. Neither the Company nor any of the Subsidiaries has any
Liabilities except for (a) Liabilities provided for or reserved against in the Financial Statements
and not discharged subsequent to the dates of the Financial Statements and (b) Liabilities which
have been incurred by the Company or the Subsidiaries subsequent to the Interim Financial Statement
Date in the ordinary course of the Company’s business and not discharged since the Interim
Financial Statement Date. Neither the Company nor any of the Subsidiaries has any Liability that
relates to or has arisen out of a breach of Contract, breach of warranty, tort, or
infringement by or against the Company or any claim or lawsuit involving the Company or the
Subsidiaries. With the exception of those specifically set forth on Schedules 2.2.1(b) and
2.2.1(c) of the Disclosure Schedule, the Company does not have any Indebtedness in the nature of
borrowed money from any bank or other lender, or any guarantee thereof.

          3.3.15 Adequate Cash. The Company and the Subsidiaries have adequate cash on hand or
borrowing power to satisfy all accrued short-term liabilities and all trade payables of the Company
and the Subsidiaries as of the date hereof. All borrowings by the Company under construction draw
loans have been applied, in accordance with the Company’s use of funds representations to the
applicable lender, to trade vendors and not for employee compensation or other general obligations
of the Company.

          3.3.16 Assets. The Company and the Subsidiaries have good title to their respective
assets, free and clear of any Claims, except for Permitted Liens. Except as disclosed

- 13 -

 

in Schedule
3.3.16 of the Disclosure Schedule, no unreleased mortgage, trust deed, chattel mortgage, security
agreement, financing statement or other instrument encumbering any of the assets of the Company or
the Subsidiaries has been recorded, filed, executed or delivered. The Company’s and the
Subsidiaries’ assets are adequate to conduct their respective businesses as each is presently being
conducted. The Company’s and the Subsidiaries’ respective assets and items of tangible personal
property are in good operating condition and repair, normal wear and tear excepted.

          3.3.17 Accounts Receivable. All of the Accounts Receivable reflected on the Interim
Financial Statements or incurred in the normal course of business since the Interim Financial
Statement Date have arisen from bona fide transactions in the ordinary course of business and, to
the extent not previously collected, are fully collectible, net of any allowance for doubtful
accounts shown on the Interim Financial Statements, in the ordinary course of business in
accordance with their terms and assuming that the methods of collection practices and procedures
used in collection of the Accounts Receivable are consistent with those historically used by the
Company and the Subsidiaries. None of the Accounts Receivable is or will be at the Closing Date
subject to any counterclaim or set-off. All reserves, allowances and discounts with respect to the
Accounts Receivable were and are adequate and consistent in extent with reserves, allowances and
discounts previously maintained by the Company and the Subsidiaries in the ordinary course of
business.

          3.3.18 Insurance. Schedule 3.3.18 of the Disclosure Schedule contains a true, correct
and complete list and description (including insurer, coverages, annual premium, deductibles,
limitations and expiration dates) of all insurance policies (including fire and casualty, general
liability, theft, life, workers’ compensation, directors and officers, business interruption,
reinsurance and all other forms of insurance) which are owned by the Company and the Subsidiaries
or which name the Company or the Subsidiaries as an insured (or loss payee), including without
limitation those which pertain to the Company’s and the Subsidiaries’ respective assets, employees
or operations. All such insurance policies are in full force and effect, all premiums have been
paid thereunder and none of the coverage provided by such policies will terminate or lapse by
reason of any of the transactions contemplated by this Agreement. In the three year period ending
on the date hereof, neither the Company nor the Subsidiaries has received any written notice from
or on behalf of any insurance carrier issuing
such insurance policies to the effect that insurance rates will thereafter be substantially
increased, there will thereafter be no renewal of an existing policy, or that material alteration
of any owned or leased personal or real property, purchase of additional equipment, or material
modification of the Company’s or its Subsidiaries methods of doing business, will be required or is
suggested. With the exception of those set forth on Schedule 3.3.18, there are no pending claims
that have been denied insurance coverage. Neither the Company nor any of the Subsidiaries has
failed to give any notice or present any claim under any insurance policy in due and timely fashion
or as required by any insurance policy. Schedule 3.3.18 of the Disclosure Schedule sets forth a
list of all claims made under any insurance policies covering the Company and the Subsidiaries in
the last three years. Neither the Company nor any of the Subsidiaries has received notice that any
insurer under any policy is denying, disputing or questioning liability with respect to a claim
thereunder or defending under a reservation of rights clause.

- 14 -

 

          3.3.19 Bank Accounts. Schedule 3.3.19 of the Disclosure Schedule contains a list
showing: (a) the name of each bank, safe deposit company or other financial institution in which
the Company has an account, lock box or safe deposit box, (b) the names of all Persons authorized
to draw thereon or to have access thereto and the names of all Persons, if any, holding powers of
attorney from the Company or any Subsidiary, and (c) all instruments or agreements to which the
Company or any Subsidiary is a party as an endorser, surety or guarantor, other than checks
endorsed for collection or deposit in the ordinary course of business.

          3.3.20 Taxes.

               (a) The Company and each Subsidiary has properly completed and filed on a timely basis all
Returns required to be filed. Such Returns are accurate and complete in all material respects. As
of the time of filing, the foregoing Returns correctly reflected the facts regarding the income,
business, assets, operations, activities, status and other matters of or information regarding the
Company or the Subsidiaries required to be shown thereon.

               (b) With respect to all amounts in respect of Taxes imposed upon the Company or any
Subsidiary or for which the Company or any Subsidiary is or could be liable, whether to taxing
authorities or to other Persons (as, for example, under tax allocation agreements), with respect to
all taxable periods or portions of periods ending on or before the Closing Date, all applicable
Laws have been complied with and all amounts required to be paid by the Company or any Subsidiary
to taxing authorities have been paid.

               (c) To the Knowledge of the Company, no issues have been raised and are currently pending by
any taxing authority in connection with any of the Returns. No waivers of statutes of limitation
with respect to the Returns have been given by or requested from the Company or any Subsidiary.
All deficiencies asserted or assessments made as a result of any examinations of Returns previously
filed by the Company or any Subsidiary have been fully paid, or are fully reflected as a liability
in the Financial Statements and the Interim Financial Statements, or are being contested and an
adequate reserve therefor has been established and is fully reflected as a liability in the
Financial Statements and the Interim Financial Statements.

               (d) Neither Company nor any Subsidiary is a party to or bound by any tax indemnity, tax
sharing or tax allocation agreement.

               (e) All material elections with respect to Taxes affecting the Company or the Subsidiaries are
set forth in Schedule 3.3.20 of the Disclosure Schedule.

               (f) None of the assets of the Company or any Subsidiary is “tax-exempt use property” within
the meaning of Section 168(h) of the Code.

               (g) Neither the Company nor any Subsidiary has entered into a reportable transaction with the
meaning of Section 6011 of the Code or the regulations thereunder.

               (h) Neither the Company nor any Subsidiary has agreed to make, nor is required to make, any
adjustment under Section 481(a) of the Code by reason of a change in accounting method or
otherwise.

- 15 -

 

               (i) None of the Sellers is a Person other than a United States person within the meaning of
the Code and the transactions contemplated hereby are not subject to the withholding provisions of
Section 3406 or subchapter A of Chapter 3 of the Code.

               (j) The Company and each Subsidiary has disclosed on its Returns all positions taken therein
that could reasonably give rise to a substantial understatement of Tax within the meaning of
Section 6662 of the Code.

               (k) Neither the Company nor any Subsidiary has had a permanent establishment in any foreign
country, as defined in any applicable Tax treaty or convention between the United States and such
foreign country.

               (l) The unpaid Taxes of the Company or the Subsidiaries do not exceed the reserve for Tax
liability (excluding any reserve for deferred Taxes established to reflect timing differences
between book and Tax income) set forth or included in the Interim Financial Statements, as adjusted
for the passage of time through the Closing Date, in accordance with the past practices of the
Company.

               (m) The Company has duly elected to be treated and has been qualified as an “S corporation”
under the Code (and for all pertinent state tax purposes) for each taxable year since its
incorporation, and the Company does not have any potential liability for Tax under Section 1374 of
the Code or comparable provisions under state or local Law. Neither the Company nor the Sellers
have taken any action which would cause a termination of the Company’s “S” election, or which would
disqualify the Company as an S corporation.

          3.3.21 Contracts. Schedule 3.3.21 of the Disclosure Schedule contains a true, correct
and complete list of each undischarged Contract (including all amendments thereto) that is material
to the conduct of the Company’s or any Subsidiaries’ businesses and to which the Company or any
Subsidiary is a party to, including without limitation, all agreements with (a) suppliers or
vendors; (b) independent contractors and subcontractors; (c) developers; and (d) any Governmental
or Regulatory Authority. Furthermore, Schedule 3.3.21 of the Disclosure Schedule contains a true,
correct and complete list of all material personal property and equipment leases, employment
Contracts, consulting Contracts, all agreements of sale for the purchase of homes that have not
closed, all Contracts under which the Company or any
Subsidiary has created, incurred, assumed or guaranteed Indebtedness of more than $10,000, all
Contracts that give the Company or any Subsidiary any right to purchase land, including options,
letters of intent, rights of first offer and other similar Contracts, and all written warranties,
guaranties and/or other similar undertaking with respect to contractual performance extended by the
Company or any Subsidiary. Each Contract required to be set forth on the Disclosure Schedule is in
full force and effect and is valid and enforceable in accordance with its terms. The Company is in
compliance with all material terms and requirements of each such Contract and, to the Knowledge of
the Company, each other Person that is party to any such Contract is in compliance with the terms
and requirements of such Contract. No event has occurred or circumstance exists that (with or
without notice or lapse of time) may contravene, conflict with or result in a violation or breach
of, or give the Company, a Subsidiary or any other Person the right to declare a default or
exercise any remedy under, or to accelerate the maturity or performance of, or to cancel, terminate
or modify any such Contract. There are no

- 16 -

 

renegotiations, attempts to renegotiate or outstanding
rights to negotiate any amount to be paid or payable to or by the Company or any Subsidiary under
any such Contract other than with respect to non-material amounts in the ordinary course of
business, and no Person has made a written demand for such renegotiation. The Company or any
Subsidiary has not released or waived any of its rights under any such Contract.

          3.3.22 Material Adverse Effect. Neither the Company or any Subsidiary has suffered or
been threatened with, and no Seller has knowledge of any facts which may cause or result in, any
Material Adverse Effect including, without limiting the generality of the foregoing, the existence
or threat of any labor dispute, a moratorium or permit allocation scheme or any changes that may
have a Material Adverse Effect on any relationship between the Company or a Subsidiary and its
respective customers, suppliers or employees or related to any Contract.

          3.3.23 Suppliers. Set forth in Schedule 3.3.23 of the Disclosure Schedule are the
names and addresses of all the suppliers from which the Company or the Subsidiaries ordered
homebuilding supplies, or other goods or services with an aggregate purchase price of $5,000 or
more during the twelve-month period ended November 30, 2005 and the amount for which each such
supplier invoiced the Company or the Subsidiaries during such period. The Company or any
Subsidiary has not received any notice or has any reason to believe that any such supplier will not
sell supplies, merchandise and other goods to the Company or to any Subsidiary at any time after
the Closing Date on terms and conditions substantially similar to those used in its current sales
to the Company or to the Subsidiary, subject only to general and customary price increases and
decreases.

          3.3.24 Related Parties Transactions. With the exception of those items set forth
Schedule 3.3.24 of the Disclosure Schedule, neither Company nor any Subsidiary has entered into any
Contracts, arrangements or other business relationships with any of the Related Parties other than
normal employment arrangements and Benefit Plans (all of which are disclosed in the Disclosure
Schedule). With the exception of the shareholder notes that are set forth in Schedule 3.3.24 of
the Disclosure Schedule, neither the Company nor any Subsidiary is owed or owes any amount from or
to the Related Parties (excluding reasonable and customary employee compensation and other ordinary
incidents of employment). No property or interest in any property which relates to and is or will
be necessary or useful in the present or currently contemplated future operation of the business of
the Company or a Subsidiary, is presently
owned by or leased by or to any Related Party. Neither the Company nor any Related Party has
an interest, directly or indirectly, in any business, corporate or otherwise, which is in
competition with the business of the Company or any Subsidiary.

          3.3.25 Permits. Schedule 3.3.25 of the Disclosure Schedule contains a true, correct
and complete list of, and the Company possesses, all Permits which are required in order for the
Company and each Subsidiary to conduct its business as presently conducted or proposed to be
conducted. The Company, the Subsidiaries and Sellers have delivered complete and accurate copies
of each Permit to Purchaser. The Company and each Subsidiary has not received any citation,
suspension, revocation, limitation, warning or similar notice regarding the Permits. With the
exception of those jurisdictions set forth on Schedule 3.3.25 of the Disclosure Schedule, neither
the Company nor any Subsidiary does not have any operations outside of the State of Georgia.

- 17 -

 

          3.3.26 Employee Benefit Plans. With respect to the Benefit Plans of the Company:

               (a) The Company does not maintain, administer or contribute to any Benefit Plan other than
those Benefit Plans set forth on Schedule 3.3.26 of the Disclosure Schedule.

               (b) The Company does not maintain or contribute to any plan or arrangement providing medical
or life insurance benefits to former employees or their dependents, other than benefits provided in
the event of disability and conversion privileges.

               (c) Each Benefit Plan complies, in form and operation, in all material respects, with all
applicable Laws, including ERISA and the Code.

               (d) All reports and information relating to each Benefit Plan required to be filed with any
Governmental or Regulatory Authority have been timely filed and are accurate in all material
respects. All reports and information relating to each Benefit Plan required to be disclosed or
provided to participants or their beneficiaries have been timely disclosed or provided. To the
Knowledge of the Company, no fiduciary of any Benefit Plan has committed a breach of any
responsibility or obligation imposed upon fiduciaries under ERISA with respect to such Benefit
Plan.

               (e) There are no actions, suits, proceedings, investigations or hearings pending or, to the
Knowledge of the Company, overtly threatened with respect to any Benefit Plan or any fiduciary or
assets thereof, other than claims for benefits arising in the ordinary course of any Benefit Plan.

          3.3.27 Employee Relations. With respect to the employees of the Company and any
Subsidiary:

               (a) To the Knowledge of the Company, no employee of the Company or a Subsidiary is a party to,
or is otherwise bound by, any Contract, including any confidentiality, noncompetition or
proprietary rights agreement, between such employee and any other Person that materially adversely
affects or will affect the performance of that employee’s
duties as an employee of the Company or any Subsidiary following the Closing. To the
Knowledge of the Company, no officer or other key employee of the Company or a Subsidiary intends
to terminate employment with the Company or any Subsidiary prior to or following the Closing.

               (b) There is not presently pending or, to the Knowledge of the Company, overtly threatened
any: (i) strike, slowdown, picketing, work stoppage or employee grievance process; (ii) charge,
grievance proceeding or other claim against or affecting the Company or any Subsidiary relating to
the alleged violation of any Law pertaining to labor relations or employment matters, including any
charge or complaint filed by an employee or union with the National Labor Relations Board, the
Equal Employment Opportunity Commission or any comparable Governmental or Regulatory Authority;
(iii) union organizational activity or other labor or employment dispute against or affecting the
Company; or (iv) application for certification of a collective bargaining agent.

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               (c) To the Knowledge of the Company, no event has occurred or circumstances exist that could
provide the basis for any work stoppage or other labor dispute with respect to the Company or any
Subsidiary. There is no lockout of any employees of the Company, and no such action is
contemplated by the Company or any Subsidiary.

               (d) No employee of the Company or a Subsidiary has any claim against the Company or any
Subsidiary (whether under Law, any employment Contract or otherwise) on account of or for: (i)
overtime pay, other than overtime pay for the current payroll period, (ii) wages or salaries, other
than wages or salaries for the current payroll period, or (iii) vacations, sick leave, time off or
pay in lieu of vacation, sick leave or time off, other than vacation, sick leave or time off (or
pay in lieu thereof) earned in the 12 month period immediately prior to the date of this Agreement.
The Company and each Subsidiary has made all required payments to the relevant unemployment
compensation reserve account with the appropriate governmental departments with respect to its
respective employees and such accounts have positive balances.

               (e) Schedule 3.3.27 of the Disclosure Schedule contains a true, correct and complete list of
all employees of the Company and Subsidiaries as of the date of this Agreement, together with their
base salaries, bonuses and positions. The Disclosure Schedule correctly states the number of
employees laid-off by Company or any Subsidiary in the 90 days preceding the date hereof.

               (f) To the Knowledge of the Company, no employee of the Company or any Subsidiary is an
undocumented alien or has been hired in violation of the immigration Laws.

               (g) The employees and former employees of the Company and any Subsidiary who have (or have
had) access to confidential or proprietary information of the Company have executed confidentiality
and assignment of inventions forms which, to the Knowledge of the Company, are adequate to protect
the Company’s or any Subsidiaries’ proprietary interest therein.

               (h) The employment of each of the Company’s and Subsidiaries’ employees, other than James B.
Parker, Jr. and Andrew H. Chandler, Jr., is terminable at will without cost to the Company, except
for payments required under the Benefit Plans and the payment of accrued salaries or wages and
vacation pay.

          3.3.28 Litigation and Claims. Except as set forth on Schedule 3.3.28, there is no
litigation or proceeding, at law or in equity, and there are no proceedings or governmental
investigations before any Governmental or Regulatory Authority, pending or, to the Knowledge of the
Company, threatened against any Seller, the Company, any Subsidiary or the officers, directors or
Affiliates of the Company, with respect to or affecting the Company’s or any Subsidiary’s
operations, Contracts, business or assets, or with respect to the consummation of the transactions
contemplated hereby nor, to the Knowledge of the Company, is there any basis for any of the
foregoing.

- 19 -

 

          3.3.29 Decrees, Orders or Arbitration Awards. The Company and each Subsidiary is not
a party to, or bound by, any decree, order or arbitration award (or agreement entered into in any
administrative, judicial or arbitration proceeding with any Governmental or Regulatory Authority)
with respect to or affecting the Company’s or the Subsidiary’s operations, business or assets.

          3.3.30 Compliance with Laws. The Company and each Subsidiary is not in violation of,
or delinquent in respect to, any decree, order or arbitration award or Law of or agreement with, or
any Permit from, any Governmental or Regulatory Authority to which the property, assets, personnel
or business activities of the Company or any Subsidiary are subject, including Laws relating to
equal employment opportunities, fair employment practices, occupational health and safety, wages
and hours, and discrimination. During the last three years, the Company and each Subsidiary has
not received from any Governmental or Regulatory Authority any written notification with respect to
possible noncompliance of any decree, order, writ, judgment or arbitration award or any Law.

          3.3.31 Environmental Matters. There is no Environmental Claim pending or, to the
Knowledge of the Company, threatened against the Company or any Subsidiary. The Company and each
Subsidiary (a) is in compliance with all applicable Environmental Laws and Environmental Permits,
and (b) possesses all Environmental Permits which are required for the operation of its business
and operations, all of which are set forth on Schedule 3.3.31 of the Disclosure Schedule. The
Company or each Subsidiary has not received any communication alleging that it is not, or at any
time has not been, in compliance with any applicable Environmental Laws or Environmental Permits,
nor has the Company or any Subsidiary received any written notice from any Person with respect to
any Real Property or Leased Real Estate of potential or actual liability or a written request for
information from any Person under or relating to CERCLA or any comparable state or local Law. No
Real Property or Leased Real Estate is currently listed on the National Priorities List or the
Comprehensive Environmental Response, Compensation and Liability Information System, both
promulgated under the CERCLA or any comparable state list. Since acquired or leased by the
Company, (i) there is not and has not been any Hazardous Substances used, generated, treated,
stored, transported, disposed of, handled or otherwise existing on, under or about any Real
Property or Leased Real Estate in violation of Environmental Laws, (ii) there are no underground or
above-ground storage tanks located on any
Real Property or Leased Real Estate, and (iii) all underground or above-ground storage tanks
previously located at any Real Property or Leased Real Estate (and not presently thereat as of the
date hereof), were removed in accordance with all Environmental Laws. There has been no Release
or, to the Knowledge of the Company, any threat of Release, of any Hazardous Substance at or from
any Real Property or Leased Real Estate.

          3.3.32 Real Property.

               (a) Schedule 3.3.32(a) of the Disclosure Schedule contains a true, correct and complete legal
description, street address (to the extent one exists) and tax parcel identification number of each
tract, parcel and subdivided lot constituting all of the Real Property owned by the Company or
Subsidiaries or which is the subject of any Contract to which the Company or any Subsidiary is a
party, and the Disclosure Schedule correctly identifies such Real Property as Fully Developed and
Buildable Land or Undeveloped Land and states whether each

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such tract, parcel or lot is held as
inventory or is used for some other purpose. For Undeveloped Land, the Disclosure Schedule shall
identify the zoning and/or permit approval status of each parcel along with the number of
subdividable lots upon which homes are to be constructed. For Fully Developed and Buildable Land,
the Disclosure Schedule shall identify all subdivided lots upon which a home is fully constructed
or under construction. For lots upon which a home is currently under construction, a percentage of
completion shall be designated for each such lot as of the Closing Date. For existing lots upon
which a home has been fully constructed, the Disclosure Schedule shall designate whether it is a
model, speculative or sold unit as of the Closing Date. Upon Closing, Purchaser will acquire all
of the right, title and interest of the Company in the respective Real Property, including, but not
limited to, any Improvements constructed thereon and any Contracts related thereto. Except as
disclosed in the Disclosure Schedule, the Company (either itself or through its Subsidiaries) owns
good and marketable title to its fee simple estates in the Real Property, free and clear of all
Claims other than the Permitted Liens. True, correct and complete copies of (i) all deeds,
existing title insurance policies, plans of subdivision, all title encumbrances and exceptions and
surveys of or pertaining to the Real Property and (ii) all instruments, agreements and other
documents evidencing, creating or constituting any Claims on the Real Property have been delivered
to Purchaser.

               (b) The use of the Real Property for the various purposes for which it is presently being
used, or for which it is being planned to be used, is permitted under all applicable Laws and is
not subject to “permitted nonconforming” use or structure classifications. All Improvements on the
Real Property are in compliance with all applicable Laws, including those pertaining to zoning,
building and the disabled, are in good repair and in good condition, ordinary wear and tear
excepted, and are free from latent and patent defects. No part of any improvement on the Real
Property encroaches on any real property not included in the Real Property, and there are no
buildings, structures, fixtures or other Improvements primarily situated on adjoining property that
encroach on any part of the Real Property.

               (c) With respect to the Real Property, each lot abuts on and has direct vehicular access to a
public road or has access to a public road via a permanent, irrevocable, appurtenant easement
benefiting such lot, is supplied with public or quasi-public utilities to the boundaries of the lot
and other services appropriate for the operation of the Improvements, if any, located thereon and
no lot for a home is located within any flood plain or area subject to
wetlands regulation or any similar restriction. All offsite easements required in connection
with the development and subsequent construction of homes upon any lots within the Real Property
have been obtained and paid for by the Company or a Subsidiary. With respect to the Real Property,
all water, sewer, electric and telephone facilities and all other utilities required for the normal
use and operation of the residences constructed or to be constructed on the lots are installed
within the streets or sidewalks of the lots and can be connected for use by the residences without
charge except the normal and usual nondiscriminatory tap fees and utilities charges. With respect
to the Real Property, there is no existing or proposed plan to modify or realign any street or
highway or any existing or proposed eminent domain proceeding that would result in the taking of
all or any part of any lot or that would prevent or hinder the continued use of any lot as
heretofore used in the conduct of the Company’s or a Subsidiary’s business.

               (d) For each parcel of Real Property that is subject to a recorded plat, Purchaser has been
provided with a complete copy of such recorded plat. For each Real Property

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or Contract which
constitutes an option to purchase Real Property that is not subject to a recorded plat, the Company
and Sellers have no knowledge of (i) any notification from any Governmental or Regulatory Authority
indicating that such tract or parcel is subject to any Law outside of the ordinary course of
business, or not uniformly imposed on all similar properties within such Governmental or Regulatory
Authority’s jurisdiction or (ii) any notification from any Governmental or Regulatory Authority
indicating that any plans to develop such tract or parcel may not be approved or may be approved
with less density than the current zoning designation Permits.

               (e) Schedule 3.3.32(e) of the Disclosure Schedule contains a true, correct and complete list
of all street addresses and legal descriptions of the Leased Real Estate. All Leased Real Estate is
leased to the Company or a Subsidiary pursuant to written leases, complete and accurate copies of
which have been previously delivered to Purchaser, and all of which are in full force and effect.
Except as set forth in Schedule 3.3.32(e) of the Disclosure Schedule, the Company has not subleased
any Leased Real Estate. To the Knowledge of the Company, the Leased Real Estate is not subject to
any leases or tenancies of any kind, except for the Company’s leases. The Leased Real Estate
constitutes all of the real property and Improvements leased by the Company.

               (f) The Leased Real Estate is not in possession of any adverse possessors, is used in a manner
which is consistent and permitted by applicable zoning ordinances and other Laws without special
use approvals or permits, are served by all water, sewer, electrical, telephone, drainage and other
utilities required for normal operations of the Company’s business, is in good condition and
repair, and requires no work or Improvements to bring it into compliance with any applicable Law or
to repair or maintenance the Improvements thereon. None of the utility companies serving any of
the Leased Real Estate has threatened the Company with any reduction in service.

               (g) To the Knowledge of the Company, there are no challenges or appeals pending regarding the
amount of the real estate Taxes on, or the assessed valuation of, the Leased Real Estate, and no
special arrangements or agreements exist with any Governmental or Regulatory Authority with respect
thereto. There are no condemnation proceedings pending or, to the Knowledge of the Company,
threatened with respect to any portion of the Leased Real
Estate. There is no tax assessment (in addition to the normal, annual general real estate tax
assessment) pending or, to the Knowledge of the Company, threatened with respect to any portion of
the Leased Real Estate.

          3.3.33 Intellectual Property.

               (a) Schedule 3.3.33 of the Disclosure Schedule sets forth a complete and accurate list of any
and all U.S. and foreign copyright registrations, copyright applications, patents and patent
applications, trademark and service mark registrations (including Internet domain name
registrations), trademark and service mark applications and material unregistered trademarks and
service marks included within the Intellectual Property, owned, licensed or otherwise used by the
Company or any Subsidiary (collectively, the “Company Intellectual Property”) and identifies each
as owned, licensed or otherwise used.

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               (b) Schedule 3.3.33 of the Disclosure Schedule sets forth a complete and accurate list of all
Proprietary Software and Software which is licensed, leased or otherwise used by the Company (other
than “off-the-shelf” Software), and identifies which Software is owned, licensed, leased or
otherwise used, as the case may be.

               (c) Schedule 3.3.33 of the Disclosure Schedule sets forth a complete and accurate list of all
Intellectual Property Licenses.

               (d) The Company is the owner of, or has exclusive rights to use, all of the Company
Intellectual Property.

               (e) The conduct of the Company’s business and the exercise of its rights relating to the
Company Intellectual Property do not infringe upon or otherwise violate the intellectual property
rights of any Person.

               (f) To the Knowledge of the Company, no Person is infringing upon or otherwise violating any
of the Company Intellectual Property.

               (g) The Company has not received notice of any claims, and, to the Knowledge of the Company,
there are no pending claims, of any Persons relating to the scope, ownership or use of any of the
Company Intellectual Property.

               (h) The Company has not licensed or sublicensed its rights in any of the Company Intellectual
Property or received or granted any such rights, other than pursuant to Intellectual Property
Licenses.

               (i) All Proprietary Software was developed either by employees of the Company within the scope
of their employment or by independent contractors who have assigned their right to the Company
pursuant to written agreements.

          3.3.34 Product Liability. Each of the residential homes built, sold and delivered by
the Company or a Subsidiary was, at the time of delivery, in compliance in all respects with all
applicable Laws and is, and at all relevant times has been, fit for the ordinary purposes for which
it is intended to be used and conforms to any promises or affirmations of fact made in
connection with the sale. There is no design defect or construction defect or common element
defect with respect to any of such homes and there is no presence of mold or existing water
intrusion issues with respect to a home under construction or built and sold by the Company or a
Subsidiary and neither the Company nor any Subsidiary has received any notice of same from any
contractor, supplier, vendor, contract purchaser or owner of a home constructed by the Company or a
Subsidiary. To the Knowledge of the Company, there are no claims, actions, suits, inquiries,
proceedings or investigations pending or threatened against the Company or any Subsidiary that any
of such homes are defective or were improperly designed or constructed or improperly labeled or
otherwise improperly described for use and there is no known basis for any of the foregoing. Each
of the homes constructed, sold, and delivered by the Company or a Subsidiary has conformed in all
material respects with all basic plans and specifications and applicable contractual commitments
agreed to between the Company or the Subsidiary and the purchaser of such home, and the Company or
the Subsidiary has no Liabilities for replacement thereof or other Damages in connection therewith,
subject only to the reserve for product

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warranty claims set forth on the face of the Financial
Statements, as adjusted for operations and transactions through the Closing Date in accordance with
the past custom and practice of the Company or the Subsidiary.

          3.3.35 Commercial Bribery. None of the Company, Subsidiaries, Sellers, or, to the
Knowledge of the Company, any of the Company’s or any Subsidiary’s former or current officers,
directors, employees, agents or representatives, has made, directly or indirectly, with respect to
the business of the Company or any Subsidiary, any bribes or kickbacks, illegal political
contributions, payments from corporate funds not recorded on the books and records of the Company,
payments from corporate funds to governmental officials, in their individual capacities, for the
purpose of affecting their action or the action of the government they represent, to obtain
favorable treatment in securing business or licenses or to obtain special concessions, or illegal
payments from corporate funds to obtain or retain business. Without limiting the generality of the
foregoing, neither Sellers nor the Company has directly or indirectly made or agreed to make
(whether or not said payment is lawful) any payment to obtain, or with respect to, sales other than
usual and regular compensation to the Company’s employees and sales representatives with respect to
such sales.

          3.3.36 No Omissions. The representations and warranties of the Company, the
Subsidiaries and each Seller in this Agreement, and all representations, warranties and statements
of the Company, the Subsidiaries and each Seller contained in any schedule, Financial Statement,
exhibit, list, certificate or other document delivered pursuant hereto or in connection herewith,
do not omit to state a material fact necessary in order to make the representations, warranties or
statements contained herein or therein not misleading.

          3.3.37 Brokers. With the exception of BB&T Capital Markets, none of the Company, the
Sellers or any of their respective Affiliates has dealt with any Person who is entitled to a
broker’s commission, finder’s fee, investment banker’s fee or similar payment from Purchaser, the
Company or the Sellers for arranging the transactions contemplated hereby or introducing the
parties to each other. The Sellers shall bear full responsibility for any fee or commission that
may be due and payable to BB&T Capital Markets or any other brokers or advisors retained on their
behalf in connection with the transactions that are contemplated by this Agreement.

     3.4 Representations and Warranties of the Sellers. Each Controlling Seller, jointly
and severally in respect of all Sellers, and each Participating Seller individually and solely in
respect of such Seller (and only such Seller) and not jointly and severally in respect of all
Sellers, represents and warrants to Purchaser as follows:

          3.4.1 Power and Authority. Such Seller has full power and authority to execute,
deliver and perform this Agreement and each of the documents and instruments required to be entered
into pursuant to this Agreement, and to consummate the transactions contemplated hereby and
thereby.

          3.4.2 Enforceability. This Agreement has been duly executed and delivered by such
Seller and constitutes a legal, valid and binding agreement of such Seller, enforceable against
such Seller in accordance with its terms, except that (a) such enforcement may be subject

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to
applicable bankruptcy, insolvency, reorganization, moratorium or other similar Laws, now or
hereafter in effect, affecting creditors’ rights generally; and (b) the remedy of specific
performance and injunctive and other forms of equitable relief that may be subject to equitable
defenses and to the discretion of the court before which any proceeding therefor may be brought.

          3.4.3 Consents. No consent, authorization, order or approval of, or filing or
registration with, any Governmental or Regulatory Authority is required for or in connection with
the consummation by such Seller of the transactions contemplated hereby.

          3.4.4 Conflicts With Laws. Neither the execution and delivery of this Agreement by
such Seller, nor the consummation by him or her of the transactions contemplated hereby will
conflict with or constitute a breach of any of the terms, conditions or provisions of any statute
or administrative regulation or of any order, writ, injunction, judgment or decree of any
Governmental or Regulatory Authority, court or of any arbitration award, to which such Seller is a
party or by which such Seller is bound.

          3.4.5 Conflicts Under Contracts. Such Seller is not a party to, or bound by, any
unexpired, undischarged or unsatisfied written or oral Contract, agreement, indenture, mortgage,
debenture, note or other instruments under the terms of which the execution, delivery and
performance by such Seller of this Agreement and the consummation of the transactions contemplated
hereby by such Seller will require a consent, approval, or notice or result in a lien on the Shares
owned by such Seller.

          3.4.6 Title to Shares. Each Seller has good and marketable title to the Shares which
are to be transferred to the Purchaser by such Seller pursuant to this Agreement, free and clear of
any and all Claims (including covenants, conditions, restrictions, voting trust arrangements,
encumbrances, security interests, options and adverse claims or rights whatsoever). No Seller is,
nor will he be, required to give any notice to or obtain any consent or approval from any Person in
connection with the execution and delivery of this Agreement or the consummation or performance of
any of the transactions contemplated by this Agreement.

ARTICLE IV

[INTENTIONALLY OMITTED.]

ARTICLE V

[INTENTIONALLY OMITTED.]

ARTICLE VI

CLOSING

     6.1 Closing Documents. At the Closing, the parties are delivering the documents, and
performing the acts, which are set forth in this ARTICLE VI.

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     6.2 Purchaser’s Deliveries. Purchaser hereby executes and/or delivers to Sellers all
of the following:

          6.2.1 the Closing Payment;

          6.2.2 a certificate of the secretary of Purchaser certifying as true, correct and complete the
following: (a) the incumbency and specimen signature of each officer of Purchaser executing this
Agreement and any other document delivered hereunder on behalf of Purchaser; (b) a copy of
Purchaser’s certificate of incorporation and bylaws; and (c) a copy of the resolutions of
Purchaser’s board of directors authorizing the execution, delivery and performance of this
Agreement and any other documents delivered by Purchaser hereunder;

          6.2.3 a closing certificate executed by an executive officer of Purchaser, on behalf of
Purchaser, pursuant to which Purchaser certifies to Sellers that: (a) all covenants required by
the terms hereof to be performed by Purchaser on or before the Closing Date, to the extent not
waived by Sellers in writing, have been so performed (or, if any such covenant has not been so
performed, indicating that such covenant has not been performed); and (b) all documents to be
executed and delivered by Purchaser at the Closing have been executed by duly authorized officers
of Purchaser;

          6.2.4 the Employment Agreement (including all documentation relating to the grant of
contingent restricted stock of Purchaser) and a Noncompetition Agreement, each to be entered into
with each of James B. Parker, Jr. and Andrew H. Chandler, Jr., respectively, executed by a duly
authorized officer of Purchaser; and

          6.2.5 without limitation by specific enumeration of the foregoing, all other documents
reasonably required from the Company and Sellers to consummate the transactions contemplated
hereby.

     6.3 Company’s and Sellers’ Deliveries.
The Company and Sellers, as applicable, hereby execute and/or deliver to Purchaser all of the
following:

          6.3.1 certificates representing all outstanding Shares, duly endorsed in blank or with duly
executed stock powers attached;

          6.3.2 physical possession of all records, tangible assets, licenses, policies, Contracts,
plans, leases or other instruments owned by or pertaining to the Company which are in the
possession of Sellers;

          6.3.3 the minute books and stock records of the Company and each Subsidiary;

          6.3.4 evidence demonstrating that the Company and the Subsidiaries have adequate cash on hand
or borrowing power to satisfy all accrued short-term liabilities and all trade payables of the
Company and the Subsidiaries as of the date hereof;

          6.3.5 a certificate executed by each Seller, certifying that each Seller is not a person or
entity subject to withholding under the Foreign Investment in Real Property Tax Act, as amended;

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          6.3.6 landlord waivers with respect to all property of the Company located at the Leased Real
Estate, such waivers to be in form and substance reasonably satisfactory to Purchaser;

          6.3.7 copies of all of the Required Consents;

          6.3.8 a Seller Release, in the form of Exhibit D attached hereto, duly executed by
each Seller;

          6.3.9 the written resignations effective as of the Closing Date of such directors, officers
and managers of the Company and each Subsidiary as requested by Purchaser to resign;

          6.3.10 certified copies of (a) the Company’s articles of incorporation issued by the Secretary
of State of the State of Georgia and (b) each Subsidiary’s articles of incorporation or articles of
organization, as the case may be, issued by the secretary of state of the applicable jurisdiction;

          6.3.11 certificates of good standing for each of the Company and its Subsidiaries issued not
earlier than fifteen days prior to the Closing Date, by the secretaries of state of the applicable
jurisdictions;

          6.3.12 a certificate of the secretary of the Company certifying as true, correct and complete
the following: (a) the incumbency and specimen signature of each Seller and each officer of the
Company executing this Agreement and any other document delivered hereunder on behalf of the
Company or Sellers; (b) a copy of the bylaws of the Company; (c) copies of the bylaws or operating
agreements of the Subsidiaries; and (d) a copy of the resolutions of the Company’s board of
directors and shareholders authorizing the execution, delivery and performance of this Agreement
and any other documents delivered by the Company hereunder;

          6.3.13 a closing certificate duly executed by the President of the Company, on behalf of the
Company, and by each Seller, pursuant to which the Company and each Seller certifies to Purchaser
that: (a) all covenants required by the terms hereof to be performed by either the Company and
each Seller on or before the Closing Date, to the extent not waived in writing by Purchaser, have
been so performed (or if any such covenant has not been so performed, indicating that such covenant
has not been performed); and (b) all documents to be executed by the Company and each Seller and
delivered at the Closing have been executed by duly authorized officers of the Company and by each
Seller, as applicable;

          6.3.14 the Employment Agreement (including all documentation relating to the grant of
contingent restricted stock of Purchaser) and a Noncompetition Agreement, each to be entered into
with each of James B. Parker, Jr. and Andrew H. Chandler, Jr., respectively, and each duly executed
by James B. Parker, Jr. and Andrew H. Chandler, Jr., respectively;

          6.3.15 confidentiality and noncompetition agreements to be entered into with employees of the
Company as may be requested by Purchaser;

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          6.3.16 the written opinions of Schreeder, Wheeler & Flint, LLP, counsel to the Company and the
Sellers, dated as of the Closing Date, in substantially the form of Exhibit F attached
hereto; and

          6.3.17 without limitation by specific enumeration of the foregoing, all other documents
reasonably required from Purchaser to consummate the transactions contemplated hereby.

ARTICLE VII

POST-CLOSING AGREEMENTS

     7.1 Post-Closing Agreements. From and after the Closing, the parties shall have the
respective rights and obligations which are set forth in the remainder of this ARTICLE VII.

     7.2 Inspection of Records. Each Seller shall make his books and records (including
work papers in the possession of his accountants) with respect to his investment in the Company
available for inspection by Purchaser, or by Purchaser’s duly authorized representatives, for
reasonable business purposes at all reasonable times during normal business hours, for a seven year
period after the Closing Date, with respect to all transactions of the Company occurring prior to
the Closing, and the historical financial condition, assets, Liabilities, operations and cash flows
of the Company. As used in this Section 7.2, the right of inspection includes the right to make
extracts or copies.

     7.3 Use of Trademarks. Each Seller shall not use, and shall not license or permit any
third party to use, any name, slogan, logo or trademark which is deceptively similar to any of the
names or trademarks used in connection with the business of the Company or any Subsidiary.

     7.4 Payments of Accounts Receivable. In the event any Seller shall receive any
instruments of payment of any of the Accounts Receivable, such Seller shall forthwith deliver such
instruments to the Company or Purchaser, endorsed where necessary, without recourse, in favor of
the Company or Purchaser.

     7.5 Third Party Claims. The parties hereon shall cooperate with each other with
respect to the defense of any Third Party Claims subsequent to the Closing Date which are not
subject to the indemnification provisions contained in ARTICLE IX, provided that the party
requesting cooperation shall reimburse the other party for the other party’s reasonable
out-of-pocket costs and expenses of furnishing such cooperation.

     7.6 Further Assurances. The parties shall execute such further documents, and perform
such further acts, as may be necessary to transfer and convey the Shares to Purchaser, on the terms
herein contained, and to otherwise comply with the terms of this Agreement and consummate the
transactions contemplated hereby.

     7.7 Company’s Release. The Company shall deliver to Sellers the Company’s Release, in
the form of Exhibit E attached hereto and duly executed by its authorized officer,
immediately after Closing.

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ARTICLE VIII

OTHER AGREEMENTS

     8.1 Confidentiality. Each of the parties hereto hereby agrees to keep the existence
and terms of this Agreement (except to the extent contemplated hereby), and such information or
knowledge obtained pursuant to the negotiation and execution of this Agreement or the effectuation
of the transactions contemplated hereby, confidential; provided, however, that the
foregoing shall not apply to information or knowledge which (a) a party can demonstrate was already
lawfully in its possession prior to the disclosure thereof by the other party, (b) is or becomes
generally known to the public and did not become so known through any violation of Law, or a
confidentiality agreement or other contractual, legal or fiduciary obligation of confidentiality of
the disclosing party or any other party with respect to such information, (c) is later lawfully
acquired by such party without confidentiality restrictions from other sources not bound by
applicable confidentiality restrictions, (d) is required to be disclosed under applicable Law or
the rules of the Securities and Exchange Commission or any stock exchange, (e) is required to be
disclosed to satisfy a condition of this Agreement and (f) is required to be disclosed by order of
court or Governmental or Regulatory Authority with subpoena powers (provided that such party shall
have provided the other party with prior notice of such order and an opportunity to object or seek
a protective order and take any other available action) or in connection with any lawsuit or
arbitration proceeding between the parties hereto (and in such event only to the extent such
disclosure is required).

     8.2 Publicity. Except as otherwise required by Law or the rules of the Securities and
Exchange Commission or any stock exchange, press releases and other publicity concerning this
transaction shall be made only with the prior agreement of Sellers and Purchaser (and in any event,
the parties shall use all reasonable efforts to consult and agree with each other with respect to
the content of any such required press release or other publicity).

     8.3 Certain Tax Matters.

          8.3.1 The Company and Sellers shall be liable for, duly prepare, or cause to be prepared,
file, or cause to be filed, and pay on a timely basis, all tax returns for the Company for any
taxable year or period ending on or before the Closing Date. The Company and Sellers shall provide
such tax returns to Purchaser for review at least 30 days prior to the applicable due date
(including extensions where applicable) and shall make such changes to the tax returns as may be
reasonably requested by Purchaser. No Seller shall file any amended tax returns with respect to
the Company without the prior written consent of Purchaser.

          8.3.2 Purchaser shall have the right to control any audit or examination of the Company’s
Taxes by any Governmental or Regulatory Authority, and have the right to initiate any claim for
refund or amended return, and contest, resolve and defend against any assessment, notice of
deficiency or other adjustment or proposed adjustment of Taxes (collectively with any audits or
examinations, “Tax Proceedings”) for all taxable periods of the Company. The Sellers shall have
the right (but not the duty) to participate in any Tax Proceedings with respect to taxable periods
for which the Sellers are charged with the payment of the Company’s Taxes, and to employ counsel,
at their own expense, separate from the counsel employed by Purchaser. Purchaser and Sellers shall
cooperate in the defense or prosecution of any Tax Proceeding.

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Purchaser and Sellers agree to
retain or cause to be retained all books and records pertinent to the Company until the applicable
period for assessment under applicable Law (giving effect to any and all extensions or waivers) has
expired, and to abide by or cause the abidance with all record retention agreements entered into
with any Governmental or Regulatory Authority. The Sellers shall execute or cause to be executed
any powers of attorney or other documents reasonably requested by Purchaser to enable Purchaser to
take any and all actions it reasonably needs to take with respect to any Tax Proceedings.

     8.4 Employee Matters. The Company and each Seller will use their best efforts to
retain, and will assist Purchaser’s efforts to retain, as may be reasonably requested by Purchaser,
key employees of the Company, and/or to find suitable replacements in the event of the termination
of employment of any such key employees. At the Closing, Purchaser will enter into Employment
Agreements and Noncompetition Agreements with each of James B. Parker, Jr. and Andrew H. Chandler,
Jr., respectively.

     8.5 Personal Guarantees.
Purchaser shall either (a) at Closing assume the personal guarantees previously made by any
Seller with respect to any Assumed Institutional Debt, as such guarantees are set forth on Schedule
8.5, to the extent that any guaranteed parties thereunder consent to the substitution of Purchaser
thereunder or (b) indemnify and hold harmless such Seller on account of any such personal
guarantees, to the extent that any guaranteed parties thereunder do not consent to the substitution
of Purchaser thereunder.

     8.6 Sellers’ Representatives.

          8.6.1 Each of the Sellers hereby irrevocably constitutes and appoints the Controlling Sellers,
acting individually or collectively, as the Sellers’ Representative to represent the interests of
the Sellers and to act as the attorneys-in-fact and agents for and on behalf of each Seller. This
power is irrevocable and coupled with an interest, and shall not be affected by the death,
incapacity, illness, dissolution or other inability to act of any of the Sellers. Each Seller
hereby irrevocably grants each Sellers’ Representative full power and authority: (a) to execute and
deliver, on behalf of such Seller, and to accept delivery of, on behalf of such Seller, such
documents as may be deemed by each Sellers’ Representative, in his sole discretion, to be
appropriate to consummate this Agreement and the other transactions contemplated hereby, including
without limitation, the Escrow Agreement; (b) to endorse and to deliver on behalf of such Seller,
certificates representing the Shares to be surrendered by such Seller at the Closing; (c) to
acknowledge receipt at the Closing of the Closing Payment, and to certify, on behalf of such
Seller, as to the accuracy of the representations and warranties of such Seller under, or pursuant
to the terms of, this Agreement; (d) to dispute or refrain from disputing, on behalf of such
Seller, any claim made by Purchaser under this Agreement; (e) to negotiate and compromise, on
behalf of such Seller, any dispute that may arise under, and to exercise or refrain from exercising
any remedies available under, this Agreement; (f) to execute, on behalf of such Seller, any
settlement agreement, release or other document; (g) to give or to agree to, on behalf of such
Seller, any and all consents, waivers, amendments or modifications, deemed by the Sellers’
Representative, in his sole discretion, to be necessary or appropriate, under this Agreement, and,
in each case, to execute and deliver any documents that may be necessary or appropriate in
connection therewith; (h) to enforce, on behalf of such Seller, any claim against Purchaser arising
under this Agreement; (i) to engage attorneys, accountants and agents at the

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expense of the
Sellers; and (j) to give such instructions and to take such action or refrain from taking such
action, on behalf of such Seller, as the Sellers’ Representative deem, in his sole discretion,
necessary or appropriate to carry out the provisions of this Agreement.

          8.6.2 Each Seller hereby agrees that: (a) Purchaser shall be entitled to rely on any and all
action taken by one or both Sellers’ Representatives, under this Agreement or documents
contemplated hereby without any liability to, or obligation to inquire of, any of the Sellers or
the other Sellers’ Representative; (b) notice to any Sellers’ Representative, delivered in the
manner provided in Section 11.1, shall be deemed to be notice to all Sellers for the purposes of
this Agreement; (c) the power and authority of each Sellers’ Representative, as described in this
Agreement, shall continue in force until all rights and obligations of the Sellers under this
Agreement shall have terminated, expired or been fully performed; and (d) if both of the Sellers’
Representatives resign or are removed or otherwise cease to function in their capacity as such for
any reason whatsoever, and no successor is appointed by the Sellers within thirty (30) days, then
Purchaser shall have the right to appoint one or more of the Sellers to act as the substitute
Sellers’ Representative, to serve as described in this Agreement.

          8.6.3 Each Seller, jointly and severally, shall indemnify the Purchaser Indemnitees against,
and agree to hold the Purchaser Indemnitees harmless from, any and all Damages incurred or suffered
by any Purchaser Indemnitee arising out of, with respect to or incident to the operation of, or any
breach of any covenant or agreement pursuant to, this Section 8.6, including without limitation,
with respect to (a) actions taken by each Sellers’ Representative and (b) reliance by any Purchaser
Indemnitee on, and actions taken by any Purchaser Indemnitee in response to or in reliance on, the
instructions of, notice given by or any other action taken by each Sellers’ Representative.

          8.6.4 The Sellers shall jointly and severally indemnify each Sellers’ Representative against
any Damages (except such Damages as result from such Seller’s Representative’s gross negligence or
willful misconduct) that such Seller may suffer or incur in connection with any action or omission
of such Sellers’ Representative. Each Seller shall bear its pro-rata portion of such Damages. No
Sellers’ Representative shall be liable to any Seller with respect to any action, omission taken or
omitted to be taken pursuant to this Section 8.6, except for such Sellers’ Representative’s gross
negligence or willful misconduct.

ARTICLE IX

INDEMNIFICATION

     9.1 The Company’s and Sellers’ Indemnification Obligations. Subject to the provisions
of this Section 9.1 and Sections 9.4, 9.5, 9.6, 9.7 and 9.9, the Sellers shall indemnify, save and
keep each Purchaser Indemnitee harmless against and from all Damages sustained or incurred by any
Purchaser Indemnitee, as a result of, or arising out of or by virtue of:

          9.1.1 any inaccuracy in or breach of any representation and warranty made by the Company or
Sellers to Purchaser herein or in any certificate or closing document delivered to Purchaser in
connection herewith;

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          9.1.2 the breach by the Company or Sellers of, or failure of the Company or Sellers to comply
with, any of the covenants or obligations under this Agreement to be performed by the Company or
Sellers (including their obligations under this ARTICLE IX);

          9.1.3 Liabilities of the Company or any Subsidiary of the Company arising out of acts or
omissions occurring before the Closing Date, including the operation of the Company’s business
before the Closing Date, or by virtue of the termination of any employee prior to the Closing Date,
or in respect of any Indebtedness (other than the Assumed Institutional Debt or the Assumed
Shareholder Debt) arising prior to the Closing Date; or

          9.1.4 Taxes which are unpaid as of the Closing Date and which are imposed on the Company with
respect to (a) any taxable period ending on or before the Closing Date, or (b) the pre-Closing
portion of any taxable period which begins before, and ends after, the Closing Date, to the extent
the liability for such Taxes exceeds the accrual for Taxes contained on the
Company’s Interim Financial Statement and is not a result of any filing election made by
Purchaser subsequent to Closing (including, without limitation, any Liabilities arising from the
failure of the Company to qualify, or the forfeiture of the Company’s qualification, as an “S
corporation” under the Code at any time prior to the Closing).

     After the Closing, the Sellers shall not be entitled to contribution from, or recovery
against, the Company with respect to any liability of the Sellers which may arise under or pursuant
to this Agreement, other than with respect to amounts recovered by the Company from third parties
or under insurance for the same Damages for which indemnification shall have been obtained
hereunder (and only to the extent of such recovery). Each Purchaser Indemnitee acknowledges and
agrees that, other than claims for fraud, which claims are specifically excluded from the
limitations of this Article IX, the indemnification provided for in this Article IX shall be the
sole and exclusive remedy against the Sellers for any and all claims, injuries, demands, costs,
contributions, penalties, attorney’s fees, costs of litigation and causes of action of any kind
whatsoever, now or hereafter in existence, known or unknown, which are related to events, omissions
or circumstances arising from this Agreement or the transactions contemplated hereby.

     9.2 Purchaser’s Indemnification Obligations. Purchaser shall indemnify, save and keep
each Seller Indemnitee harmless against and from all Damages sustained or incurred by any Seller
Indemnitee, as a result of, or arising out of or by virtue of:

          9.2.1 any inaccuracy in or breach of any representation and warranty made by Purchaser to
Sellers herein or in any certificate or closing document delivered to Sellers in connection
herewith;

          9.2.2 any breach by Purchaser of, or failure by Purchaser to comply with, any of the covenants
or obligations under this Agreement to be performed by Purchaser (including without limitation its
obligations under this ARTICLE IX); or

          9.2.3 Taxes which are imposed on the Company with respect to (a) any taxable period ending
after the Closing Date, excluding the pre-Closing portion of any taxable period which begins
before, and ends after, the Closing Date.

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     9.3 Cooperation. Subject to the provisions of Section 9.4, the Indemnifying Party
shall have the right, at its own expense, to participate in the defense of any Third Party Claim,
and if said right is exercised, the parties shall cooperate in the investigation and defense of
said Third Party Claim.

     9.4 Third Party Claims. Promptly after the receipt of written notice of a Third Party
Claim, the party receiving the notice of the Third Party Claim shall notify the other party of its
existence setting forth with reasonable specificity the facts and circumstances of which such party
has received notice, and if the party giving such notice is an Indemnified Party, specifying the
basis hereunder upon which
the Indemnified Party’s claim for indemnification is asserted; provided,
however, that the failure to provide such notice shall not release the Indemnifying Party
from any of its obligations under this ARTICLE IX except to the extent the Indemnifying Party is
materially prejudiced by such failure. The Indemnified Party may, upon reasonable notice, tender
the defense of a Third Party Claim to the Indemnifying Party. If

          9.4.1 the defense of a Third Party Claim is so tendered and within 30 days thereafter such
tender is accepted without qualification by the Indemnifying Party; or

          9.4.2 within 30 days after the date on which written notice of a Third Party Claim has been
given pursuant to this Section 9.4, the Indemnifying Party shall acknowledge without qualification
its indemnification obligations as provided in this ARTICLE IX in writing to the Indemnified Party
and accept the defense thereof;

then, except as herein provided, the Indemnified Party shall not, and the Indemnifying Party shall,
have the right to contest, defend, litigate or settle such Third Party Claim. In all other cases,
the Indemnified Party shall have the sole right, at the Indemnifying Party’s expense, to contest,
defend, litigate or settle such Third Party Claim. The Indemnified Party shall have the right to
be represented by counsel at its own expense in any contest, defense, litigation or settlement
conducted by the Indemnifying Party, provided that the Indemnified Party shall be entitled to
reimbursement therefor if the Indemnifying Party shall not be entitled, or shall lose its right, to
contest, defend, litigate and settle the Third Party Claim as herein provided. The Indemnifying
Party shall not be entitled, or shall lose its right, as applicable, to contest, defend, litigate
and settle a Third Party Claim if (a) there exists or is reasonably likely to exist a conflict of
interest that would make it inappropriate in the reasonable judgment of the Indemnified Party for
the same counsel to represent both the Indemnifying Party and the Indemnified Party, (b) the
Indemnifying Party shall fail to diligently contest the Third Party Claim, (c) such Third Party
Claim involves remedies or disputes other than claims for monetary damages, or (d) such Third Party
Claim or the resolution thereof could impair ongoing business relationships with any material
customer, supplier, any Governmental or Regulatory Authority, or any other Person doing business
with the Indemnified Party or any of its Affiliates. So long as the Indemnifying Party is entitled
and has not lost its right and/or obligation to contest, defend, litigate and settle as herein
provided, the Indemnifying Party shall have the exclusive right to contest, defend and litigate the
Third Party Claim and shall have the exclusive right, in its discretion exercised in good faith,
and upon the advice of counsel, to settle any such matter, either before or after the initiation of
litigation, at such time and upon such terms as it deems fair and reasonable, provided that (i) at
least ten days prior to any such settlement, written notice of its intention to settle shall be
given to the Indemnified Party, (ii) such settlement includes as an unconditional term thereof

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the
giving by the claimant or the plaintiff to the Indemnified Party of a release from all Liabilities
in respect of such Third Party Claim, (iii) such settlement does not impose any obligations of any
kind upon the Indemnified Party and (iv) such settlement does not otherwise impair ongoing business
relationships with any material customer, supplier, any Governmental or Regulatory Authority, or
any other Person doing business with the Indemnified Party or any of its Affiliates. All expenses
(including without limitation attorneys’ fees) incurred by the Indemnifying Party in connection
with the foregoing shall be paid by the Indemnifying Party. No failure by an Indemnifying Party to
acknowledge in writing its indemnification obligations under this ARTICLE IX shall relieve it of
such obligations to the extent they exist. If an
Indemnified Party is entitled to indemnification against a Third Party Claim, and the Indemnifying
Party fails to accept a tender of, or assume, the defense of a Third Party Claim pursuant to this
Section 9.4, or if, in accordance with the foregoing, the Indemnifying Party shall not be entitled
or shall lose its right to contest, defend, litigate and settle such a Third Party Claim, the
Indemnified Party shall have the right, without prejudice to its right of indemnification
hereunder, in its discretion exercised in good faith and upon the advice of counsel, to contest,
defend and litigate such Third Party Claim, and may settle such Third Party Claim, either before or
after the initiation of litigation, at such time and upon such terms as the Indemnified Party deems
fair and reasonable. If, pursuant to this Section 9.4, the Indemnified Party so contests, defends,
litigates or settles a Third Party Claim for which it is entitled to indemnification hereunder, the
Indemnified Party shall be reimbursed by the Indemnifying Party for the reasonable attorneys’ fees
and other expenses of contesting, defending, litigating and/or settling the Third Party Claim which
are incurred from time to time, forthwith following the presentation to the Indemnifying Party of
itemized bills for said attorneys’ fees and other expenses.

     9.5 Assertion of Claims. No claim shall be brought under Section 9.1 hereof unless
the Purchaser Indemnitees, or any of them, at any time prior to the applicable Survival Date (as
defined below), give the Sellers written notice of any such claim pursuant to Section 9.4. It is
expressly understood and agreed that a claim may be brought for indemnification if facts have
developed which reasonably may lead to Damages under Section 9.1, regardless of whether actual
Damages have then occurred, provided that the written notification of such claim is provided within
the appropriate timeframe as required herein.

     9.6 Survival of Representations and Warranties. Subject to further provisions of this
Section 9.6, the representations and warranties of the Company and the Sellers contained in Article
III and the representations and warranties of Purchaser contained in Article III shall survive the
Closing Date until the third year anniversary of the Closing Date. For Unlimited Claims (as
defined below), the Survival Date shall be the date on which the applicable statute of limitations
would bar such Claims. The covenants and other agreements of the parties contained in this
Agreement shall survive the Closing Date until they are otherwise terminated, whether by their
terms or as a matter of applicable law. For convenience of reference, the date upon which any
representation, warranty, covenant or other agreement contained herein shall terminate, if any, is
referred to herein as the “Survival Date.” Any action for indemnification hereunder shall be
brought by a Purchaser Indemnitee in any event by the applicable Survival Date.

     9.7 Limitation on Indemnification of the Company, the Sellers and Purchasers.

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          9.7.1 The provisions for indemnity from the Sellers under this Article IX shall be effective
only when the aggregate amount of all Damages for which indemnification is sought, either for a
particular claim, a series of related claims or otherwise, exceeds $150,000 (the “Deductible”), in
which case the Purchaser Indemnitees shall be entitled to indemnification of the Purchaser
Indemnitees’ aggregate Damages under this Section exceeding the Deductible.
Notwithstanding the foregoing, the Deductible shall not apply to claims arising from the (a)
breach of Section 3.3.1 (Organization, Existence and Good Standing), (b) breach of Section 3.3.3
(Power and Authority), (c) breach of Section 3.3.4 (Enforceability), (d) breach of Section 3.3.11
(Capitalization), (e) breach of Section 3.3.26 (Employee Benefit Plans), and (f) breach of Section
3.4 (Representation and Warranties of the Sellers) (together the claims in clauses (a)-(f) of this
sub-Section are “Unlimited Claims”). The indemnification obligations of the Sellers shall not
exceed (x) $2,000,000 in respect of all Damages (other than Damages arising from the breach of
Section 3.3.31 (Environmental Matters) and any Unlimited Claims), (y) in the case of any Damages
relating to any breach of Section 3.3.31 (Environmental Matters), $5,000,000, and (z) in the case
of any Damages relating to any of the Unlimited Claims, the Purchase Price (collectively, the
limitations in clauses (x)-(z) of this sub-Section are “Liability Caps”), provided,
however, that the indemnification obligations of Sellers from all Damages referenced in
clauses (x)-(z) of this sub-Section shall not exceed $10,000,000 in the aggregate. The
indemnification obligations of each Participating Seller shall be individual and several, and not
joint, and shall be further limited in respect of the indemnification obligations hereunder (other
than in respect of each Participating Seller’s individual representations and warranties in Section
3.4) to such Participating Seller’s Percentage Interest of the applicable Damages recoverable
hereunder, and in respect of each Participating Seller’s individual representations and warranties
in Section 3.4, shall be limited to the portion of the Purchase Price received by such
Participating Seller. The indemnification obligations of the Controlling Sellers hereunder shall
be joint and several, subject to the Liability Caps. Without limitation to the primary, joint and
several obligations of the Controlling Sellers hereunder, the Purchaser will use commercially
reasonable efforts to cooperate with the Controlling Sellers in making demand upon and joining the
applicable Participating Sellers in any claims by the Purchaser hereunder, provided that Purchaser
will not be required to exhaust remedies against the Participating Sellers in order to maintain
claims against the Controlling Sellers under this Article IX.

          9.7.2 The provisions for indemnity from the Purchaser under this Article IX shall be effective
only when the aggregate amount of all losses for which indemnification is sought, either for a
particular claim, a series of related claims or otherwise, exceeds the Deductible, in which case
the Seller Indemnitees shall be entitled to indemnification of the Seller Indemnitees’ aggregate
Damages under this Section exceeding the Deductible. Further, the indemnification obligations of
the Purchaser, in the aggregate, under Section 9.2 shall not exceed $2,000,000.

          9.7.3 The parties hereto acknowledge and agree, for themselves and on behalf of their
respective Affiliates and representatives, that with respect to each indemnification obligation in
this Agreement (i) all Damages shall be net of any third-party insurance proceeds which have been
actually recovered by the Indemnified Party (net of any premium increase directly relating to such
Damages) in connection with the facts giving rise to the right of indemnification; and (ii) the
amount of any Damages shall appropriately take into account any reduction in the Indemnified
Parties’ actual Tax liability as a result of the event giving rise to such Damages, with respect to
the year in which such Loss arose.

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     9.8 Corporate Indemnification of Officers and Directors.

Notwithstanding any provision of this Agreement to the contrary, including the delivery of any
release contemplated herein, Purchaser shall cause the Company to indemnify each officer and
director of the Company pursuant to the indemnification policy of the Company as in existence prior
to the Closing Date as established in the Company’s organizational documents or as provided by law;
provided, however, that in no event shall such indemnity exceed the maximum
indemnification permitted under applicable state law.

     9.9 Set-Off.

          9.9.1 Without limiting any other rights or remedies available to Purchaser, Purchaser may
set-off and recoup any Damages to which any Purchaser Indemnitee may be entitled to be reimbursed
pursuant to this ARTICLE IX against the Escrow Amount and any other amount to which the Sellers may
be entitled to under this Agreement, upon due notice from Purchaser to Escrow Agent in accordance
with the terms of the Escrow Agreement. The good faith exercise of such right of set-off by
Purchaser and Escrow Agent will not constitute a breach of this Agreement. If the Escrow Amount is
insufficient to set-off any Damages any Purchaser Indemnitee may be entitled to under the exclusive
remedy afforded by Section 9.1, Purchaser may take any action or exercise any remedy available to
it by appropriate legal proceedings to collect the Damages, subject to the Liability Caps.

          9.9.2 All set-offs and recoupments against the Escrow Amount shall be treated as adjustments
to the Purchase Price.

ARTICLE X

[INTENTIONALLY OMITTED]

ARTICLE XI

MISCELLANEOUS

     11.1 Notices. All notices required or permitted to be given hereunder shall be in
writing and may be delivered by hand, by facsimile, by nationally recognized private courier, or by
United States mail. Notices delivered by mail shall be deemed given three Business Days after
being deposited in the United States mail, postage prepaid, registered or certified mail, return
receipt requested. Notices delivered by hand, by facsimile, or by nationally recognized private
courier shall be deemed given on the first Business Day following receipt. All notices shall be
addressed as follows:

If to Sellers or the Company:

Parker-Chandler Homes, Inc.

5400 Laurel Springs Parkway

Suite 202

Suwanee, Georgia 30024

Attention: James B. Parker, Jr., President

Fax: (678) 636-3622

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with a copy to:

Schreeder, Wheeler & Flint, LLP

127 Peachtree Street, N.E.

Suite 1600

Atlanta, GA 30303

Attention: Chester J. Hosch, Esq.

Fax: (404) 681-1046

If to Purchaser:

Comstock Homebuilding Companies, Inc.

11465 Sunset Hills Road, Fifth Floor

Reston, Virginia 20190

Attention: Bruce J. Labovitz, Chief Financial Officer and

                    Jubal R. Thompson, General Counsel

Fax: (703) 760-1520

with a copy to:

Greenberg Traurig, LLP

800 Connecticut Avenue, N.W.

Suite 500

Washington, D.C. 20006

Attention: Stephen A. Riddick, Esq.

Fax: (202) 261-0149

and/or to such other respective addresses and/or addressees as may be designated by notice given in
accordance with the provisions of this Section 11.1.

     11.2 Expenses; Transfer Taxes. Sellers shall bear all fees and expenses incurred by
the Company and themselves in connection with, relating to or arising out of the negotiation,
preparation, execution, delivery and performance of this Agreement and the consummation of the
transactions contemplated hereby, including financial advisors’, attorneys’, accountants’ and other
professional fees and expenses. Purchaser shall bear all fees and expenses incurred by Purchaser
in connection with, relating to or arising out of the negotiation, preparation, execution, delivery
and performance of this Agreement and the consummation of the transactions contemplated hereby,
including financial advisors’, attorneys’, accountants’ and other professional fees and expenses.
Sellers shall pay the cost of all sales, use, stamp, documentary, excise and transfer Taxes which
may be payable in connection with the transactions contemplated hereby.

     11.3 Entire Agreement. This Agreement, together with the instruments and other
documents to be delivered by the parties pursuant to the provisions hereof constitute the entire
agreement between the parties with respect to the subject matter hereof and shall be binding

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upon
and inure to the benefit of the
parties hereto and their respective legal representatives, successors and permitted assigns.
Without limiting the generality of the preceding sentence, the letter of intent entered into as of
October 28, 2005, between Purchaser, James B. Parker, Jr. and Andrew H. Chandler, Jr. is hereby
expressly superseded and of no further force or effect. Each exhibit, schedule and the Disclosure
Schedule, shall be considered incorporated into this Agreement. Any amendments, or alternative or
supplementary provisions, to this Agreement, must be made in writing and duly executed by an
authorized representative or agent of each of the parties hereto.

     11.4 Non-Waiver. The failure in any one or more instances of a party to insist upon
performance of any of the terms, covenants or conditions of this Agreement, to exercise any right
or privilege in this Agreement conferred, or the waiver by said party of any breach of any of the
terms, covenants or conditions of this Agreement, shall not be construed as a subsequent waiver of
any such terms, covenants, conditions, rights or privileges, but the same shall continue and remain
in full force and effect as if no such forbearance or waiver had occurred. No waiver shall be
effective unless it is in writing and signed by an authorized representative of the waiving party.

     11.5 Counterparts. This Agreement may be executed in multiple counterparts and by
facsimile, each of which shall be deemed to be an original, and all such counterparts shall
constitute but one instrument.

     11.6 Severability. Whenever possible, each provision of this Agreement shall be
interpreted in such manner as to be effective and valid under applicable Law, but if any provision
of this Agreement is held to be invalid, illegal or unenforceable in any respect under any
applicable Law or rule in any jurisdiction, such invalidity, illegality or unenforceability shall
not affect any other provision or any other jurisdiction, and, for purposes of such jurisdiction,
such provision or portion thereof shall be struck from the remainder of this Agreement, which shall
remain in full force and effect. This Agreement shall be reformed, construed and enforced in such
jurisdiction so as to best give effect to the intent of the parties under this Agreement.

     11.7 Applicable Law; Binding Arbitration. This Agreement shall be governed and
controlled as to validity, enforcement, interpretation, construction, effect and in all other
respects by the internal Laws of the Commonwealth of Virginia applicable to contracts made in that
state, without giving effect to any choice of law or conflict of law provision or rule that would
cause the application of the Laws of any jurisdiction other than the Commonwealth of Virginia. All
disputes arising out of or in connection with this Agreement shall be finally resolved by means of
binding arbitration in accordance with the Rules of the American Arbitration Association. Any
arbitral award so rendered shall be final and executory and can be enforced by either party before
any competent court. The arbitrators shall use the substantive Laws of the Commonwealth of
Virginia in arriving at their decision and venue for the arbitration shall be in the city of
Alexandria, Virginia.

     11.8 Binding Effect; Benefit. This Agreement shall inure to the benefit of and be
binding upon the parties hereto, and their successors and permitted assigns. Nothing in this
Agreement, express or implied, shall confer on any Person other than the parties hereto, and their

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respective successors and permitted assigns, any rights, remedies, obligations or Liabilities under
or by reason of this Agreement, including third party beneficiary rights.

     11.9 Assignability. This Agreement shall not be assignable by the Company or Sellers
without the prior written consent of Purchaser. Purchaser may assign its rights under this
Agreement to an Affiliate or a wholly-owned subsidiary of Purchaser.

     11.10 Rule of Construction. The parties acknowledge and agree that each has
negotiated and reviewed the terms of this Agreement, assisted by such legal and tax counsel as they
desired, and has contributed to its revisions. The parties further agree that the rule of
construction that any ambiguities are resolved against the drafting party will be subordinated to
the principle that the terms and provisions of this Agreement will be construed fairly as to all
parties and not in favor of or against any party.

     11.11 Amendments. This Agreement shall not be modified or amended except pursuant to
an instrument in writing executed and delivered on behalf of each of the parties hereto.

     11.12 Headings. The headings contained in this Agreement are for convenience of
reference only and shall not affect the meaning or interpretation of this Agreement.

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     IN WITNESS WHEREOF, the parties have executed this Stock Purchase Agreement on the date first
above written.

	 	 	 	 	 
	 	 	PURCHASER:
	 
	 	 	 	 
	 	 	COMSTOCK HOMEBUILDING COMPANIES, INC.
	 
	 	 	 	 
	 

	 	By:	 	 
	 

	 	 	 	 
	 

	 	Name:	 	 
	 

	 	 	 	 
	 

	 	Title:	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	 	 	THE COMPANY:
	 
	 	 	 	 
	 	 	PARKER-CHANDLER HOMES, INC.
	 
	 	 	 	 
	 

	 	By:	 	 
	 

	 	 	 	 
	 

	 	Name:	 	 
	 

	 	 	 	 
	 

	 	Title:	 	 
	 

	 	 	 	 

[SIGNATURES CONTINUED ON FOLLOWING PAGE]

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	 	CONTROLLING SELLERS:	 	 
	 
	 	 	 	 
	 

	 	 

JAMES B. PARKER, JR.
	 	 
	 
	 	 	 	 
	 

	 	 

ANDREW H. CHANDLER, JR.
	 	 
	 
	 	 	 	 
	 

	 	PARTICIPATING SELLERS:	 	 
	 
	 	 	 	 
	 

	 	 

SUNDERRAJ M. KAMALESON
	 	 
	 
	 	 	 	 
	 

	 	 

ROBERT A. FORSTER
	 	 
	 
	 	 	 	 
	 

	 	 

RICHARD DOBKIN
	 	 
	 
	 	 	 	 
	 

	 	 

EUGENE E. PEARSON
	 	 
	 
	 	 	 	 
	 

	 	 

JOHN D. PEARSON
	 	 
	 
	 	 	 	 
	 

	 	 

DONALD SCHROELUCKE
	 	 
	 
	 	 	 	 
	 

	 	 

JAMES SHIRAH
	 	 

 

 

Exhibit A

Form of Employment Agreement

(See Attached)

 

 

Exhibit B

Form of Noncompetition Agreement

(See Attached)

 

 

Exhibit C

Form of Escrow Agreement

(See Attached)

 

 

Exhibit D

Form of Seller Release

(See Attached)

 

 

Exhibit E

Form of Company Release

(See Attached)

 

 

Exhibit F

Form of Legal Opinion

(See Attached)exv10w39

 

EXHIBIT 10.39

Execution Copy

LOAN AGREEMENT

     THIS LOAN AGREEMENT (this “Agreement”) is made as of this 31st day of January, 2006 by and
between (i) COMSTOCK CARTER LAKE, L.C., a Virginia limited liability company (“Borrower”) and (ii)
BANK OF AMERICA, N.A., a national banking association (the “Lender”).

R E C I T A L S:

     WHEREAS, Lender has agreed to make a loan to Borrower as more particularly described herein
(the “Loan”) for the purpose of the acquisition of an apartment complex in Reston, Fairfax County,
Virginia containing in the aggregate 259 units (each a “Unit” and collectively, the “Units”), more
fully described in Exhibit “A” hereto.

     WHEREAS, Lender acknowledges that Borrower intends to renovate and convert the Units into
condominiums (the “Renovation”) during the term of the Loan, such Renovation being subject to the
provisions of this Agreement;

     WHEREAS, Comstock Homebuilding Companies, Inc. has executed and delivered to Lender a Guaranty
(as defined herein); and

     WHEREAS, Lender and Borrower have agreed to execute this Agreement for the purpose of
describing together with the other Loan Documents (as herein defined) some of the obligations of
Borrower and the Lender.

W I T N E S S E T H:

     For and in consideration of these presents, and in further consideration of the mutual
covenants and agreements herein set forth, and in consideration of the sum of Ten and no/100
Dollars ($10.00) lawful money of the United States of America by each of the parties to the other
paid, receipt of which is hereby acknowledged, the parties hereto, intending to be legally bound,
do hereby covenant and agree as follows:

ARTICLE
I — DEFINITIONS

     1.1 Definitions. Borrower and the Lender agree that, unless the context otherwise
specifies or requires, the following terms shall have the meanings herein specified, such
definitions to be applicable equally to the singular and the plural forms of such terms and to all
genders:

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          (a)
Appraised Value — The then current market value determined pursuant to the most recent
appraisal for the Property. All such appraisals shall be ordered by the Lender, prepared at
Borrower’s expense by a certified appraiser acceptable to the Lender and otherwise satisfactory to
the Lender in all respects. The Lender may order, if required by the Lender’s internal policies,
reappraisals of the Property, at the Lender’s sole discretion and at Borrower’s expense.

          (b)
Borrower — The entity hereinabove designated as such.

          (c)
Contract — A fully executed contract of sale for a Unit that: (i) has been accepted by
Borrower and meets the Lender’s criteria for acceptable contracts; (ii) is not subject to
cancellation without forfeiture of all deposits thereunder (except for cause in accordance with
applicable law and in the event the purchaser fails to obtain the necessary mortgage loan); (iii)
contains no contingencies (including, without limitation, the sale of the purchaser’s home) except
ordinary financing contingencies; (iv) is accompanied by a cash deposit or deposits in form,
content and amount acceptable to the Lender; and (v) that either (A) provides for a cash sale
(i.e., a sale not contingent upon financing) by a purchaser whose creditworthiness is satisfactory
to the Lender in all respects, or (B) is accompanied by a pre-qualification letter from a permanent
mortgage lender in form, amount and content satisfactory to the Lender in all respects. In lieu of
copies of Contracts, the Borrower may elect to submit a “Unit Contract Summary Report” in form
attached hereto as Exhibit “B”. At Lender’s option, no more than twice monthly Lender
shall verify the accuracy of the information on each Unit Contract Summary Report through a review
of Borrower’s files. Notwithstanding the foregoing, the Lender shall retain the right to request
copies of Contracts at any time during the term of the Loan. At the time any Unit Contract Summary
Report is submitted to the Lender for its approval, Borrower shall specifically identify to the
Lender each Contract wherein the purchaser is affiliated with or related to Borrower, Guarantor
(hereinafter defined) or any of their respective employees, shareholders, partners, members or
other principals, as applicable “Related Party Contracts”). The number of Related Party Contracts
shall not exceed ten percent (10%) of the total Units without Lender’s prior consent.

          (d)
Deed of Trust — Collectively, that certain Credit Line Deed of Trust and Security
Agreement of even date herewith, executed and delivered by Borrower to secure the Loan, as any of
the same may from time to time be amended, modified, supplemented or spread.

          (e)
Default — Any of the happenings, events, circumstances or occurrences designated as such
in this Agreement.

          (f)
Environmental Regulations — “Environmental Regulations” as defined in the Deed of Trust.

          (g)
Guarantor — Comstock Homebuilding Companies, Inc. and any other party that executes and
delivers a Guaranty, and its or their respective successors, personal representatives and permitted
assigns.
 

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          (h)
Guaranty — That certain (i) Guaranty Agreement of even date herewith executed and
delivered by Guarantor to secure the Loan and all other indebtedness under the Loan Documents
(hereinafter defined), and (ii) any and all other guaranty agreements executed for the benefit of
the Lender to secure the Loan, as any of the same may from time to time be amended, modified,
replaced or supplemented.

          (i)
Hazardous Materials — “Hazardous Materials” as defined in the Deed of Trust.

          (j)
Improvements — Any and all buildings, structures, improvements, alterations or
appurtenances already existing or at any time hereafter constructed or placed upon the Land, and
any replacements thereof, additions thereto and substitutions therefor, including without
limitation, all equipment, apparatus, machinery and fixtures of any kind or character forming a
part thereof.

          (k)
Indebtedness — All amounts due or to become due to the Lender pursuant to or on account of
the Note (hereinafter defined), this Agreement and each of the other Loan Documents, including,
without limitation, all principal (whether advanced prior to, upon execution of, or after the date
of this Agreement), interest, late charges, loan fees, extension fees, prepayment fees, amounts
drawn under any letters of credit, any letter of credit fees and all other payments required to be
made by the Borrower pursuant to or on account of the Note, this Agreement and any of the other
Loan Documents, and including any and all amounts advanced by the Lender for the account of the
Borrower pursuant to the provisions of this Agreement and any of the other Loan Documents, whether
or not such amounts are advanced from the proceeds of the Loan.

          (l)
Jurisdiction of Choice — The Commonwealth of Virginia, the jurisdiction under whose laws
this Agreement shall be governed, unless otherwise provided herein.

          (m)
Land — Any or all of the real property now owned or hereafter acquired by the Borrower
with Loan proceeds and more particularly described in the Deed of Trust.

          (n)
Lender — The party hereinabove designated as such, its successors and assigns.

          (o)
Loan — That certain acquisition loan in the amount of $26,000,000.00, made pursuant to
this Agreement, to finance the acquisition of certain property, as evidenced by the Note and
secured by the Deed of Trust and the other Loan Documents.

          (p) Loan Documents — This Agreement, the Note, the Deed of Trust, any Guaranty and any other
instrument or documents executed in connection with the Loan, as any of the same may from time to
time be amended, modified or supplemented.

          (q)
Maturity Date — July 31, 2006.

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          (r)
Note — That certain Deed of Trust Note of even date herewith in the original principal
amount of $26,000,000.00, or so much thereof as shall be advanced, made by the Borrower, payable to
the order of the Lender, as the same may from time to time be amended, modified, replaced or
supplemented.

          (s)
Obligations — Any and all of the covenants, warranties, representations, agreements,
promises and other obligations (other than the Indebtedness) made or owing by the Borrower, the
Guarantor or others to the Lender pursuant to or as otherwise set forth in the Loan Documents.

          (t)
Progress Inspector — Such person or firm as the Lender may from time to time appoint or
designate to inspect the progress of the Renovation and conformity of construction with applicable
laws, and for such other purposes as may from time to time seem appropriate to the Lender or as may
be required by the terms of this Agreement

          (u)
Project — Carter Lake Project (hereinafter defined).

          (v)
Property — The property described as such in the Deed of Trust, including, but not limited
to, the Land and the Improvements.

          (w)
Title Company — Any title company approved by the Lender that provides mortgagee title
insurance covering the lien of the Deed of Trust in favor of the Lender thereon.

          (x)
Carter Lake Project — acquisition of an apartment complex in Reston, Fairfax County,
Virginia containing 259 apartment Units to be converted into 258 condominium Units.

ARTICLE
II — CONDITIONS PRECEDENT TO CLOSING

     In addition to any other conditions stated in this Agreement, the following conditions must be
satisfied prior to Lender having any obligation to advance funds hereunder:

     2.1 Loan Documents. Receipt by Lender of appropriately completed and duly executed
originals of this Agreement and the other Loan Documents. In addition, Borrower shall provide a
written opinion of counsel to the Borrower and the Guarantor as to the authority
of the Borrower and the Guarantor to execute and deliver the Loan Documents, as to the
enforceability and validity of the Loan Documents, and as to such other matters as the Lender may
reasonably require.

     2.2. Organizational Documents. Borrower shall supply, with respect to the Borrower
and Guarantor: (i) a currently certified copy of the Articles of Organization or Certificate of
Incorporation and all amendments thereto, as applicable; (ii) evidence satisfactory to Lender and
its counsel that Borrower and Guarantor in good standing in the jurisdiction where

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organized and
qualified to do business in every jurisdiction in which the nature of their businesses or their
properties makes such qualification necessary; (iii) resolutions of the Borrower and Guarantor
authorizing the due execution and delivery of the Loan Documents to which it is a party, to the
extent necessary; and (iv) certified true copies of the Operating Agreement or By-laws and all
amendments thereto, as applicable.

None of the documents pursuant to which the Borrower or Guarantor is organized shall be amended or
modified in any respect without the prior written consent of the Lender, which may be given or
withheld in the reasonable discretion of the Lender.

     2.3 Insurance. Borrower shall provide Lender with a complete and fully paid up policy
or policies of casualty and fire insurance with standard extended coverage in an amount not less
than the replacement cost of the improvements and personalty located on the Property; $2,000,000.00
covering all claims for bodily injury or death and property damage arising out of a single
occurrence and $2,000,000.00 for the aggregate of all occurrences during any given annual policy
period, plus $5,000,000.00 of “umbrella” coverage; builder’s risk insurance with on a completed
value, nonreporting form with permission to complete and occupy; malicious mischief insurance;
business interruption insurance and insurance against such other hazards as Lender may require, in
amounts, with insurers and under forms of policies containing such provisions and endorsements as
Lender may require. All policies of insurance (except employee benefit and public liability
insurance which shall name Lender as an additional insured) shall contain a lender’s loss payable
clause and standard mortgagee clause for the benefit of Lender, and shall provide, in part, that:
(a) in the event of a loss, all insurance proceeds shall be paid to Lender and Lender shall be
authorized and empowered by Borrower to settle, adjust or compromise any claims for loss, damage or
destruction under such policies of insurance; (b) any loss covered by such insurance shall be
payable by the insurer in accordance with the terms of such policy notwithstanding any act or
negligence of Borrower, its agents or employees, the named insured or any owner, tenant or occupant
of the Property which might otherwise result in forfeiture of said insurance; (c) the insurer
waives all rights of setoff, counterclaim or deduction against Borrower; and (d) should title to
and beneficial ownership of the Property become vested in Lender, the insurance provided by such
policies shall continue for the term thereof for the benefit of Lender. All required insurance
shall provide that (i) the insurance afforded all parties named as insureds shall be primary
insurance and shall not participate with, nor be in excess over, any other valid and collectible
insurance available to Lender, (ii) any other insurance obtained by any named insured shall not be
called upon to contribute until the limits of the policies required hereunder are
exhausted, and (iii) the insurance required hereunder cannot be canceled or materially amended
or altered without at least thirty (30) days prior written notification to Lender. All insurance
required hereunder shall be issued by companies and in an amounts in each company approved in
advance by Lender, in its sole discretion, and such insurance shall be in the form and on terms
(including but not limited to deductibles, self-insured retentions or similar provisions) approved
in advance by Lender, in its sole discretion.

     Borrower shall deliver all such policies (or certified copies thereof) to Lender, together
with a one-year’s paid receipt for each such policy. In addition, Lender shall be furnished with

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satisfactory evidence indicating whether the Property is located within an area that has been
identified as a “special flood hazard area” as that term is used in the Flood Disaster Protection
Act of 1973. If any insurable improvements on the Property are located in any area so designated,
a flood insurance policy satisfactory to Lender shall be deposited with Lender prior to the closing
on the Loan and shall be maintained in full force until the Loan is repaid in full.

     2.4 Financing Statement. The financing statement necessary to perfect Lender’s
security interest in the personal property subject to the Deed of Trust shall be duly filed in all
appropriate offices and jurisdictions, all other financing statements covering any of such personal
property shall be terminated, and filing and recording receipts evidencing such filings and
terminations shall be delivered to Lender, all in form and substance satisfactory to Lender.

     2.5 Real Estate Documents. Lender shall have received and approved, in its sole
discretion, the following:

          (a) Appraisal. An appraisal of the Property, prepared by an appraiser acceptable to
Lender, in form and content acceptable to Lender, conforming to all regulatory and internal
appraisal guidelines applicable to or established by Lender, in its sole, absolute, nonreviewable
discretion, reflecting an as-finished discounted value for the Property satisfactory to Lender in
its sole, absolute nonreviewable discretion. Lender acknowledges that the appraisal received by it
is acceptable.

          (b) Title Insurance. An irrevocable commitment to issue a full-coverage mortgagee
title insurance policy (the “Title Policy”) on the ALTA 1992 form insuring the first lien of the
Deed of Trust to Lender in a form and issued by a title insurance company or companies acceptable
to Lender, said policy (i) containing only those exceptions to title as shall be reasonably
approved by Lender and Lender’s counsel, and (ii) showing the lien of the Deed of Trust securing
the Loan to be a first lien of record, on the fee simple estate of Borrower in the Property,
together with true and complete copies of all documents or instruments identified therein as
exceptions to title. The title policy shall be delivered to Lender promptly after recordation of
the Deed of Trust. Lender shall have the right to designate such co-insurers or re-insurers as it
deems advisable in its sole discretion. Such policy or policies shall be endorsable or assignable
to Lender’s successors and assigns, upon request, without cost to Lender. Such policy or policies
shall contain affirmative insurance against filed and unfiled
mechanic’s liens in form acceptable to Lender. Lender shall receive satisfactory evidence that
there is no pending litigation with respect to the Property.

          (c) Survey. A current survey (or other documentation acceptable to Lender) and legal
description of the Property satisfactory to Lender from a registered land surveyor of the
Commonwealth of Virginia, which survey shall show all easements, rights of way and other matters of
record, shall locate all proposed improvements on the Land and shall generally show a state of
facts acceptable to Lender and contain a surveyor’s certificate satisfactory to the Lender.

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          (d) Environmental Audit. An environmental audit of the Property prepared by an
environmental consulting firm acceptable to Lender, in its sole discretion, confirming that the
Property is in compliance with all applicable environmental laws.

          (e) Evidence of Zoning Compliance. Such written evidence as the Lender may require
to the effect that the Property has been zoned for purposes consistent with the uses contemplated
beyond any possibility of appeal and to the effect, further, that there are no pending proceedings,
either administrative, legislative or judicial which would in any manner adversely affect the
status of the zoning with respect to such property or any part thereof.

          (g) Public Utilities. Evidence to the effect that sanitary sewer, water, electric,
gas, telephone and other public utilities are available and adequate to serve the Property.

          (h) Sale Agreement. A copy of the purchase contract for the Property, satisfactory to
the Lender and Lender’s counsel in form and substance.

          (i) No Default. No event shall have occurred and be continuing that constitutes a
Default (as defined below).

          (j) Representations. All representations and warranties contained in this Agreement
shall be true and correct in every material respect as of the date of the first disbursement under
this Agreement and on the date of any future disbursements hereunder.

          (k) Satisfactory Documents. All documents delivered pursuant to this Agreement must
be in form and substance reasonably satisfactory to Lender and its counsel, and all legal matters
incident to this Agreement must be reasonably satisfactory to Lender’s counsel.

     2.6 Equity Requirement. At or prior to Closing, Borrower shall provide Lender
evidence that Borrower has contributed a minimum of $10,250,000.00 toward the purchase price of
the Property and the related closing costs (“Equity Contribution”).

     2.7 Loan Fee. Upon the closing of the Loan, the Borrower shall pay Lender a
non-refundable loan fee in the amount of Sixty-Five Thousand and 00/100 Dollars ($65,000.00).

ARTICLE III –CONDITIONS PRECEDENT FOR COMMENCEMENT OF RENOVATION

     3.1 In addition to any other conditions stated in this Agreement, the following conditions
must be satisfied prior to commencement of the Renovation. Borrower shall obtain and submit to
Lender, the following, as they pertain to the Renovation:

          (a) Permits. Copies of any and all building and similar permits required in
connection with the Renovation, together with such evidence as the Lender may require to the effect
that all fees for such permits have been paid. Satisfactory evidence shall be submitted to Lender
of the receipt of all governmental approvals necessary for the Renovation and

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condominium
conversion of the Units have been obtained. Lender shall also receive satisfactory evidence that
all applicable safety, ecological and environmental laws and any other codes or regulations
affecting the Renovation and/or proposed use of the Property have been complied with.

          (b) General Contractor. The Borrower shall disclose to Lender the name of the
general contractor, who must maintain workers’ compensation and disability insurance in amounts
required by law, and employer’s liability insurance (the “General Contractor”) and submit to Lender
the executed contract for the Renovation.

          (c) List of Subcontractors and Materialmen. If required by Lender, a list of the
names of all subcontractors and materialmen intended by the Borrower to perform work or supply
materials in connection with the Renovation, and conformed copies of executed contracts for such
work and materials.

          (d) Builder’s Risk Insurance. Evidence that the insurance policy referred to in
paragraph 2.3 hereof contains builder’s risk coverage on a completed value, non-reporting form with
permission to complete and occupy.

          (e) Budget. Borrower shall submit to Lender a budget for
the Renovation.

          (f) Plans and Specifications. Borrower shall submit to Lender the plans and
specifications for the Renovation, as certified by an architect.

ARTICLE IV – REQUIREMENTS FOR THE RENOVATION

     4.1 The Renovation shall be performed by the Borrower in strict accordance with all applicable
(whether present or future) laws, ordinances, rules, regulations, requirements and order of any
governmental or regulatory authority having or claiming jurisdiction. The Renovation shall be
completed in a manner so as not to encroach upon any easement or right-of-way, or upon the land of
others. The Renovation shall be wholly within all applicable building
restriction lines and set-backs or variances made therefor, however established, and shall be
in strict accordance with all applicable use or other restrictions and the provisions of any prior
declarations, covenants and zoning ordinances and regulations.

     4.2 Borrower shall submit to Lender or the Progress Inspector, at Lender’s discretion, such
information as may be reasonably requested by Lender or the Progress Inspector to verify the
Renovation costs which are to be incurred in connection with the Renovation. On-site inspection by
an authorized officer of the Lender and the Progress Inspector shall be permitted at all times
during the term of the Loan.

     4.3 Borrower shall permit the Lender and its duly authorized representatives (including,
without limitation, the Progress Inspector) to enter upon the Property at all reasonable times and
in a reasonable manner to inspect the Improvements and any and all materials and to examine all
detailed plans and shop drawings and similar materials relating to

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the Renovation. Borrower will
at all times cooperate and request its subcontractors and materialmen to cooperate with the Lender
and its duly authorized representatives (including, without limitation, the Progress Inspector) in
connection with or in aid of the performance of the Lender’s functions under this Loan Agreement.
Borrower shall pay all inspection fees incurred by the Lender in connection with the Loan; however,
so long as no Default exists, inspections shall be limited to two site inspection visits per month
to be performed by the Progress Inspector at Borrower’s sole cost and expense.

     4.4 Borrower will furnish to the Lender, promptly on demand, a computer generated report of
job costs and accounts payable for the Renovation.

     4.5 Borrower will pay when due all bills for materials supplied and for services or labor
performed in connection with the Renovation.

     4.6 Borrower will promptly correct or cause the correction of any structural defects in the
Improvements and any substantial departures or deviations from the plans and specifications for the
Renovation.

     4.7 Lender may also require an endorsement to the title insurance policy theretofore
delivered, indicating that there has been no change in the status of title and no title exceptions
not theretofore approved by the Lender.

     4.8 Lender may require the Borrower to obtain from the General Contractor, acknowledgments of
payment and releases of liens and rights to claim liens, if applicable. All such acknowledgments
and releases shall be in the form and substance satisfactory to the Lender.

     4.9 Lender may require (i) evidence satisfactory to it that all work requiring inspection by
governmental or regulatory authorities having or claiming jurisdiction has been duly inspected and
approved by such authorities and by any rating or inspection organization,
bureau, association, or office having or claiming jurisdiction; and (ii) evidence satisfactory
to it that requisite certificates of occupancy for permanent occupancy have been validly issued and
that the Renovation has occurred free and clear of all mechanics’ or materialmens’ liens and any
bills or claims for labor, materials and services in connection with the Renovation. All fees and
costs of the Progress Inspector incurred by the Lender shall be paid by the Borrower at its sole
expense.

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ARTICLE V — REPRESENTATIONS AND WARRANTIES

     Borrower hereby represents and warrants to the Lender, as of the date hereof and at all times
hereafter, that:

     5.1 Organization, Power, Etc. (a) Borrower is a duly organized, validly existing
limited liability company, in good standing under the laws of the jurisdiction of its organization;
(b) Guarantor is a duly organized, validly existing corporation under the laws of the jurisdiction
of its organization (c) each of the Borrower and Guarantor has the power and authority to own its
properties and to carry on its business as now being conducted; (c) each of the Borrower and
Guarantor is duly qualified to do business in the jurisdiction where the Property is located and in
every jurisdiction in which the nature of its business or its properties makes such qualification
necessary; (d) each of the Borrower and Guarantor is in compliance with all laws, regulations,
ordinances and orders of public authorities applicable to it; and (e) each of the Borrower and
Guarantor has the full power, authority and legal right to execute, deliver and perform the
covenants and obligations set forth in this Agreement and the other Loan Documents and to carry out
the terms hereof and thereof.

     5.2 Validity of Loan Documents. The execution, delivery and performance by Borrower
of the Note, and the other Loan Documents: (a) are within the legal powers of Borrower; (b) have
been duly authorized by all requisite partnership and/or membership action, as applicable; (c) have
received all necessary governmental approvals; (d) will not violate any provision of law, any order
of any court or other agency of government or any articles of organization, membership and/or
operating agreement, partnership agreement, indenture, agreement or other instrument to which
Borrower is a party or by which it or any of its property is bound, or be in conflict with, result
in a breach of or constitute (with due notice or lapse of time or both) a default under any such
indenture, agreement or other instrument, or result in the creation or imposition of any lien,
charge or encumbrance of any nature whatsoever upon any of its property or assets, except as
contemplated by the provisions of the Loan Documents; and (e) when executed and delivered by
Borrower, will constitute the legal, valid and binding obligations of the Borrower and other
obligors named therein, if any, in accordance with their respective terms.

     5.3 Financial Statements. All financial statements delivered to the Lender are true
and correct in all respects, have been prepared in accordance with generally accepted accounting
practices consistently applied (other than with respect to individual Guarantors), and fairly
present the financial condition of the Borrower and other parties named therein as of the dates
thereof. No material adverse change has occurred in the financial condition reflected therein
since the dates thereof and no material additional liabilities have been incurred since the most
recent date thereof other than the borrowing contemplated in the Commitment and this Agreement.

     5.4 Other Information. All other information, reports, papers and data given to the
Lender with respect to Borrower or others obligated under the
terms of the Loan Documents

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and the Property are accurate and correct in all material respects and
complete insofar as completeness may be necessary to give the Lender a true and accurate knowledge
of the subject matter.

     5.5 Utilities and Access. All utility services and access necessary for the continued
operation of the Property are available, including, without limitation, roads, telephone service,
water supply, storm and sanitary sewer facilities, and natural gas or electric facilities.

     5.6 Defaults. There is no Default on the part of the Borrower under the Note or any
of the other Loan Documents and no event has occurred that may give rise to a Default.

     5.7 Use of Proceeds. The proceeds of the Loan shall be used solely for the
acquisition of the Property. None of the proceeds of the Loan shall be applied toward the costs of
the Renovation.

ARTICLE VI — AFFIRMATIVE COVENANTS

     Until the Indebtedness has been paid in full and the Loan has been terminated, Borrower hereby
affirmatively covenants and agrees as follows:

     6.1 Financial Statements . Borrower shall provide the following with respect to the
Guarantor:

          (a) as soon as available, but in no event later than ninety (90) days after the close of its
fiscal year (but in no event earlier than the date such financial statements must be submitted to
governmental authorities), financial statements (all of which financial statements may include, as
requested by the Lender, a balance sheet, income statement, sources and uses of funds for such
fiscal and/or calendar year, projected sources and uses of funds for the coming year, detailed
listing and description of all contingent liabilities, tax returns, written verification of
liquidity and such other supporting schedules and documentation which the Lender may request). All
such financial statements shall be audited by a certified public accountant acceptable to the
Lender in all respects; and

          (b) if requested by the Lender, within forty-five (45) days after the close of its quarterly
business period (but in no event earlier than the date such financial statements must be submitted
to governmental authorities), the financial statements to be filed with applicable governmental
authorities.

     6.2 Approval and Permits. No work associated with the Renovation shall be commenced
by Borrower unless and until all necessary approvals by all governmental authorities having or
claiming jurisdiction and by the beneficiary of any applicable restrictive covenant have been
obtained, and unless and until all required building and other permits have been validly issued and
all required fees and bonds have been paid or posted, as the circumstances may require.

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     6.3 Free and Clear of Liens. Except as may be otherwise specifically permitted under
the Loan Documents, Borrower shall not make any contract or arrangement of any kind which would
give rise to a lien on any portion of the Property. The Renovation shall be completed by Borrower
free and clear of all mechanics’ and materialmen’s liens.

     6.4 Insurance. Borrower will comply with all insurance requirements set forth in the
Deed of Trust.

     6.5 Hazardous Materials. Borrower will comply with the provisions of the Deed of
Trust regarding Hazardous Materials and all applicable Environmental Regulations.

     6.6 Compliance with Laws. Borrower, at its own cost and expense, will promptly, fully
and faithfully comply with, conform to and obey all present and future applicable federal, state
and local statutes, laws, ordinances, rules, regulations, requirements, determinations, judgments,
decrees and orders of any governmental authority, governmental agency (including, without
limitation, any Board of Fire Underwriters) or court having or claiming jurisdiction over the
Borrower or the Property or any part thereof.

     6.7 Equity Contribution. At or prior to closing, Borrower shall make the Equity
Contribution.

     6.8 Condominium Conversion. The Borrower shall take all steps necessary to validly
and legally convert the Property into a condominium regime with approximately 258 residential
Units. The condominium documents, including without limitation, the condominium declaration and
by-laws, shall be acceptable to the Lender in its discretion. From time to time, upon the Lender’s
request, the Borrower shall provide Lender with evidence that Borrower has complied with any
applicable requirements of the condominium documents and any applicable laws. Borrower shall,
within 150 days of the closing of the Loan, provide Lender with all condominium documents,
including without limitation, the public offering statement.

     6.9 Condominium Sales. Borrower will provide Lender with copies of any and all
Contracts within two (2) business days of execution.

ARTICLE VII — NEGATIVE COVENANTS

     Until the Indebtedness has been paid in full and the Loan has been terminated, Borrower hereby
covenants and agrees as follows:

     7.1 Restrictions on Subordinate Financing. Throughout the term of the Loan, Borrower
shall not place any subordinate financing on the Property.

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     7.2 Changes to Plans and Specifications. Without the prior written consent of the
Lender, Borrower will not permit any substantial changes in the plans and specifications for the
Renovation.

     7.3 Prohibition on Transfer of Assets. Without the prior written consent of the
Lender, Borrower will not transfer any of its assets, except for transfers in the ordinary course
of business and transfers for which Borrower receives consideration substantially equivalent to the
fair market value of the transferred asset.

     7.4 Assignments. Without the prior written consent of Lender, Borrower will not
transfer, assign, pledge or hypothecate any of its rights to advances, or any of its rights or
obligations under this Agreement. Any assignment made or attempted by Borrower without the prior
written consent of the Lender shall be void. No consent by the Lender to an assignment by Borrower
shall either (a) release Borrower as the party primarily obligated and liable under the terms of
this Agreement unless Borrower shall be released specifically by the Lender in writing, or (b) be
deemed to be a waiver of the requirement of prior written consent by the Lender with respect to
each and every further assignment.

     7.5 Amendments to Purchase Agreement or Holdback Escrow Agreement. Without the prior
consent of Lender, Borrower will not amend, restate, or otherwise modify the Purchase Agreement (as
defined in the Deed of Trust) or that certain Holdback Escrow Agreement by and between ER
Carter,L.L.C. and Borrower dated Janauary 31, 2006.

ARTICLE VIII — DEFAULT

     Each of the following events shall constitute a “Default” under this Agreement and each of the
other Loan Documents:

     8.1 Payment of Indebtedness. Any failure by the Borrower to pay when due any and all
amounts payable by the Borrower under the terms of the Note or any of the other Loan Documents,
which failure to pay remains uncured for a period of five (5) calendar days after the date such
payment is due (or five (5) calendar days after notice from Lender in the case of amounts due that
are not regular monthly payments), including, without limitation, any principal payment, interest
payment, letter of credit reimbursement, loan fee, extension fee, letter of credit fee or late
charge, and including any advances made by the Lender from the proceeds of the Loan or otherwise
and interest thereon at the applicable rate set forth in the Loan Documents.

     8.2 Performance of Obligations. Any default by the Borrower or Guarantor in the due
observance or performance of any of the Obligations and such default, if other than in payment of
the Indebtedness, shall remain uncured thirty (30) days after the receipt by

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Borrower of written
notice from Lender identifying such default. If Borrower receives such notice, Borrower shall
diligently pursue a cure of such default.

     8.3 Other Defaults. The occurrence of any Default under the Deed of Trust or the Note
or any of the other Loan Documents.

     8.4 Representations and Warranties. Any determination by the Lender that any
representation or warranty contained in any of the Loan Documents or in any certificate, opinion,
financial information or any other form delivered to the Lender in connection with the Loan, is
incorrect or misleading in any material respect at any time.

     8.5 Mechanic’s Lien. The establishment of any mechanics’ or materialmen’s lien
against any portion of the Property, unless the same is insured over by the Title Company,
satisfied, or bonded off to the satisfaction of the Lender within thirty (30) days.

     8.6 Adverse Action or Insolvency. (a) the entry of a final judgment for the payment
of money in excess of $50,000.00 against the Borrower or the Guarantor that is not discharged or
bonded within thirty (30) days after the date of entry, (b) the institution of any proceeding by or
against the Borrower or the Guarantor in bankruptcy, or for a reorganization or an arrangement with
creditors under any insolvency or debtor relief law which is not dismissed or stayed within thirty
(30) days of the date of filing, (c) the appointment of any receiver, liquidator, assignee,
custodian or similar official for the Borrower or the Guarantor or any portion of the Property, or
(d) the issuance of any writ or order of attachment, levy or garnishment against the Borrower or
the Guarantor which is not discharged to the Lender’s satisfaction within thirty (30) days after
the date of such issuance.

     8.7 Financial Condition. Any reasonable determination by the Lender that a material
adverse change has occurred in the financial condition of the Borrower or Guarantor, including
without limitation, the failure of Guarantor to meet the financial covenants of set forth in
Section 4 of the Guaranty.

     8.8 Hazardous Materials. Violations of any applicable Environmental Regulations or
requirements of the Deed of Trust pertaining to Hazardous Materials.

     8.9 Death and Dissolution. The death, legal incompetence, dissolution, liquidation or
termination of Borrower or Guarantor, or of any general partner of Borrower or Guarantor, subject
to the provisions of the Guaranty.

     8.10 Cross Defaults. The occurrence of any Default or Event of Default under any
other loan or credit facility from Lender to (or guaranteed by) Borrower or Guarantor.

ARTICLE IX — DEFAULT — REMEDIES

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     9.1 Remedies on Default. Upon the happening of any Default, the Lender shall not be
obligated to advance any additional Loan proceeds, and, in addition to any other rights or remedies
available to it under this Section, the Deed of Trust and other Loan Documents, the Lender may
enter into possession of the Property or any portion thereof.

          All sums expended by the Lender for such purposes shall be deemed to have been paid to the
Borrower or for its benefit and shall constitute part of the Indebtedness secured by the Deed of
Trust. Borrower hereby constitutes and appoints the Lender as its true and lawful
attorney-in-fact with full power of substitution to execute, acknowledge and deliver such
documents, instruments and certificates, and to take such other actions, in the name and on behalf
of Borrower and at the sole cost and expense of Borrower, as the Lender, in its sole discretion,
deems necessary, desirable or appropriate to effectuate the provisions of this section.

     It is understood and agreed that this power of attorney shall be deemed to be a power coupled
with an interest which cannot be revoked.

     The Lender shall also have the right, upon the happening of any Default, to do any one or more
of the following, at its election, but without any obligation to do so:

          (a) to declare the Indebtedness immediately due and payable;

          (b) to terminate the Loan;

          (c) to decline to make any further Loan advances and/or readvances;

          (d) to reduce any claim to judgment;

          (e) to exercise any and all rights and remedies afforded by this Agreement and the other Loan
Documents, as well as any and all legal or equitable rights and remedies afforded under any statute
or otherwise; and

          (f) to set off and apply against the Indebtedness any and all deposits, funds or assets at any
time held, and any and all indebtedness at any time owed, by the Lender to or for the credit or
account of Borrower.

     9.2 No Conditions Precedent to Exercise of Remedies. Neither Borrower nor Guarantor
shall be relieved of any obligation by reason of the failure of the Lender to comply with any
request of Borrower or of any other person to take action to foreclose on the Deed of Trust or
otherwise to enforce any provisions of the Note or the other Loan Documents, or by reason of the
release, regardless of consideration, of all or any part of the Property, or by reason of any
agreement of stipulation between any subsequent owner of any portion of the Property and the Lender
extending the time of payment or modifying the terms of the Note or the other Loan Documents
without first having obtained the consent of Borrower or Guarantor; and in the latter event,
Borrower and Guarantor shall continue to be liable to make payments

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according to the terms of any
such extension or modification agreement, unless expressly released and discharged in writing by
the Lender.

     9.3 Remedies Cumulative and Concurrent. No remedy herein conferred upon or reserved
to the Lender is intended to be exclusive of any other remedies provided for in the Note or in the
other Loan Documents, and each and every such remedy shall be cumulative, and shall be in addition
to every other remedy given hereunder, or under the Note, the Deed of Trust or the other Loan
Documents, or now or hereafter existing at law or in equity or by statute. Every right, power and
remedy given by the Note and the Loan Documents to the Lender shall be concurrent and may be
pursued separately, successively or together against the Borrower, Guarantor, or the Property or
any part thereof, or any one or more of them; and every right, power and remedy given by the Note
or the other Loan Documents may be exercised from time to time as often as may be deemed expedient
by the Lender.

     9.4 Strict Performance. No delay or omission of the Lender in exercising any right,
power or remedy accruing upon the happening of a Default shall impair any such right, power or
remedy or shall be construed to be a waiver of any such Default or any acquiescence therein. No
delay or omission on the part of the Lender in exercising any option for acceleration of the
maturity of the Indebtedness, or for foreclosure under the Deed of Trust following any Default as
aforesaid, or any other option granted to the Lender hereunder in any one or more instances, or the
acceptance by the Lender of any partial payment on account of the Indebtedness, shall constitute a
waiver of any such Default and each such option shall remain continuously in full force and effect.

     9.5 Dispute Resolution.

     (a) Arbitration. Except to the extent expressly provided below, any Dispute shall, upon the
request of either party, be determined by binding arbitration in accordance with the Federal
Arbitration Act, Title 9, United States Code (or if not applicable, the applicable state law), the
then-current rules for arbitration of financial services disputes of the American Arbitration
Association, or any successor thereof (“AAA”) and the “Special Rules” set forth below. “Dispute”
means any controversy, claim or dispute between or among the parties to this Note, Agreement, or
Guaranty, as applicable, including any controversy, claim or dispute arising out of or relating to
(a) this Agreement, (b) any other Loan Documents, (c) any related agreements or instruments, or (d)
the transaction contemplated herein or therein (including any claim based on or arising from an
alleged personal injury or business tort). In the event of any inconsistency, the Special Rules
shall control. The filing of a court action is not intended to constitute a waiver of the right of
Borrower or Lender, including the suing party, thereafter to require submittal of the Dispute to
arbitration. Any party to this Agreement may bring an action, including a summary or expedited
proceeding, to compel arbitration of any Dispute in any court having jurisdiction over such action.
For the purposes of this Dispute Resolution Section only, the terms “party” and “parties” shall
include any parent corporation, subsidiary or
affiliate of Lender involved in the servicing, management or administration of any obligation
described in or evidenced by this Agreement, together with the officers, employees, successors and
assigns of each of the foregoing.

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     (b) Special Rules.

     (i) The arbitration shall be conducted in any U.S. state where real or tangible
personal property collateral is located, or if there is no such collateral, in the City and
County where Lender is located pursuant to its address for notice purposes in this
Agreement.

     (ii) The arbitration shall be administered by AAA, who will appoint an arbitrator. If
AAA is unwilling or unable to administer or legally precluded from administering the
arbitration, or if AAA is unwilling or unable to enforce or legally precluded from enforcing
any and all provisions of this Dispute Resolution Section, the any party to this Agreement,
may substitute another arbitration organization that has similar procedures to AAA and that
will observe and enforce any and all provisions of this Dispute Resolution Section. All
Disputes shall be determined by one arbitrator; however, if the amount in controversy in a
Dispute exceeds Five Million Dollars ($5,000,000), upon the request of any party, the
Dispute shall be decided by three arbitrators (for purposes of this Agreement, referred to
collectively as the “arbitrator”).

     (iii) All arbitration hearings will be commenced within ninety (90) days of the demand
for arbitration and completed within ninety (90) days from the date of commencement;
provided, however, that upon a showing of good cause, the arbitrator shall be permitted to
extend the commencement of such hearing for up to an additional sixty (60) days.

     (iv) The judgment and the award, if any, of the arbitrator shall be issued within
thirty (30) days of the close of the hearing. The arbitrator shall provide a concise
written statement setting forth the reasons for the judgment and for the award, if any. The
arbitration award, if any, may be submitted to any court having jurisdiction to be confirmed
and enforced, and such confirmation and enforcement shall not be subject to arbitration.

     (v) The arbitrator will give effect to statutes of limitations and any waivers thereof
in determining the disposition of any Dispute and may dismiss one or more claims in the
arbitration on the basis that such claim or claims is or are barred. For purposes of the
application of the statute of limitations, the service on AAA under applicable AAA rules of
a notice of Dispute is the equivalent of the filing of a lawsuit.

     (vi) Any dispute concerning this arbitration provision, including any such dispute as
to the validity or enforceability of this provision, or whether a Dispute is arbitrable,
shall be determined by the arbitrator; provided, however, that the arbitrator shall not be
permitted to vary the express provisions of these Special Rules or the Reservations of
Rights in subsection (c) below.

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     (vii) The arbitrator shall have the power to award legal fees and costs pursuant to the
terms of this Agreement.

     (viii) The arbitration will take place on an individual basis without reference to,
resort to, or consideration of any form of class or
class
  action.

     (c) Reservations of Rights. Nothing in this Agreement shall be deemed to (i) limit the
applicability of any otherwise applicable statutes of limitation and any waivers contained in this
Agreement, or (ii) apply to or limit the right of Lender (A) to exercise self help remedies such as
(but not limited to) setoff, or (B) to foreclose judicially or nonjudicially against any real or
personal property collateral, or to exercise judicial or nonjudicial power of sale rights, (C) to
obtain from a court provisional or ancillary remedies such as (but not limited to) injunctive
relief, writ of possession, prejudgment attachment, or the appointment of a receiver, or (D) to
pursue rights against a party to this Agreement, in a third-party proceeding in any action brought
against Lender in a state, federal or international court, tribunal or hearing body (including
actions in specialty courts, such as bankruptcy and patent courts). Lender may exercise the rights
set forth in clauses (A) through (D), inclusive, before, during or after the pendency of any
arbitration proceeding brought pursuant to this Agreement, as applicable. Neither the exercise of
self help remedies nor the institution or maintenance of an action for foreclosure or provisional
or ancillary remedies shall constitute a waiver of the right of any party, including the claimant
in any such action, to arbitrate the merits of the Dispute occasioning resort to such remedies. No
provision in the Loan Documents regarding submission to jurisdiction and/or venue in any court is
intended or shall be construed to be in derogation of the provisions in any Loan Document for
arbitration of any Dispute.

     (d) Conflicting Provisions for Dispute Resolution. If there is any conflict between the
terms, conditions and provisions of this Section and those of any other provision or agreement for
arbitration or dispute resolution, the terms, conditions and provisions of this Section shall
prevail as to any Dispute arising out of or relating to (i) this Agreement, (ii) any other Loan
Document, (iii) any related agreements or instruments, or (iv) the transaction contemplated herein
or therein (including any claim based on or arising from an alleged personal injury or business
tort). In any other situation, if the resolution of a given Dispute is specifically governed by
another provision or agreement for arbitration or dispute resolution, the other provision or
agreement shall prevail with respect to said Dispute.

     (e) Jury Trial Waiver in Arbitration. By agreeing to this Section, the parties irrevocably
and voluntarily waive any right they may have to a trial by jury in respect of any Dispute.

ARTICLE X — MISCELLANEOUS

     10.1 No Warranty by Lender. By accepting or approving anything required to be
observed, performed or fulfilled by Borrower or Guarantor pursuant to this Agreement or any other
Loan Documents, including, without limitation, any plans, specifications, certificate,

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financial
information, survey, receipt, appraisal or insurance policy, the Lender shall not be deemed to have
warranted or represented the sufficiency,
legality, effectiveness or legal effect of the same, or of any term, provision or condition
thereof. Any such acceptance or approval thereof shall not be or constitute any warranty or
representation with respect thereto by the Lender.

     10.2 Liability of Lender. The Lender shall not be liable for any act or omission by
it pursuant to the provisions of this Agreement in the absence of fraud or gross negligence. The
Lender shall incur no liability to Borrower or any other party in connection with the acts or
omissions of the Lender in reliance upon any certificate or other paper believed by the Lender to
be genuine or with respect to any other thing which the Lender may do or refrain from doing, unless
such act or omission amounts to fraud or gross negligence.

     10.3 Modification — Waiver. None of the terms or provisions of this Agreement may be
changed, waived, modified, discharged or terminated except as provided in the Deed of Trust.

     10.4 Third Parties — Benefit. All conditions set forth herein with respect to the
obligations of the Lender to make Loan advances are imposed solely and exclusively for the benefit
of the Lender, and no other person shall either have standing to require satisfaction of such
condition in accordance with its terms, be entitled to assume that the Lender will refuse to make
advances in the absence of strict compliance with any or all of such conditions, or be deemed to be
beneficiary of such conditions under any circumstances, any or all of which may be freely waived in
whole or in part by the Lender at any time in the sole and absolute exercise of its discretion.
The Lender shall in no event be responsible or liable to any person other than the Borrower for the
disbursement of or failure to disburse any of the proceeds of the Loan, and no contractor,
subcontractor, laborer or material supplier or other person shall have any right or claim against
the Lender with respect to this Agreement. The terms and provisions of this Agreement are for the
benefit of the parties hereto and, except as herein specifically provided, no other person shall
have any right or cause of action on account thereof.

     10.5 Captions and Headings. The captions and headings contained in this Agreement are
included herein for convenience of reference only and shall not be considered a part hereof.

     10.6 Counterparts. This Agreement may be executed in any number of counterparts, each
of which shall be considered an original for all purposes; provided, however, that all such
counterparts shall together constitute one and the same instrument.

     10.7 Signs; Publicity. At the request and expense of the Lender (subject to
applicable law and compliance with governmental requirements, and subject to Borrower’s approval of
the design and location of said sign, which consent shall not be unreasonably withheld), Borrower
shall install a sign or signs at a location or locations on the Property satisfactory to the
Lender, reciting, among other things, that the Lender is financing the acquisition of the Property.
Borrower shall (at the expense of Lender) obtain all permits, licenses and approvals from the
appropriate governmental agency or association that
are necessary for the erection and

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existence of any such signs. Borrower expressly authorizes the
Lender to prepare and to furnish to the news media for publication from time to time news releases
with respect to any portion of the Property detailing the Lender’s involvement with the financing.

     10.8 Applicable Law. This Agreement shall be governed by and construed, interpreted
and enforced in accordance with the laws of the Jurisdiction of Choice, unless the “choice of law”
rules of the Jurisdiction of Choice can be construed or interpreted to require the laws of another
jurisdiction to govern, in which case the “choice of law” rules of the Jurisdiction of Choice shall
not apply.

     10.9 Time of Essence. Time shall be of the essence of each and every provision of
this Agreement of which time is an element.

     10.10 Conflicts. The terms and conditions of the Note and the other Loan Documents
are incorporated into this Agreement and made a part hereof as if specifically set forth herein.
In the event any provision of this Agreement conflicts with the terms of any other Loan Document,
the terms of this Agreement shall prevail. For purposes of this Section the absence of a provision
from any Loan Documents shall not constitute a conflict.

     10.11 Quality of Documents and Other Items. Each document, item or other evidence
required to be delivered to the Lender in connection with this Agreement shall be satisfactory in
form and substance to the Lender in its sole discretion. In addition, all surveys, appraisals,
environmental site assessments, inspections, cost reviews, subcontracts, leases, bonds, insurance
policies and all other documents required or contemplated by this Agreement and the other Loan
Documents shall be satisfactory to the Lender and, if required by the Lender, Borrower shall
provide the Lender and its counsel with copies of any or all of such documents. All contractors,
subcontractors, sureties, insurers and any other party responsible for the execution and
preparation of the foregoing documents shall also be satisfactory to the Lender.

     10.12 Professional Services. If requested by Lender, Borrower shall: (a) not more
frequently than annually, cause an inspection and written appraisal of the Property (or such parts
of it as are designated in the Lender’s request) to be made and provided to Lender by an appraiser
approved and engaged by the Lender in its sole discretion; and (b) cause to be conducted or
prepared any other written report, summary, opinion, inspection, review, survey, audit or other
professional service relating to the Property or any operations in connection with it (all as
designated in Lender’s request) as Lender may reasonably request, including, without limitation,
any accounting, auctioneering, architectural, consulting, engineering, design, legal, management,
pest control, surveying, title abstracting or other technical, managerial or professional service
relating to the Property or its operations. The Lender may elect to deliver any such request by
facsimile, by mail or by hand delivery addressed to the Borrower as provided herein or by any other
legally effective method, and it may be given at any time and from time to time.

     10.13 Further Assurances. At the request of the Lender, Borrower shall take any
action or execute any additional document reasonably required by the Lender to secure the

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Indebtedness, confirm the lien of the Deed of Trust or further the intent of any of the Loan
Documents.

     10.14 Costs and Expenses. The Borrower shall pay all out-of-pocket fees, charges and
expenses incurred by or on behalf of the Lender in connection with the Loan and the making, closing
and administration of the Loan, including, without limitation (a) fees and expenses for the
examination of title to the Property; (b) recording and filing fees, recordation taxes and transfer
taxes; (c) Title Company premiums, fees and charges; (d) surveyor charges; (e) appraisal fees; (f)
inspection fees; (g) the fees and expenses of the Lender’s counsel; (h) all amounts due the
Progress Inspector; (i) the payment, satisfaction, discharge and release of any encumbrance, tax,
assessment or other charge or lien upon any portion of the Property; (j) any syndication or
participation fees, if applicable, and (k) the construction, maintenance and protection of the
Improvements and every portion thereof. Further, the Lender may (but shall be under no obligation
to do so) advance for the account of Borrower as part of or in addition to the Loan any amount or
amounts as the Lender may deem necessary or advisable in order to fulfill the obligations of
Borrower hereunder, which amount or amounts may be disbursed by the Lender directly to a third
party in order to protect its interests, and any amount so applied by the Lender shall constitute a
portion of the Indebtedness, even though the aggregate of the amounts so applied, together with the
other advances under the Note, may exceed the principal amount of the Note.

     10.15 Fees and Expenses — Indemnity. Borrower will hold the Lender harmless and
indemnify the Lender from all claims of brokers and “finders” arising by reason of the Loan, the
execution and delivery of this Agreement or the making of the Loan. Borrower shall protect,
indemnify and save harmless the Lender and its directors, officers, agents, and employees, the Deed
of Trust trustees, and all independent contractors from and against all liabilities, obligations,
claims, damages, fines, penalties, causes of action, costs and expenses (including, without
limitation, attorneys’ fees and disbursements), imposed upon or incurred by or asserted against any
of them in connection with the Loan.

     10.16 Sale/Assignment of Loan. Lender may sell or offer to sell the Loan or interests
therein to one or more assignees or participants. Borrower shall execute, acknowledge and deliver
any and all instruments reasonably requested by Lender in connection therewith, and to the extent,
if any, specified in any such assignment or participation, such assignee(s) or participant(s) shall
have the same rights and benefits with respect to the Loan Documents as such person(s) would have
if such person(s) were Lender hereunder. Lender may disseminate any information it now has or
hereafter obtains pertaining to the Loan, including any security for the Loan, any credit or other
information on the Property (including environmental reports and assessments), Borrower, any of
Borrower’s principals or any Guarantor, to any actual or prospective assignee or participant, to
Lender’s affiliates, including Banc of America Securities LLC, to any regulatory body having
jurisdiction over Lender, to any actual or prospective counterparty (or its advisors) to any swap
or derivative transaction relating to Borrower and the Loan, or to any other party as necessary or
appropriate in Lender’s reasonable judgment.

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     10.17 Seal. If any Borrower is a corporation, the designation “(SEAL)” on this
Agreement shall be effective as the affixing of such Borrower’s corporate seal physically to this
Agreement.

     10.18 WAIVER OF JURY TRIAL. WITHOUT INTENDING IN ANY WAY TO LIMIT THE PARTIES’
AGREEMENT TO ARBITRATE ANY “DISPUTE” (FOR PURPOSES OF THIS SECTION, AS DEFINED IN THE “DISPUTE
RESOLUTION” SECTION) AS SET FORTH IN THIS AGREEMENT, TO THE EXTENT ANY “DISPUTE” IS NOT SUBMITTED
TO ARBITRATION OR IS DEEMED BY THE ARBITRATOR OR BY ANY COURT WITH JURISDICTION TO BE NOT
ARBITRABLE OR NOT REQUIRED TO BE ARBITRATED, BORROWER AND LENDER WAIVE TRIAL BY JURY IN RESPECT OF
ANY SUCH “DISPUTE” AND ANY ACTION ON SUCH “DISPUTE.” THIS WAIVER IS KNOWINGLY, WILLINGLY AND
VOLUNTARILY MADE BY BORROWER AND LENDER, AND BORROWER AND LENDER HEREBY REPRESENT THAT NO
REPRESENTATIONS OF FACT OR OPINION HAVE BEEN MADE BY ANY PERSON OR ENTITY TO INDUCE THIS WAIVER OF
TRIAL BY JURY OR TO IN ANY WAY MODIFY OR NULLIFY ITS EFFECT. THIS PROVISION IS A MATERIAL
INDUCEMENT FOR THE PARTIES ENTERING INTO THE LOAN DOCUMENTS. BORROWER AND LENDER ARE EACH HEREBY
AUTHORIZED TO FILE A COPY OF THIS SECTION IN ANY PROCEEDING AS CONCLUSIVE EVIDENCE OF THIS WAIVER
OF JURY TRIAL. BORROWER FURTHER REPRESENTS AND WARRANTS THAT IT HAS BEEN REPRESENTED IN THE
SIGNING OF THIS AGREEMENT, AND IN THE MAKING OF THIS WAIVER BY INDEPENDENT LEGAL COUNSEL, OR HAS
HAD THE OPPORTUNITY TO BE REPRESENTED BY INDEPENDENT LEGAL COUNSEL SELECTED OF ITS OWN FREE WILL,
AND THAT IT HAS HAD THE OPPORTUNITY TO DISCUSS THIS WAIVER WITH COUNSEL.

     10.19 Electronic Transmission of Data. Lender and Borrower agree that certain data
related to the Loan (including confidential information, documents, applications and reports) may
be transmitted electronically, including transmission over the Internet. This data may be
transmitted to, received from or circulated among agents and representatives of Borrower and/or
Lender and their affiliates and other persons involved with the subject matter of this Agreement.
Borrower acknowledges and agrees that (a) there are risks associated with the use of electronic
transmission and that Lender does not control the method of transmittal or service providers, (b)
Lender has no obligation or responsibility whatsoever and assumes no duty or obligation for the
security, receipt or third party interception of any such transmission, except for Lender’s fraud
or gross negligence, and (c) Borrower will release, hold harmless and indemnify Lender from any
claim, damage or loss, including that arising in whole or part from Lender’s strict liability or
sole, comparative or contributory negligence, but excluding that arising from Lender’s fraud or
gross negligence, which is related to the electronic transmission of data.

     10.20 USA Patriot Act Notice. Lender hereby notifies Borrower that pursuant to the
requirements of the USA Patriot Act (Title III of Pub. L. 107-56 (signed into law October 26,
2001)) (the “Act”), Lender is required to obtain, verify
and record information that identifies.

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Borrower, which information includes the name and address of Borrower and other
information that will allow Lender to identify Borrower in accordance with the Act.

[SIGNATURES APPEAR ON THE NEXT PAGE]

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

	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	BORROWER:	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	WITNESS/ATTEST:	 	 	 	COMSTOCK CARTER LAKE, L.C.,	 	 
	 	 	 	 	 	 	a Virginia limited liability company	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	By:
	 	Comstock Homebuilding Companies, Inc.,	 	 
	 

	 	 	 	 	 	 	 	Its manager	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	By:

	 	 	 	 	 	By:	 	 	 	 
	Name:

	 

	 	 	 	 	 	 

Christopher Clemente
	 	 
	Title:

	 	 	 	 	 	 	 	its Chief Executive Officer	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	(Seal)	 	 	 	Address:	 	11465 Sunset Hills Road	 	 
	 

	 	 	 	 	 	 	 	5 th Floor	 	 
	 

	 	 	 	 	 	 	 	Reston, Virginia 20190	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	WITNESS:	 	 	 	 	 	LENDER:	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	BANK OF AMERICA, N.A.	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	By:	 	 	 	 
	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	Name:

	 	 	 	 	 	 	 	John M. DeZinno	 	 
	Title:

	 	 	 	 	 	 	 	Senior Vice President	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Address:	8300 Greensboro Drive

Suite 300

McLean, Va. 22102-3604	 	 

-24-

 

Execution Copy

EXHIBIT “A”

Property Description

 

 

Execution Copy

EXHIBIT “B”

Unit Contract Summary Report

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