Document:

Exhibit 10.23

 

SERVICES AGREEMENT

 

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

 

WITNESSETH:

 

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

 

WHEREAS, the Loudoun Station Properties  were the subject of a successful rezoning
application of the Loudoun Station development that rezoned the collective
Loudoun Station Properties to a PD-TRC (Planned Development-Transit Related
Center) Zoning District in December, 2003; and

 

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

 

WHEREAS, Comstock desires to assume such
responsibilities, on and in accordance with the terms and conditions of this
Agreement;

 

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

 

ARTICLE I

Scope of the Work

 

1.01         Acting
as a consultant for CAM and at its request, Comstock will undertake and perform
for CAM the following responsibilities (the “Work”), provided however, it is
agreed by the parties hereto that Comstock shall not be guaranteeing that the
Work will be prosecuted within any timelines that may be delivered as part of
its Work.  Comstock shall manage
the site configuration, design and layout of product to be incorporated into
the development plan for the Loudoun Station Properties at the direction of
CAM. All work shall comply with the approved Proffer Agreement dated December
15, 2003 and adopted by Loudoun County as a condition of the rezoning approval
of the Loudoun Station Properties.

 

A.            Plan/Product Design and
Management.  In conjunction with land
planners, architects and engineers, Comstock shall review and comment upon any
and all design drawings, product specifications and shop drawings submitted by
such professionals and by other Contractors for the  Loudoun Station Properties or portions
thereof.

 

B.            Governmental Approvals. Based on conceptual plans
approved by CAM, Comstock shall coordinate and submit engineering plans for the
Loudoun Station Properties or portions thereof, monitor the approval processes
with the applicable governmental authority in order to seek final approvals for
lot or unit yield and F.A.R. densities, provide for vested rights regarding the
intended uses of the Loudoun Station Properties and prepare and submit bonding
applications required as a prerequisite to development of the Loudoun Station
Properties.  Comstock shall seek to
maintain the proper pro-rata allocation of development F.A.R. upon the parcels
that  comprise the Loudoun Station
Properties in accordance with the applicable site area of each parcel, all as
directed by CAM.

 

C.            Solicit and
Evaluate Development Bids. Comstock shall solicit and evaluate bids for the
development of the Loudoun Station Properties, or portions thereof, from
qualified contractors and make recommendations to CAM regarding the selection
of the Contractors.

 

D.            Development of
Loudoun Station Properties. Comstock agrees to perform and complete all
functions attendant to the management of the following items for the Loudoun
Station

 

 

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

 

E.             Financial
Services.  Comstock, on behalf of
CAM, agrees to negotiate and make arrangements for agreements with lending
institutions related to the development of the Loudoun Station Properties, as
requested by CAM, and shall be responsible for the administration of any such
agreements and compliance by CAM with requirements imposed on CAM under any
such agreements, provided however, Comstock shall not be required to enter into
or otherwise guaranty the repayment of any sums advanced as a result of said
arrangements.

 

F.             Legal Services.  Comstock, on behalf of CAM, shall assist in
the performance of requisite legal services required as a result of the
prosecution of the Work, including but not limited to formation of master and
neighborhood property owners associations reasonably required for the Loudoun
Station Properties development.

 

ARTICLE II

Exclusions from Scope of the Work

 

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

 

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

 

B.            Management duties
associated with a master or neighborhood property owners associations for the
Loudoun Station Properties development.

 

C.            Management duties
associated with completed commercial or investment properties within the
Loudoun Station Properties development.

 

ARTICLE III

Personnel Assigned to Agreement

 

3.01.        [Reserved]

 

ARTICLE IV

Compensation

 

4.01         Management
Fees.  In partial consideration
for the performance of Comstock’s prosecution of the Work under this Agreement, CAM agrees to pay to Comstock, or any designated
affiliate, and Comstock agrees to accept payment from CAM, the following
amounts:

 

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

 

B.                                     Upon
commencement of site development of the Loudoun Station Properties development,
or any portion thereof, if requested by CAM, Comstock will assign a full time
on-site project superintendent and in such event the fee for Management
Services will be increased accordingly and paid by CAM (the “Project
Superintendent Fee”).

 

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

 

4.02         Additional
Consideration

 

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

 

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CLS’s sole discretion, determines to develop as for-sale residential
property (in the form of condominium units) and will not accept any offer for
the purchase of the subject for-sale residential property from any third party
without first providing Comstock the opportunity to purchase the subject
for-sale residential property (the “Purchase Opportunity”). The foregoing
rights of CAM arise from that certain Development Management and Related
Service Agreement entered into by and between CLS and CAM on the same date as
this Agreement. Comstock will be provided a thirty (30) day period (the
Opportunity Period”) to consider the Purchase Opportunity without incurring any
obligation to purchase the subject for-sale residential property.  At such time as CAM determines such for-sale
residential property will be made available for sale it will notify Comstock
which commences the Opportunity Period. During the Opportunity Period, the
parties shall negotiate in good faith regarding a fair and reasonable purchase
price for the subject for-sale residential property and the terms and
conditions of the purchase and sale agreement. 
If the parties cannot come to agreement upon a reasonable purchase price
or agree to the terms and conditions of a purchase and sale agreement during
the Opportunity Period, the Purchase Opportunity shall automatically expire and
the parties hereto shall have no further obligations to each other in that regard.
The Purchase Opportunity shall be granted for a period of five (5) years from
the date hereof unless extended by mutual agreement.

 

4.03         Third Party Vendors and
Reimbursements

 

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

 

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

 

ARTICLE V

Term of Agreement

 

5.01.        Expiration

 

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

 

A.                                   Substantial
completion of the Work.

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

C.                                     Termination
as provided for herein.

 

5.02.        Termination Due to
Breach or Default Prior to Expiration

 

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

 

B.            Termination
by CAM. If CAM terminates this Agreement by reason of the breach or default
by Comstock of its obligations under this Agreement, the parties agree that it
would be difficult to compute the actual damages incurred by CAM as a result
thereof.  Consequently, CAM and Comstock
agree that, in the event of such breach, CAM’s sole remedy shall be the
retention by CAM of the Project Fees not yet paid to Comstock by CAM at the
time of such breach and the termination of the Purchase Opportunity, such
remedies representing

 

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

 

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

 

5.03         Termination Due to
Convenience Prior to Expiration

 

A.            CAM
termination for convenience Prior to Expiration On ninety (90) days written
notice (the “CAM Notice Period”) to Comstock, CAM may terminate this Agreement
at any time, for its convenience.  In the
event of termination of the Agreement under this Section 5.03(A), CAM shall pay
within thirty (30) days of the date of the termination notice to Comstock and
Comstock agrees to accept; (i) all unpaid Project Fees calculated through the
end of the CAM Notice Period, and (ii) reimbursement of all expenses as set
forth in Section 4.03 of this Agreement. 
In addition, the Purchase Opportunity shall remain in effect as provided
for herein.

 

B.            Comstock
Termination for Convenience Prior to Expiration.  At any time after six (6) months from the
Effective Date, Comstock may terminate this Agreement at any time, for its
convenience, on ninety (90) days written notice to CAM (the “Comstock Notice
Period”), in which event Comstock shall accept in full compensation of all
claims by it against CAM the amounts to be paid by CAM to Comstock through the
actual date of termination.  Comstock
shall continue to perform its services under this Agreement during the Comstock
Notice Period. In such event the Purchase Opportunity shall be void at the
option of CAM.

 

ARTICLE VI

Assignment and Sub-Contracting

 

6.01         Comstock may assign
or transfer this Agreement to a parent or affiliated entity provided all rights
and obligations are transferred therewith.

 

ARTICLE VII

Independent Contractor Status

 

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

 

ARTICLE VIII

Compliance with
Non-Discrimination Laws

 

8.01         Comstock shall comply
with all federal, State and County laws, codes, ordinances and regulations
requiring non-discrimination in employment and in the provision of services.

 

ARTICLE IX

Entire Agreement

 

9.01         Except as otherwise
stated in this Agreement, this Agreement constitutes the entire agreement of
the parties with respect to the matters dealt with herein.

 

ARTICLE X

Indemnification

 

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

 

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ARTICLE XI

Notices

 

11.01       All notices, demands
and requests which may be given or which are required to be given by either
party to the other must be in writing. Notices, demands or requests shall be
deemed to have been properly given for all purposes if (i) delivered against a
written receipt of delivery, (ii) mailed by express, registered or certified
mail of the United States Postal Service, return receipt requested, postage
prepaid, or (iii) delivered to a nationally recognized overnight courier service
for next business day delivery to the receiving party’s address as set forth
above or (iv) delivered via telecopier or facsimile transmission to the
facsimile number listed below, with an original counterpart of such
communication sent concurrently as specified in subsection (ii) or (iii) above
and with written confirmation of receipt of transmission provided.  Each such notice, demand or request shall be
deemed to have been received upon the earlier of the actual receipt or refusal
by the addressee or three (3) business days after deposit thereof at any main
or branch United States post office if sent in accordance with subsection (ii)
above, and the next business day after deposit thereof with the courier if sent
pursuant to subsection (iii) above. Notices shall be sent to the following
addresses:

 

To CAM:

 

Comstock Asset Management, L.C.

11465 Sunset Hills Road, Suite 501

Reston, Virginia 20190

Attention: Christopher Clemente

Fax No: 703/935-1178

 

To Comstock:

 

Comstock Homebuilding Companies, Inc.

11465 Sunset Hills Road, Suite 501

Reston, Virginia 20190

Attention: Gregory Benson

Fax No: 703/760-1520

 

[SIGNATURES FOLLOW]

 

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

 

 

	
  CAM:

  	
  COMSTOCK:

  
	
   

  	
   

  
	
   

  	
   

  
	
  COMSTOCK ASSET MANAGEMENT, L.C.

  	
  COMSTOCK HOMEBUILDING

  COMPANIES, INC.

  
	
  a Virginia limited liability company

  	
  a Delaware corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/ Christopher Clemente

  	
   

  	
  By:

  	
  /s/ Gregory Benson

  	
   

  
	
   

  	
  Christopher Clemente

  	
   

  	
  Gregory Benson

  
	
   

  	
  Manager

  	
   

  	
  President

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Dated:

  	
  March 4, 2005

  
						

 

6

 

Exhibit A:  The Loudoun Station Properties

 

7Exhibit 10.30

 

Description of Arrangements with William
Bensten

 

Mr. Bensten
serves as the Senior Vice President of Comstock Homebuilding Companies, Inc.
(the “Company”).  For the year ended
December 31, 2004, Mr. Bensten received $200,000 in base salary and $200,000 in
incentive bonus payment.  In addition,
Mr. Bensten received an additional bonus of approximately $845,000 resulting
from an arrangement he entered into with the Predecessor Company.  Under this arrangement Mr. Bensten was
entitled to receive bonuses in an amount equal to 4% of distributions to
stockholders including our distribution payable to our pre-initial public
offering stockholders.  This agreement
terminated with respect to any new bonus obligations immediately upon execution
of our initial public offering.  Pursuant
to the Company’s 2004 Long-Term Incentive Compensation Plan, on December 14,
2004, Mr. Bensten received a restricted stock grant of 112,500 shares of the
Company’s Class A common stock, which shares have a four year vesting period.

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