Document:

Exhibit
10.3

 

LOAN AGREEMENT

 

THIS LOAN AGREEMENT
(this “Agreement”) is made as of this 17th day of December, 1997 by and between
(i) COMSTOCK HOLDING COMPANY, INC.
(individually, “Borrower”), a Virginia corporation and COMSTOCK L’AMBIANCE, L.C., a Virginia
limited liability company (individually, “Comstock L’Ambiance”) (collectively,
Borrower and Comstock L’Ambiance, as their interests may appear, shall be
referred to herein as “Comstock”), and NATIONSBANK,
N.A., a national banking association (the “Lender”).

 

R E C I T A L S:

 

WHEREAS, the Lender
has agreed to make that certain acquisition and revolving construction loan to
the Borrower in the amount of $2,000,000.00, or so much thereof as shall be
advanced and/or readvanced (collectively, the “Loan”), in order to finance
Comstock’s acquisition of developed residential building lots and/or
construction of single family residences and/or townhomes thereon; and

 

WHEREAS, Comstock
L’Ambiance, Christopher Clemente and Gregory Benson have executed and delivered
to Lender their Guaranty dated of even date herewith (as defined herein); and

 

WHEREAS, Lender and
Comstock have agreed to execute this Agreement for the purpose of describing
together with the other Loan Documents (as herein defined) some of the terms
and conditions relating to the disbursement of Loan proceeds, and to otherwise
set forth together with the other Loan Documents (as herein defined) some of
the obligations of Comstock 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. Comstock and the Lender
agree that, unless the context otherwise specifies or requires, the following
terms shall have the meanings herein specified, such

 

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definitions to be applicable equally to the singular and the plural
forms of such terms and to all genders:

 

(a)                                  Appraised
Value - (i) with respect to a Unit (hereinafter defined), the then current
market value determined pursuant to the most recent appraisal for a base Unit
type, together with the appraised value estimates for significant options which
increase the value of the Unit, and (ii) with respect to a Lot (hereinafter
defined), the then current market value determined pursuant to the most recent
appraisal for the Project (hereinafter defined) where the Lot is located.  All such appraisals shall be ordered by the
Lender, prepared at Comstock’s expense by a certified appraiser acceptable to
the Lender and otherwise satisfactory to the Lender in all respects and such
appraisals may be reviewed and adjusted by the Lender from time to time, taking
into account the Lots/Units, as applicable, settled prior thereto. The Lender
may order, if required by the Lender’s internal policies, reappraisals of a
base Unit-type, at the Lender’s sole discretion and at Comstock’s expense.  Prior to the initial advance of Loan proceeds
in any Project, the Lender shall have received the requisite appraisal(s)
required for such Project. Copies of all such appraisals shall be promptly
delivered to Comstock, provided that Lender has been reimbursed for the cost
thereof.

 

(b)                                  Base
Unit - A Base Unit shall be a house type to be constructed by Comstock
without any optional features which would increase its appraised value.

 

(c)                                  Borrower
- The entity hereinabove designated as such.

 

(d)                                  Contract
- A fully executed contract of sale for a Unit that: (i) has been accepted
by Comstock which is the owner of the Project where the Unit is located which
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 “Contract Information
Sheet” in form attached hereto as Exhibit “C” for each Unit or Inventory
Lot to be financed under the Loan, which shall summarize the Contract terms and
the status thereof (e.g. approval of financing, contingencies, etc.).  No more than twice monthly Lender shall verify
the accuracy of the information on each Contract Information Sheet through a
review of Borrower’s, files.  The
Contract Information Sheet shall also serve as a turn-around document for the
purpose of notifying the Borrower of the amount of Loan proceeds to be
committed by the Lender for the construction of each Unit.  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 Contract Information Sheet is submitted to
the Lender for its approval, Comstock shall specifically identify to the Lender
each Contract wherein the purchaser is affiliated with or related to Comstock,
any Guarantor (hereinafter

 

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defined) or any of their respective employees, shareholders, partners,
members or other principals, as applicable.

 

(e)                                  Deed
of Trust - Collectively, that certain Credit Line Deed of Trust and
Security Agreement of even date herewith, executed and delivered by Comstock to
secure the Loan, and any other deed of trust encumbering any other Project, as
any of the same may from time to time be amended, modified, supplemented or
spread.

 

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

 

(g)                                 Environmental
Regulations - “Environmental Regulations” as defined in the Deed of Trust.

 

(h)                                 Future
Projects - construction of various single-family houses and/or townhouse
Units, other than the L’Ambiance Project (hereinafter defined), as approved by
the Lender to be financed with proceeds of the Loan.

 

(i)                                    Guarantor
- Comstock L’Ambiance, Christopher Clemente and Gregory Benson,
collectively, and any other party (including, without limitation, a
co-guarantor of a Future Project, as approved by the Lender) that executes and
delivers a Guaranty, and its or their respective successors, personal
representatives and permitted assigns. Upon repayment of the full amount of the
Loan advanced and outstanding with respect to a particular Project, written
confirmation from the Borrower that no further amounts shall be advanced with
respect to such Project, and release of such Project from the lien of the Deed
of Trust, the co-guarantor which owns such Project shall no longer be deemed a
co-guarantor hereunder and shall be released from all obligations under the
Loan Documents, with the exception of the Environmental Indemnification.

 

(j)                                    Guaranty
- That certain (i) Guaranty Agreement of even date herewith executed and
delivered by each 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.

 

(k)                                Hazardous
Materials - “Hazardous Materials” as defined in the Deed of Trust.

 

(l)                                    Improvements
- Any and all buildings, structures, improvements, alterations or
appurtenances already existing or at any time hereafter constructed or placed
upon the Land or any Lot therein, 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.

 

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(m)                              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 and including any
principal that is repaid and readvanced), 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.

 

(n)                                 Inventory
Lot - A Lot that is acquired with Loan proceeds but is not part of a Unit
and is not subject to a Contract.

 

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

 

(p)                                  Land
- All Lots now owned or hereafter acquired by Comstock with Loan proceeds
and more particularly described in the Deed of Trust.

 

(q)                                  Lender
- The party hereinabove designated as such, its successors and assigns.

 

(r)                                  Loan
- That certain acquisition and revolving construction loan in the amount of
$2,000,000.00, or so much thereof as shall be advanced or readvanced, from the
Lender to the Borrower made pursuant to this Agreement, to finance the
acquisition of developed Lots and/or the construction of Improvements thereon,
as evidenced by the Note and secured by the Deed of Trust and the other Loan
Documents. During the term of the Loan, as set forth in the Note, the Borrower
may borrow, repay and reborrow amounts under the Loan; provided, however, that
the maximum amount available for distribution at any time with respect to a
particular Project shall equal (a) the sum of $2,000,000.00 minus (b) the total
amount budgeted under the Loan for all Inventory Lots and Units for which funds
have been advanced under the Loan and not repaid in full.

 

(s)                                  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.

 

(t)                                    Lot
- A subdivided parcel of land contained in a Project on which no
construction has commenced.

 

(u)                                 Maturity
Date - June 30, 1999.

 

(v)                                   Note
- That certain Revolving Deed of Trust Note of even date herewith in the
original principal amount of $2,000,000 00, or so much thereof as shall be
advanced

 

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and/or readvanced, 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.

 

(w)                                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 Guarantors or others to the Lender pursuant to or as
otherwise set forth in the Loan Documents.

 

(x)                                  Plans
and Specifications - Any and all plans and specifications and/or
engineering drawings prepared for Comstock and approved by the Lender in
connection with the construction of Improvements, as the same may from time to
time be amended with the prior approval of the Lender. In no event shall
Lender’s approval, however, be required for changes which do not affect the
market value of the Improvements.

 

(y)                                  Pre-Sold
Unit - A Unit that is the subject of a Contract that has not been canceled.

 

(z)                                  Progress
Inspector - Such person or firm as the Lender may from time to time appoint
or designate to inspect the progress of the construction of the Improvements
and conformity of construction with the Plans and Specifications, 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.

 

(aa)                            Project
or Projects - The L’Ambiance Project (hereinafter defined), and the Future
Projects.

 

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

 

(cc)                            Speculative
Unit - A Unit (including any model Unit) that is not a Pre-Sold Unit.

 

(dd)                            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.

 

(ee)                            Unit -
A Lot and all Improvements thereon and may refer to a Speculative Unit and/or a
Pre-Sold Unit.

 

(ff)                                L’Ambiance
Project - construction of up to 19 single-family houses on 19 finished lots
in the subdivision known as “L’Ambiance”, located off of Kirby Road and
Westmoreland Street in McLean, Fairfax County, Virginia.

 

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ARTICLE II — ADVANCES
AND/OR READVANCES OF THE LOAN

 

2.1                               Advances
and/or Readvances of Loan Proceeds. 
The Borrower shall make applications for advances and/or readvances of
proceeds of the Loan in writing specifying the Lot number and draw number
requested; and such applications shall be made not more frequently than twice
per month. The Borrower shall make each such application at least five (5)
business days before the advance is called for. All Loan advances shall be made
either by deposit into an account established by the Borrower with the Lender,
or to the Title Company or another closing agent selected by the Borrower and
approved by the Lender in its sole discretion.

 

2.2                               Limitations
on Amounts Advanced and/or Readvanced and the Terms Therefor.  Each of the following shall constitute a
limitation on the maximum principal amount to be advanced and/or readvanced
under the Loan:

 

(a)                                  With respect to each
Pre-Sold Unit, the Lender shall not fund under the Loan an amount in excess of
the lesser of (i) eighty percent (80%) of the lesser of (x) the contract price
for such Pre-Sold Unit, or (y) the Appraised Value for such Pre-Sold Unit
including applicable appraised options, or (ii) one hundred percent (100%) of
the total costs for such Pre-Sold Unit including applicable options.  Notwithstanding anything contained in this
Agreement or any other Loan Document to the contrary, the portion of any Loan
advance which pertains to a Lot comprising a Pre-Sold Unit shall not exceed one
hundred percent (100%) of the lesser of (i) the price paid for such Lot by
Borrower, or (ii) the Appraised Value for such Lot.

 

(b)                                  With respect to each
Speculative Unit, the Lender shall not fund under the Loan an amount in excess
of the lesser of (i) eighty (80%) of the Appraised Value for such Speculative
Unit including applicable appraised options, or (ii) one hundred percent (100%)
of the total costs for such Speculative Unit including applicable options.
Notwithstanding anything contained in this Agreement or any other Loan Document
to the contrary, the portion of any Loan advance which pertains to a Lot
comprising a Speculative Unit shall not exceed eighty percent (80%) of the
lesser of (i) the price paid for such Lot by Borrower, or (ii) the Appraised
Value for such Lot; provided, however, with respect to the L’Ambiance Project,
the portion of any Loan advance which pertains to a Lot comprising a
Speculative Unit shall not exceed one hundred percent (100%) of the lesser of
(i) the price paid for such Lot by Borrower, or (ii) the Appraised Value for such
Lot.

 

(c)                                  With respect to each
Inventory Lot, the Lender shall not fund under the Loan an amount in excess of
the lesser of (i) seventy-five percent (75%) of the purchase price for such
Lot, or (ii) seventy-five percent (75%) of the Appraised Value for such Lot.
Notwithstanding anything to the contrary herein, with respect to each Inventory
Lot in the L’Ambiance project, the Lender shall not fund under the Loan an
amount in excess of One Hundred Thirty-Two Thousand Three Hundred Thirty-Three
Dollars ($132,333.00).

 

(d)                                  If the Borrower shall
request an initial advance and/or readvance under the Loan for any Unit during
the period that is within ninety (90) days prior to the Maturity Date, the
Lender only shall make such advance and/or readvance in its sole and absolute
discretion.

 

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(e)                                  The Borrower agrees
that Inventory Lots that may be financed with Loan proceeds shall not
exceed:  (i) three (3) Units per
single-family detached Project and nine (9) Units per townhouse Project. The
actual number of Inventory Lots allowed per Project shall be decided by Lender,
in its sole discretion, at the time of specific Project approval.  In no event shall the maximum principal amount
(i) advanced for Inventory Lots for all Projects financed under the Loan plus
(ii) committed for Inventory Lots for all Projects financed under the Loan
exceed Three Hundred Thousand Dollars ($300,000.00) (the “Maximum Inventory
Amount”);  provided, however, it is
acknowledged and agreed that the Maximum Inventory Amount shall be  $400,000.00 until such time as the initial
L’Ambiance Project Inventory Lots are converted to Units. 

 

(f)                                    Comstock agrees
that Speculative Units (including model Units) that may be financed with Loan
proceeds shall not exceed: (i) two (2) single family Units for the L’Ambiance
Project, and (ii) four (4) single family Units and ten (10) townhouse Units for
any Project; provided, however, that (x) at no time during the term of the loan
shall more than fifty percent (50%) of all homes under construction and
financed with Loan proceeds be Speculative Units and (y) no new Speculative
Units may be started (after the initial approval) until sufficient Contracts
exist such that the Project is in compliance with subparagraph (x) above.  Notwithstanding the foregoing, the actual
number of Speculative Units allowed per Project shall be decided by Lender, in
its sole discretion, at the time of specific Project approval. In no event
shall the maximum principal amount (i) advanced for Speculative Units for all
Projects financed under the Loan plus (ii) committed for Speculative Units for
all Projects financed under the Loan exceed Seven Hundred Fifty Thousand and
No/100 Dollars ($750,000.00). 

 

Construction of any townhouse building may be commenced without meeting
the Pre-Sold requirements, so long as the Speculative Unit Limit set forth
hereinabove is not exceeded.

 

(g)                                 The outstanding
principal balance of the Loan (together with all accrued and unpaid interest
and all other amounts due under the Loan) attributable to each Unit and/or
Inventory Lot shall be due and payable on the earlier of: 

 

(i)                                    with respect to any
Inventory Lot, the earlier of (a) the date which is six (6) months after the
first advance attributable to such Inventory Lot, unless extended pursuant to a
Courtesy Extension (as hereinafter defined), or (b) ninety (90) days after
“Project Withdrawal” (hereinafter defined);

 

(ii)                                with respect to
Pre-Sold Units, the earlier of (a) the date of closing pursuant to any sale of
any such Pre-Sold Unit to a third party purchaser, or (b) the date which is
nine (9) months after the first advance attributable to such Pre-Sold Unit,
unless extended pursuant to a Courtesy Extension (as hereinafter defined);

 

(iii)                            with respect to Speculative
Units (excluding model units), the earlier of (a) the date which is twelve (12)
months after the first advance attributable to such

 

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Speculative Unit, unless extended pursuant to a Courtesy Extension (as
hereinafter defined) or (b) ninety (90) days after Project Withdrawal; and

 

(iv)                               with respect to any
Speculative Units that are considered to be model Units, the date which is the
earlier of (a) ninety (90) days after Project Withdrawal, (b) the date of
closing pursuant to any sale of such Unit to a third party purchaser, or (c)
the Maturity Date.

 

Notwithstanding anything to the contrary set forth hereinabove
(including Courtesy Extensions), at such time and in the event the first
advance of Loan proceeds allocated for a Unit repays the principal amount
outstanding with respect to an Inventory Lot, then the funds advanced for such
Unit shall have a maturity date calculated from the date of the initial advance
of Loan proceeds as a Pre-Sold Unit or a Speculative Unit, as applicable.

 

The term “Project Withdrawal” as used herein shall mean in the event
Comstock withdraws its sales efforts at a particular Project by permanently
abandoning the sales efforts (no longer marketing from sales trailer or model)
and/or notifying the land seller of its intention not to comply with the
take-down schedule for lot purchases, as determined by the Lender.

 

The term “Courtesy Extension” as used herein shall refer to Borrower’s
request and Lender’s approval of the extension of any individual maturity date
for one three (3) month period, with no additional fee owed by Borrower to
Lender; such individual maturity date may be further extended for successive
three (3) month periods at Borrower’s request and Lender’s approval, so long as
Borrower pays to Lender prior to each three (3) month period a fee in the
amount of one eight of one percent (1/8%) of the amount committed under the
Loan for such Unit.  Notwithstanding
anything further to the contrary set forth hereinabove, the entire outstanding
principal of the Loan (together with all accrued and unpaid interest and all
other amounts due under the Loan), shall be due and payable in full on the
Maturity Date.  In no event may any
Courtesy Extension extend beyond the Maturity Date.

 

2.3                               Draw
Schedule.  The Lender shall make
advances under the Loan in accordance with a staged draw schedule attached
hereto as Exhibit “A” and made a part hereof by reference, which staged
draw schedule may show anticipated draws for more than one Unit under the Loan.

 

2.4                               Conditions
Precedent to First Advance (Land Advance).  Unless waived by the Lender, as a condition
precedent to the first advance, Comstock must (a) satisfy the conditions
required hereby and (b) execute and deliver to, procure for and deposit with,
and pay to the Lender, and if appropriate, record in the proper records with
all filing and recording fees paid, the documents, certificates, and other
items that are noted on Exhibit “B” as applicable, attached hereto and
incorporated herein by reference, together with such other documents,
instruments, and certificates as Lender may reasonably require from time to
time. 

 

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2.5                               Conditions
Precedent to All Advances. 
Unless waived by the Lender, the following conditions must be satisfied
prior to each Loan advance and/or readvance (including the first advance and
the last advance):

 

(a)                                  If the advance or
readvance is being requested to pay for construction costs:

 

(i)                                    In the reasonable
judgment of the Lender, all work completed at the time of the application for
advance has been performed in a good and workmanlike manner and all materials
and fixtures to be usually furnished and installed at that stage of
construction have been furnished and installed in accordance with the draw
schedule.

 

(ii)           The Lender shall have received
satisfactory evidence that the building permit and all other permits and
licenses necessary or required in connection with the work for which payment is
being requested have been issued and are in full force and effect.

 

(iii)         If requested by the Lender, the Lender
shall have received satisfactory evidence that all work requiring inspection by
governmental or regulatory authorities or any rating or inspection organization,
bureau, association or office having or claiming jurisdiction has been duly
inspected and approved by such authorities and that any work that is subject to
a restrictive covenant has been approved by the beneficiaries of such
restrictive covenant.

 

(iv)          If requested by the Lender, the Lender
shall have received from all subcontractors and material suppliers
acknowledgments of payment and releases of liens and rights to claim liens for
work performed or materials delivered through the date of the last preceding
advance.

 

(v)            At Lender’s option, the Lender shall
have verified that Borrower has a “wall check” or “foundation” survey of the
applicable Lot and that shows that (A) all new construction is within the
boundary lines of the Lot and is in compliance with all applicable setback,
location and area requirements, and (B) there is no change in condition which
could adversely affect such Lot.

 

(b)                                  If any Improvements
being financed with the proceeds of the Loan have been materially damaged by
fire or other casualty, the Lender shall have received proceeds of insurance or
other funds contributed by Comstock sufficient in the judgment of the Lender to
effect a satisfactory restoration of such Improvements prior to the maturity
date of the Loan. 

 

(c)                                  Unless the title
insurance policy covering the Lot for which an advance is being requested
provides for coverage in an amount sufficient to cover the requested advance
and for insurance against intervening liens between the date of the policy and
the date of the advance, the Lender shall have received a notice of title
continuation or an endorsement to the title insurance policy providing for such
coverage and showing no change in the status of title or any other exceptions
not previously approved by the Lender. 

 

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(d)                                  The representations
and warranties in this Agreement and in the Deed of Trust and each of the other
Loan Documents shall be true and correct on and as of the date of the advance
with the same effect as if made on such date. 

 

(e)                                  If the advance or
readvance is for construction of a Pre-Sold Unit, the Contract Information
Sheet for such Contract has been submitted to Lender, and the Contract for such
Pre-Sold Unit remains in full force and effect as outlined on the Contract
Information Sheet.

 

(f)                                    Lender shall have
received from Borrower a construction budget, which includes base house and
option costs for all active Projects.

 

(g)                                 All other terms and
conditions of the Loan Documents required to be met as of the date of the Loan
advance shall have been met to the satisfaction of the Lender.

 

2.6                               Additional
Conditions Precedent to Final Advance. 
Unless waived in writing by the Lender, in addition to the requirements
of Section 2.5 above pertaining to
all advances, the following conditions must be satisfied prior to the final
Loan advance:

 

(a)                                  If the proceeds of
the Loan have been used to finance construction of a Unit:

 

(i)            if the Lender shall have so
requested, the Lender shall have received the final “as-built” survey for each
Unit;

 

(ii)           the Lender shall be satisfied that
use and occupancy permits or certificates of occupancy will be issued for
permanent occupancy of all of the Units; and

 

(iii)         if the Lender shall have so requested,
the Lender and the Title Company shall have been provided with all final
waivers of liens or, as to any disputed lien or claim of lien, a bond
acceptable to Lender, or sufficient funds to cover any potential liability have
been placed in escrow with an escrow agent satisfactory to the Lender.

 

(b)                                  All other terms and
conditions of the Loan Documents required to be met as of the date of the final
advance of Loan proceeds shall have been met to the satisfaction of the Lender.

 

2.7                               Use
of Funds. Comstock agrees not to expend any part of the proceeds of the
Loan for any purpose except in accordance with this Agreement and the other
Loan Documents.  Comstock further
covenants and agrees that the proceeds of the Loan shall be used only for
acquisition and/or construction of homes as approved by the Lender in
connection with Projects, including the soft costs and other general and
administrative expenses and overhead expenses of Comstock.

 

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2.8                               Advances
to Others for Account of Comstock. 
The Lender may make Loan advances hereunder in order to satisfy
conditions of the Commitment, the Note or the other Loan Documents.  Any such advance may be made directly to the
Title Company or to any contractor, subcontractor or materialman, or to any of
them jointly. Any and all such advances shall constitute part of the
Indebtedness secured by the Deed of Trust regardless of the disposition of such
amounts by the party or parties to whom an advance is made.

 

2.9                               Additional
Funds.  If, at any time, the
Lender determines that the unfunded balance of the Loan is insufficient to pay
for the cost of completing construction of the Pre-Sold and Speculative Units
according to the plans and specifications for such Units then (unless the
Lender is otherwise satisfied that such deficiency no longer exists):  (i) until such deficiency is cured by
Comstock as set forth in the Loan Documents, the Lender shall not be obligated
to make any further advances relating to such unit for which there is a
deficiency and/or readvances under the Loan; (ii) Comstock shall deposit funds
with the Lender in an amount equal to the deficiency as determined by Lender
within fifteen (15) business days after notification from the Lender to
Comstock of such deficiency; and (iii) such deficiency shall be deemed a
default under the Loan Documents unless adequate funds are deposited with
Lender therefor within the fifteen (15) business day period previously
described in clause (ii) of this paragraph. 
Such funds deposited with Lender shall be advanced to Comstock prior to
any further advances and/or readvances of the proceeds of the Loan for the unit
where a deficiency is determined to exist. Nothing in this Section 2.9 shall be construed so as to
relieve Lender of its obligation to fund all other advances on all other
Units/Projects where said deficiency is not applicable unless such deficiency
is not cured within the timeframe set forth herein.

 

2.10                        Future
Projects.  Prior to the Lender’s
initial advance or readvance of any Loan proceeds for any Future Projects,
Comstock and the Lender must have received, reviewed and found satisfactory (a)
amendments, modifications or spreaders to the Loan Documents, as applicable,
including, without limitation, the addition to the Guaranty of an additional
co-guarantor which owns or will own such Future Project, and (b) the items set
forth on Exhibit “B” attached hereto, as applicable.

 

ARTICLE III — REPRESENTATIONS
AND WARRANTIES

 

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

 

3.1                               Organization,
Power, Etc. (a) Borrower is a duly organized, validly existing
corporation, in good standing under the laws of the jurisdiction of its
organization; (b) Comstock L’Ambiance is duly organized, validly existing
limited liability company, in good standing under the laws of the jurisdiction
of its organization and shall continue to be so organized until such time as
the L’Ambiance portion of the Loan is repaid; (c) each of the entities
constituting Comstock has the power and authority to own its properties and to
carry on its business as now being conducted; (d) each of the entities
constituting Comstock is duly qualified to do business

 

11

 

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; (e) each of the entities constituting Comstock is in
compliance with all laws, regulations, ordinances and orders of public
authorities applicable to it; and (f) each of the entities constituting
Comstock 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.

 

3.2                               Validity
of Loan Documents.  The
execution, delivery and performance by Comstock of the Note and the other Loan
Documents: (a) are within the legal powers of Comstock; (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 Comstock 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
Comstock, will constitute the legal, valid and binding obligations of the
Comstock and other obligors named therein, if any, in accordance with their
respective terms.

 

3.3                               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 Comstock 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.

 

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

 

3.5                               Utilities
and Access.  All utility services
and access necessary for the construction of the Improvements and the use
thereof for residential purposes are available at the boundaries of each Lot
(or provisions for the extension of same to each Lot), including, without
limitation, roads, telephone service, water supply, storm and sanitary sewer
facilities, and natural gas or electric facilities.

 

12

 

3.6                               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.

 

3.7                               Subordinate
Financing.

 

(a)                                  Subordinate
financing on any Future Projects shall be subject to the approval of the Lender
and such approval shall be made on a project by project basis in the Lender’s
sole discretion. The subordination agreement used for any Future Projects shall
be upon Lender’s standard form and shall in all respects be acceptable to
Lender in its sole discretion.

 

ARTICLE IV — AFFIRMATIVE
COVENANTS

 

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

 

4.1                               Financial
Statements; Sales and Inventory Reports.

 

For purposes of this Agreement, the term the “Entities” shall mean the
Borrower and Comstock L’Ambiance.

 

(a)                                  as
soon as available, but in no event later than ninety (90) days after the close
of each fiscal year of the Entities, and, in the case of the Guarantor not
later than ninety (90) days after the end of each calendar year, financial
statements of the Entities and the Guarantor (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 financial statements shall
be internally prepared and shall not be required to be audited by an
independent accountant, except for the financial statements of Borrower, which
shall be audited; and

 

(b)                                 if
requested by the Lender, within thirty (30) days after the close of the
Entities’ respective quarterly business period, an internally prepared balance
sheet and income statement of the Entities;

 

All financial information shall be certified on the Lender’s Financial
Statement Certification form by the Entities or by the Guarantor, as
applicable, with an original signature and date.

 

(c)                                  if
requested by the Lender, within thirty (30) days after the close of Comstock’s
monthly business period, Comstock shall provide to the Lender written status
reports indicating, by project (to include each and every project in which
Borrower is involved, whether or not such project is financed by the Lender),
the number of the Comstock’s lots and

 

13

 

units (a) sold and settled, (b) under contract, and (c) remaining to be
sold, together with such additional information as the Lender may reasonably
require.

 

The term “financial statements” may include income tax returns,
consolidated statements of related companies, interim statements, statements of
contingent liabilities, detailed cash flow statements, and supporting schedules
and documentation, if requested by the Lender.

 

4.2                               Construction.  After each advance and/or readvance of
proceeds under the Loan, Comstock shall commence to acquire the Land and/or
construct the improvements for which each such advance and/or readvance is
designated and will prosecute the same in good faith with diligence and
continuity in accordance with the Plans and Specifications.

 

4.3                               Approval
and Permits.  No work associated
with the construction of any of the improvements shall be commenced by Comstock
unless and until the Plans and Specifications for such improvements have been
approved by all governmental authorities having or claiming jurisdiction and by
the beneficiary of any applicable restrictive covenant, 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.

 

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

 

4.5                               Compliance
with Laws - Encroachments.  The
Improvements shall be constructed by Comstock in strict accordance with alt
applicable present and future laws, ordinances, rules, regulations,
requirements and orders of any governmental or regulatory authority having or
claiming jurisdiction.  Each Unit (a)
shall be constructed entirely within the appropriate Lot, (b) will not encroach
upon any easement or right-of-way, or upon the land of others, (c) shall be
wholly within all applicable building restriction lines and set-backs, however
established, and (d) shall be in strict accordance with all applicable use or
other restrictions and the provisions of any prior agreements, declarations,
covenants and all applicable zoning and subdivision ordinances and regulations.

 

4.6                               Surveys.  At the time Comstock requests its first
construction draw on any Lot, Lender shall verify that Borrower has performed a
wall check survey.  Upon the completion
of each Unit, Comstock shall furnish the Lender with a final house location
survey prepared by a registered land surveyor.

 

4.7                               Inspections:
Cooperation.  Comstock 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 the construction of the Improvements.  Comstock will at all times cooperate and 

 

14

 

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. 
Comstock 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 per Project, one
monthly site inspection to be performed by the Progress Inspector and the other
monthly draw inspection to be performed in-house by Lender with no
corresponding cost to Comstock. Inspection fees may be deducted by the Lender
from the Borrower’s applicable Loan disbursement.

 

4.8                               Vouchers
and Receipts.  Comstock will
furnish to the Lender, promptly on demand, a computer generated report of job
costs and accounts payable for each Project financed under the Loan, and from
and after any Default under the Loan, (i) any contracts, bills of sale,
statements, receipted vouchers or agreements pursuant to which Comstock has any
claim of title to any materials, fixtures or other articles delivered or to be
delivered to the Land or incorporated or to be incorporated into the
Improvements and (ii) a verified written statement, in such form and detail as
the Lender may require, showing all amounts paid and unpaid for labor and
materials and all items of labor and materials to be furnished for which
payment has not been made and the amounts to be paid therefor.

 

4.9                               Payments
for Labor and Materials. 
Comstock will pay when due all bills for materials supplied and for
services or labor performed in connection with the construction of the
Improvements.

 

4.10                        Correction
of Construction Defects. 
Comstock 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.

 

4.11                        Insurance.  Comstock will comply with all insurance
requirements set forth in the Deed of Trust.

 

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

 

4.13                        Subcontractors.  Comstock shall immediately disclose to the
Lender upon request the names of all subcontractors with whom Comstock has
contracted or intends to contract for construction of the Improvements or for
the furnishing of labor or materials therefor.

 

4.14                        Profits.
Comstock L’Ambiance, L.C. and any entity owning a Future Project shall retain a
minimum of fifty percent (50%) of any and all net profits of Comstock
L’Ambiance, L.C. and any entity owning a Future Project until the later to
occur of (i) the Maturity Date or (ii) the Loan has been paid in full on the
L’Ambiance Project, for Comstock L’Ambiance, L.C., or on a Future Project, for
the entity owning such Future Project.

 

15

 

ARTICLE V — NEGATIVE
COVENANTS

 

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

 

5.1                               Restrictions
on Future Purchases.  Throughout
the term of the Loan, Comstock (including any co-guarantors that may be
approved by the Lender for Future Projects) shall not purchase, with recourse
debt, any tracts of land which are not solely comprised of finished lots
without first notifying the Lender or which contain more than ten (10) lots
without first notifying the Lender.

 

5.2                               Changes
to Plans and Specifications. 
Without the prior written consent of the Lender, Comstock will not
permit any substantial changes in the Plans and Specifications or in the design
concept for the Improvements.

 

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

 

5.4                               Assignments.  Without the prior written consent of Lender,
Comstock 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 Comstock
without the prior written consent of the Lender shall be void.  No consent by the Lender to an assignment by
Comstock shall either (a) release Comstock as the party primarily obligated and
liable under the terms of this Agreement unless Comstock 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;

 

5.5                               Canceled
Contracts.  In the event of the
cancellation of any Contract which results in the Speculative Unit Limit
outlined in Section 2.2(f) hereof to be exceeded, then Comstock shall, within
ninety (90) days after such cancellation or default, reduce and curtail the
outstanding principal balance of the Loan to a sixty percent (60%)
loan-to-value with regard to the unit or units over such limit, provided that
Comstock has not entered into a Contract with respect to such Unit within such
ninety (90) day period. Notwithstanding the foregoing to the contrary, the
Lender shall not be obligated to fund additional advances and/or readvances
under the Loan for the Speculative Unit(s) which exceed the limit so long as
the limit on Speculative Units continues to be exceeded.  So long as no Default shall exist hereunder
and so long as each and every condition to advances shall have been satisfied,
the Lender shall continue to fund advances and/or readvances under the Loan for
Pre-Sold Units and all Speculative Units as permitted.  It is agreed that exceeding the applicable
limit for Speculative Units is not an event of default and only Comstock’s
failure to curtail the Loan (as required) as it relates to any Speculative Unit
over the limit shall be a Default hereunder.

 

16

 

ARTICLE VI — DEFAULT

 

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

 

6.1                               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, 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.

 

6.2                               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 or other than default with respect to the
following listed sections, shall remain uncured thirty (30) days after the
receipt by Borrower of written notice from Lender identifying such default., If
Borrower receives such notice, Borrower shall diligently pursue a cure of such
default. Default with respect to the following listed sections shall not be
subject to such thirty (30) day notice requirement:  Section
4.11 (Insurance); Section 4.14
(Profits); Section 5.3 (Transfer
of Assets); Section 5.4 (Assignment);
Section 6.3 (51% Ownership); Sections 6.6(b) and 6.6(c) (Progress of Construction); Section 6.7 (Proceeds Insufficient to
Complete); Section 6.8 (Cross
Defaults); Section 6.9 (Mechanics
Liens); Section 6.10 (Adverse
Action or Insolvency); Section 6.12
(Hazardous Materials); and Section 6.13
(Death or Dissolution).

 

6.3                               51%
Ownership Interest In co-guarantors. 
Borrower’s failure to maintain a minimum fifty-one percent (51%)
ownership interest in any co-guarantor which owns a Project or any Future
Project.

 

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

 

6.5                               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.

 

6.6                               Progress
of Construction.  Except for
delays unavoidably occasioned by strikes, lock- outs, war or civil disturbance,
natural disaster or acts of God (a) any delay in construction of any
Improvements caused by lack of good faith or reasonable dispatch, (b) any
abandonment of the work or discontinuation of construction for a period of more
than thirty (30) consecutive days, unless the Lender is notified of Comstock’s
Project Withdrawal or such abandonment of work or discontinuance of
construction is otherwise approved by the Lender, or (c) any failure to
complete the construction of any Unit on or before the maturity date of the
Loan for such Unit.

 

17

 

6.7                               Proceeds
Insufficient to Complete.  Any
failure by Comstock to pay or deposit the amount of the deficiency as required
by Section 2.9 of this Agreement,
if the Lender determines that the amount of undisbursed Loan proceeds available
is less than the amount necessary or required to complete and pay for the
construction of a Unit.

 

6.8                               Cross
Defaults.  The occurrence of any
Default or Event of Default under any other loan or credit facility from the
Lender to Borrower.

 

6.9                               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 to the
satisfaction of the Lender within twenty (20) days.

 

6.10                        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.  

 

6.11                        Financial
Condition.  Any reasonable
determination by the Lender that a material adverse change has occurred in the
financial condition of the Borrower or any Guarantor.

 

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

 

6.13                        Death
and Dissolution.  The death,
legal incompetency, dissolution, liquidation or termination of Borrower or any
Guarantor, or of any general partner of Borrower or any Guarantor, subject to
the provisions of Section 4 of the Guaranty Agreement.

 

ARTICLE VII — DEFAULT
- REMEDIES

 

7.1                               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, and perform any
and all work and labor necessary to complete the construction of the
Improvements (whether or not in accordance with the Plans and Specifications)
and to employ watchmen to protect the Property.

 

18

 

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. Comstock hereby constitutes and
appoints the Lender as its true and lawful attorney-in-fact with full power of
substitution to complete the work in the name of Comstock, and hereby empowers
said attorney or attorneys as follows: (a) to use any funds of Comstock,
including any escrow balances and any unadvanced Loan proceeds, for the purpose
of completing the construction of the Improvements, whether or not in the
manner called for in the Plans and Specifications; (b) to make such additions
and changes and corrections in the Plans and Specifications as may be necessary
or desirable in the judgment of the Lender to complete the construction of the
Improvements; (c) to employ such contractors, subcontractors, agents,
architects and inspectors as may be required for such purpose; (d) to pay,
settle or compromise all existing bills and claims which are or may be liens
against the Property, or may be necessary or desirable for the completion of
the work or the clearance of title; (e) in the name of Comstock to execute all
applications and certificates that may be required; (f) to execute, acknowledge
and deliver such documents, instruments and certificates, and to take such
other actions, in the name and on behalf of Comstock and at the sole cost and
expense of Comstock, as the Lender, in its sole discretion, deems necessary,
desirable or appropriate to effectuate the provisions of this section; and (g)
to do any and every act with respect to the construction of the Improvements
that Comstock may do in its own behalf.

 

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. Such
attorney-in-fact shall also have power to prosecute and defend all actions or
proceedings in connection with the construction of the Improvements and to take
such actions and require such performance as is deemed necessary.

 

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 Comstock.  

 

19

 

 

7.2                               No
Conditions Precedent to Exercise of Remedies.  Neither Borrower nor any Guarantor shall be
relieved of any obligation by reason of the failure of the Lender to comply
with any request of Comstock 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 Notes or the
other Loan Documents without first having obtained the consent of Borrower or
such Guarantor; and in the latter event. 
Borrower and each Guarantor shall continue to be liable to make payments
according to the terms of any such extension or modification agreement, unless
expressly released and discharged in writing by the Lender.  

 

7.3                               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, any 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.  

 

7.4                               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.  

 

7.5                               Mandatory
Arbitration.  Any controversy or
claim between or among Comstock and the Lender arising out of or relating to
any Loan Document, including any claim based on or arising from an alleged
tort, shall be determined by binding arbitration in accordance with the Federal
Arbitration Act (or if not applicable, the applicable state law), the Rules of
Practice and Procedure for the Arbitration of Commercial Disputes of Judicial
Arbitration and Mediation Services, Inc., predecessor in interest to Endispute,
Inc. (“J.A.M.S./Endispute”) and the Special Rules set forth below.  In the event of any inconsistency, the
Special Rules shall control, Judgment upon any arbitration award may be entered
in any court having jurisdiction.  Any
party to the Loan Documents may bring an action, including a summary or
expedited proceeding, to compel arbitration of any controversy or claim to
which any of the Loan Documents apply in any court having jurisdiction over
such action.  

 

20

 

(a)                                  Special
Rules.  The arbitration shall be
conducted in the city of the Borrower’s domicile at the time of this
Agreement’s execution and administered by J.A.M.S./Endispute who will appoint
an arbitrator, if J.A.M.S./Endispute is unable or legally precluded from
administering the arbitration, then the American Arbitration Association shall
serve.  All arbitration hearings will be
commenced within ninety (90) days of the demand for arbitration; further, the
arbitrator shall only, upon a showing of cause, be permitted to extend the commencement
of such hearing for up to an additional sixty (60) days.  

 

(b)                                  Reservation
of Rights.  Nothing in the Loan
Documents shall be deemed to (i) limit the applicability of any otherwise
applicable statutes of limitation or repose and any waivers contained in the
Loan Documents; or (ii) be a waiver by the Lender of the protection afforded to
it by 12 U.S.C. Sec. 91 or any substantially equivalent state law; or
(iii)  limit the right of the Lender (A)
to exercise self help remedies such (but not limited to setoff), or  (B) to foreclose against any real or personal
property, or (C) to obtain from a court provisional or ancillary remedies such
as (but not limited to) injunctive relief, the appointment of a receiver or the
attachment of assets.  The Lender may
exercise such self-help rights, foreclose upon such property, or obtain such
provisional or ancillary remedies before, during or after the pendency of any
arbitration proceeding brought pursuant to the Loan Documents.  At the Lender’s option, foreclosure under a
deed of trust or mortgage may be accomplished by any of the following:  the exercise of a power of sale under the
deed of trust or mortgage, or by mortgage, or by judicial sale under the deed
of trust or mortgage, or by judicial foreclosure.  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
controversy or claim 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 derogation of the provisions in any Loan Document for
arbitration of any controversy or claim.

 

ARTICLE VIII — MISCELLANEOUS

 

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

 

8.2                               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 Comstock 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

 

21

 

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.

 

8.3                               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.

 

8.4                               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.

 

8.5                               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.

 

8.6                               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.

 

8.7                               Signs;
Publicity.  At the request and
expense of the Lender, Comstock 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 construction of the Improvements.  Comstock 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 existence of any
such signs.  Comstock 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.

 

8.8                               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.  

 

22

 

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

 

8.10                        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.

 

8.11                        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, Comstock 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.

 

8.12                        Professional
Services.  If requested by
Lender, Comstock 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.

 

8.13                        Further
Assurances.  At the request of
the Lender, Comstock shall take any action or execute any additional document
reasonably required by the Lender to secure the Indebtedness, confirm the lien
of the Deed of Trust or further the intent of any of the Loan Documents.

 

8.14                        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 each Lot; (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

 

23

 

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; and (j) 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 Comstock 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
Comstock 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.

 

8.15                        Fees
and Expenses - Indemnity. 
Comstock 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.  Comstock 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.

 

8.16                        Participation
or Sale of the Loan.  The Lender
may sell the Loan or any undivided ownership or participation interest in the
Loan and disclose in confidence such financial and other information with
respect to Borrower, the Loan, any Guarantor, and/or the Property, or any
portion thereof, which the Lender may deem necessary in connection with such
sale or participation.  Comstock shall
execute, acknowledge and deliver any and all instruments reasonably requested
by the Lender in connection with the foregoing.

 

8.17                        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.

 

8.18                        Waiver
of Jury Trial.  The Borrower and the
Guarantors waive trial by jury in any action or proceeding to which the
Borrower and Guarantors and the Lender may be parties, arising out of or in any
way pertaining to this Agreement, the Note, or any of the other Loan
Documents.  It is agreed and understood
that this waiver constitutes a waiver of trial by jury of all claims against
all parties to such actions or proceedings, including, claims against parties
who are not parties to the Note.  This
waiver is knowingly, willingly and voluntarily made by the Borrower and the
Guarantors.

 

[SIGNATURES APPEAR ON THE NEXT PAGE]

 

24

 

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 HOLDING COMPANY, INC.,

  
	
   

  	
  a Virginia corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/ John Dapogny

  	
   

  	
  By:

  	
  /s/ Christopher Clemente

  	
  (SEAL)

  	
   

  
	
  Name:

  	
  John Dapogny

  	
   

  	
  Christopher Clemente

  	
   

  
	
  Title:

  	
   

  	
   

  	
  Chief Executive Officer

  
	
   

  	
   

  
	
  (Seal)

  	
  Address:

  	
  1313 Dolley Madison Blvd.

  
	
   

  	
  Suite 302

  
	
   

  	
  McLean, Virginia 22101

  
	
   

  	
   

  
	
  ATTEST:

  	
  COMSTOCK L’AMBIANCE:

  
	
   

  	
   

  
	
   

  	
  COMSTOCK L’AMBIANCE, L.C.,

  a Virginia limited liability company

  
	
   

  	
   

  
	
   

  	
  By:

  	
  Comstock Holding Company, Inc.,

  a Virginia corporation, Manager

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ John Dapogny

  	
   

  	
   

  	
  By:

  	
  /s/ Christopher Clemente

  	
   

  
	
  Name:

  	
  John Dapogny

  	
   

  	
   

  	
  Christopher Clemente

  	
   

  
	
  Title:

  	
   

  	
   

  	
  Chief Executive Officer

  
	
   

  	
   

  
	
  (Seal)

  	
  Address:

  	
  1313 Dolley Madison Blvd.

  
	
   

  	
  Suite 302

  
	
   

  	
  McLean, Virginia 22101

  
																

 

[signatures continued on following page]

 

25

 

	
  WITNESS:

  	
  LENDER:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  NATIONSBANK, N.A.

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Linda P. Long

  	
   

  
	
   

  	
  Vice President

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Address:

  	
  8300 Greensboro Drive

  Suite 300

  McLean, Va. 22102-3604

  	
   

  
						

 

26

 

PREPARED OUT OF STATE

 

SECOND LOAN MODIFICATION AGREEMENT

 

THIS SECOND LOAN MODIFICATION AGREEMENT (this “Agreement”) is made this
28th day of July, 1998, by and among (a) COMSTOCK HOLDING COMPANY,
INC. (“Borrower”), a Virginia corporation, (b) COMSTOCK L’AMBIANCE, L.C., a
Virginia limited liability company (“Comstock L’Ambiance”) and CHRISTOPHER
CLEMENTE and GREGORY BENSON, jointly and severally (collectively, the
“Guarantor”), (c) PATRICIA I. DUBOIS, a resident of Fairfax County, Virginia
and GREGORY L. CARTER, a resident of Fairfax County, Virginia (“Trustees”), and
(d) NATIONSBANK, N.A., a national banking association (the “Lender”).

 

RECITALS:

 

WHEREAS, pursuant to the terms of that certain Loan Agreement (the
“Original Loan Agreement”) dated as of December 17, 1997, by and among
Lender, Borrower, and Comstock L’Ambiance, as modified (as modified, and as the
same may be further modified, renewed, supplemented or restated, the “Loan
Agreement”), Lender made a loan (the “Loan”) to Borrower in the original
principal amount of Two Million and No/100 Dollars ($2,000,000.00), as
evidenced by that certain Revolving Deed of Trust Note dated December 17,
1997 made by Borrower payable to the order of the Lender in the original
principal amount of Two Million and No/100 Dollars ($2,000,000.00), as modified
and increased to the principal amount of Two Million Eight Hundred Thousand and
No/100 Dollars ($2,800,000.00) (as amended, and as the same may be further
amended, renewed, supplemented or restated, the “Note”); and

 

WHEREAS, the Borrower’s obligations under the Note and the Loan are
jointly and severally guaranteed by that certain Guaranty Agreement dated as of
December 17, 1997, by the Guarantor for the benefit of the Lender (the
“Guaranty”); and

 

WHEREAS, the Loan is secured by that certain Credit Line Deed of Trust
and Security Agreement dated as of December 17, 1997 and recorded in Deed
Book 10211 at page 1879, among the Land Records of Fairfax County, Virginia, as
amended (as amended, and as the same may be further amended or supplemented from
time to time, the “Deed of Trust”) granting a security interest to the Trustees
in certain land located in Fairfax County, Virginia, as more particularly
described in Exhibit A attached thereto, and;

 

WHEREAS, Lender and Borrower have mutually agreed to (a) increase the
principal amount of the Loan and the Note to the maximum aggregate amount of
Three Million Three Hundred Fifty Thousand and No/100 Dollars ($3,350,000.00)
and (b) spread the lien of the Deed of Trust to include the certain land
described more particularly in Exhibit A-1 attached hereto, on the terms
and conditions set forth herein.

 

NOW, THEREFORE, in consideration of the premises and of the sum of Ten
Dollars ($10.00), the receipt and sufficiency of which are hereby acknowledged
by all parties, the parties agree as follows:

 

1

 

1.                                      Recitals.  The recitals set forth above are a material
part of this Agreement.  Borrower and
Guarantor each acknowledge and affirm the accuracy of the recitals set forth
above.

 

2.                                      Note.

 

(a)                                  The
Note is hereby amended to increase the maximum aggregate principal amount which
can be outstanding under the Note at any time to Three Million Three Hundred
Fifty Thousand and No/100 Dollars ($3,350,000.00).

 

(b)                                 Commencing
as of the date hereof, Borrower shall pay to Lender non-refundable loan fees
payable in quarterly payments as follows: (i) on or before August 1, 1998,
a loan fee of $5,235.00, (ii) on or before November 1, 1998, a loan fee of
$5,235.00, (iii) on or before February 1, 1999, a loan fee of $5,235.00,
and (iv) on or before May 1, 1999, a loan fee of $2,921.00. This
Section 2(b) supercedes Section 4 of the Note and Section 7 of
the First Loan Modification Agreement dated June 10, 1998 by and among the
Borrower, Comstock L’Ambiance, the Guarantor, the Trustees and the Lender to
the extent of any fees due and payable thereunder after the date hereof.

 

3.                                      Loan
Agreement.  The Loan Agreement is
hereby amended as follows:

 

(a)                                  Section 1.1(r)
of the Loan Agreement is hereby deleted in its entirety and the following is
substituted in lieu thereof:

 

“(r)                              Loan
- That certain acquisition and revolving construction loan in the amount of
$3,350,000.00, or so much thereof as shall be advanced or readvanced, from the
Lender to the Borrower made pursuant to this Agreement, to finance the
acquisition of developed Lots and/or the construction of Improvements thereon,
as evidenced by the Note and secured by the Deed of Trust and the other Loan
Documents. During the term of the Loan, as set forth in the Note, the Borrower
may borrow, repay and reborrow amounts under the Loan; provided, however, that
the maximum amount available for distribution at any time with respect to a
particular Project shall equal (a) the sum of $3,350,000.00 minus (b) the total
amount budgeted under the Loan for all Inventory Lots and Units for which funds
have been advanced under the Loan and not repaid in full.”

 

(b)                                 Section 1.1(v)
of the Loan Agreement is hereby deleted in its entirety and the following is
substituted in lieu thereof:

 

“(s)                            Note
- That certain Revolving Deed of Trust Note of even date herewith made by the
Borrower payable to the order of the Lender in the original principal amount of
$2,000,000.00, as modified and increased to the aggregate principal amount of
$3,350,000.00 or so much thereof as shall be advanced and/or readvanced, as the
same may from time to time be amended, modified, replaced or supplemented.

 

2

 

4.                                      Deed
of Trust. The Deed of Trust is hereby amended as follows:

 

(a)                                  Spread of Lien.  Borrower and Comstock L’Ambiance hereby
irrevocably grants, bargains, and conveys (and to the extent any of such
property was previously conveyed to the Trustees pursuant to the Deed of Trust,
regrants, rebargains and reconveys) to the Trustees and their respective
successors in trust, and their assigns, with power of sale, and the lien of the
Deed of Trust is spread to include, the Additional Property as described on Exhibit
A-1 attached hereto, to have and to hold the same, together with all and
singular the rights, privileges, tenements, hereditaments and appurtenances
thereto in any way incident or belonging unto the Trustees and to their
successors and assigns forever, in and upon the same uses and trusts and with
all the powers and duties as set forth in the Deed of Trust, with like force
and effect.  All terms, provisions,
covenants, stipulations, conditions and agreements contained in the Deed of
Trust are incorporated herein by this reference for all purposes.

 

(b)                                 Section 1.1(q) of
the Deed of Trust is hereby deleted in its entirety and the following is
substituted in lieu thereof:

 

“(q)                           Loan - Any and all loans from the Beneficiary to the Grantor
and/or the other Loan Documents, including that certain acquisition and
revolving construction loan from the Beneficiary to the Grantor in the original
principal amount of $2,000,000.00, as modified and increased to the aggregate
principal amount of $3,350,000.00, and any and all letters of credit issued by
the Beneficiary for the account of the Grantor, to finance the acquisition of
Lots and/or the construction of Improvements thereon, as evidenced by the Note
and secured by this Deed of Trust and the other Loan Documents.”

 

(c)                                  The first and third
recitals of the Deed of Trust are hereby amended to delete the word
“$2,800,000.00” as it appears therein and to substitute the term
“$3,350,000.00”  in lieu thereof in each
instance.

 

5.                                      Guaranty
Agreement.  The first and fourth
recitals of the Guaranty are hereby amended to delete the word “$2,800,000.00”
as it appears therein and to substitute the term  “$3,350,000.00” in lieu thereof in each
instance.

 

6.                                      Environmental
Indemnity Agreement.  The first
paragraph of that certain Environmental Indemnity Agreement dated
December 17, 1997 by Borrower and Guarantor in favor of the Lender, as
modified, is hereby amended to replace the definition of the “Loan” with the
following:

 

“a loan to Borrower evidenced by a certain Revolving Deed of Trust Note
dated December 17, 1997 and made payable to the order of the Lender in the
original principal amount of $2,000,000.00, as amended and increased to the
maximum aggregate principal amount of $3,350,000.00, or so much thereof as
shall be advanced or readvanced, and all amendments and modifications thereof”

 

3

 

7.                                      Borrower’s
Representations and Warranties. 
The Borrower hereby reaffirms all of the representations and warranties
set forth in the Loan Documents (as defined in the Loan Agreement, as amended
hereby), and further represents and warrants that (a) the execution and
delivery of this Agreement do not contravene, resulting in an breach of, or
constitute a default under, any deed of trust, loan agreement, indenture or other
contract or agreement to which the Borrower is a party or by which the Borrower
or any of its properties may be bound (nor would such execution and delivery
constitute such a default with the passage of time or the giving of notice or
both), and do not violate or contravene any law, order, decree, rule,
regulation or restriction to which the Borrower or the Property is subject; (b)
this Agreement constitutes the legal, valid and binding obligations of the
Borrower enforceable in accordance with its terms; (c) the execution and
delivery of, and performance under, this Agreement are within the Borrower’s
power and authority without the joinder or consent of any other party and have
been duly authorized by all requisite action, and are not in contravention of
any law, or of the Borrower’s charter, bylaws or other corporate organizational
documents or of any indenture, agreement or undertaking to which the Borrower
is a party or by which it is bound; (d) there exists no default under the Note
or any other Loan Document; (e) there are no offsets, claims or defenses with
respect to the Borrower’s or Guarantor’s obligations under any of the Loan
Documents (the “Obligations”); and (f) the Borrower is duly organized and
legally existing under the laws of the Commonwealth of Virginia and is duly
qualified to do business in the Commonwealth of Virginia. The Borrower further
represents and warrants that, except as disclosed in writing to the Lender,
there is no suit, judicial or administrative action, claims, investigation,
inquiry, proceeding or demand pending (or, to the Borrower’s knowledge
threatened) against (i) the Borrower, or against any other person liable
directly or indirectly for the Obligations, or (ii) which affects the Property
or the Borrower’s title to the Property, or (iii) which affects the validity,
enforceability or priority of any of the Loan Documents.  The Borrower agrees to indemnify and hold the
Lender harmless against any loss, claim, damage, liability or expense
(including, without limitation, attorneys’ fees) incurred as a result of any
representation or warranty made by the Borrower herein which proves to be
untrue or inaccurate in any respect, and any such occurrence shall constitute a
default under the Loan Documents.

 

8.                                      Renewal;
Lien Continuation; No Novation. 
The Borrower hereby renews the Obligations and promises to pay and
perform the Obligations as modified by this Agreement. All liens evidenced by
the Loan Documents (the “Liens”) are hereby ratified and confirmed as valid,
subsisting and continuing to secure the Obligations, as modified hereby.
Nothing herein shall in any manner diminish, impair, waive or extinguish the
Note, the Obligations or the Liens.  The
execution and delivery of this Agreement shall not constitute a novation of the
debt evidenced and secured by the Loan Documents.

 

9.                                      Expenses.  The Borrower promises to pay all costs and
expenses and reimburse the Lender for any and all expenditures of every
character incurred or expended from time to time, regardless of whether a
default shall have occurred, in connection with this Agreement and all other
Loan Documents, and all such amounts shall constitute a portion of the
Obligations evidenced by the Note and secured by the Loan Documents.

 

10.                               Miscellaneous.  To the extent of any conflict between the
Loan Documents and this Agreement, this Agreement shall control. Unless
specifically modified hereby, all terms of the Loan Documents shall remain in
full force and effect. This Agreement (a) shall bind and benefit the parties hereto
and their respective heirs, beneficiaries administrators, executors, receivers,

 

4

 

trustees, successors and assigns; (b) shall be governed by the laws of
the Commonwealth of Virginia and United States federal law; and (c) may be
executed in several counterparts, and by the parties hereto on separate
counterparts, and each counterpart, when executed and delivered, shall
constitute an original agreement enforceable against all who signed it without
production of or accounting for any other counterpart, and all separate
counterparts shall constitute the same agreement. Any terms not defined herein
shall have the meanings set forth in the Loan Documents.

 

11.                               Reaffirmation
of Guaranty.  Each Guarantor, by
signature below as such, for a valuable consideration, the receipt and adequacy
of which are hereby acknowledged, hereby consents to and joins in this
Agreement and hereby declares to and agrees with the Lender that the Guaranty
is and shall continue in full force and effect for the benefit of the Lender
with respect to the Obligations, as amended by this Agreement, that there are
no offsets, claims or defenses of the Guarantor with respect to the Guaranty
nor, to Guarantor’s knowledge, with respect to the Obligations, that the
Guaranty is not released, diminished or impaired in any way by this Agreement
or the transactions contemplated hereby, and that the Guaranty is hereby
ratified and confirmed in all respects. Each Guarantor hereby reaffirms all of
the representations and warranties set forth in the Guaranty. Each Guarantor
acknowledges that without this consent and reaffirmation, Lender would not
execute this Agreement or otherwise consent to its terms.

 

12.                               Authorization
of Trustees.  Lender, by its
execution hereof, authorizes and instructs the Trustees to execute this
instrument for the purposes set forth herein and expressly acknowledges that
either Trustee may act and the execution by both Trustees shall not be
required.

 

[continued]

 

5

 

 

EXECUTED ON THE DATE OR DATES OF THE ACKNOWLEDGMENTS HEREOF, BUT
EFFECTIVE AS OF THE DATE FIRST STATED IN THIS AGREEMENT.

 

	
  ATTEST/WITNESS:

  	
  BORROWER

  
	
   

  	
   

  
	
   

  	
  COMSTOCK HOLDING COMPANY, INC.,

  
	
   

  	
  a Virginia corporation

  
	
   

  	
   

  
	
  By:

  	
  /s/ Kelly L. Wyche

  	
   

  	
  By:

  	
  /s/ Christopher Clemente

  	
  (SEAL)

  	
   

  
	
  Name:

  	
  KELLY L. WYCHE

  	
   

  	
   

  	
  Christopher Clemente

  	
   

  
	
  Title:

  	
   

  	
   

  	
   

  	
  Chief Executive Officer

  
	
   

  	
   

  
	
  (Seal)

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  ATTEST:

  	
   

  	
  COMSTOCK L’AMBIANCE:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  COMSTOCK L’AMBIANCE, L.C.,

  a Virginia limited liability company

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  Comstock Holding Company, Inc.,

  a Virginia corporation, Manager

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ Kelly L. Wyche

  	
   

  	
   

  	
  By:

  	
  /s/ Christopher Clemente

  	
   

  
	
  Name:

  	
  KELLY L. WYCHE

  	
   

  	
   

  	
   

  	
  Christopher Clemente

  	
   

  
	
  Title:

  	
   

  	
   

  	
   

  	
  Chief Executive Officer

  
	
   

  	
   

  
	
  (Seal)

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  WITNESS:

  	
   

  	
  LENDER:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  NATIONSBANK, N.A.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  /s/ Lisa M Moore

  	
   

  	
   

  	
  By:

  	
  /s/ Linda P. Long

  	
   

  
	
  Print Name:

  	
   

  	
   

  	
  Linda P. Long

  
	
  Print Title:

  	
   

  	
   

  	
  Vice President

  
	
  [Corporate Seal]

  	
   

  	
   

  
																				

 

[continued]

 

6

 

	
  ATTEST/WITNESS:

  	
  GUARANTORS

  
	
   

  	
   

  
	
   

  	
   

  
	
  /s/ Kelly L. Wyche

  	
   

  	
  /s/ Christopher Clemente

  	
   

  
	
  Print Name:  Kelly L. Wyche

  	
  Christopher Clemente, individually [SEAL]

  
	
   

  	
   

  
	
   

  	
   

  
	
  /s/ Kelly L. Wyche

  	
   

  	
  /s/ Gregory Benson

  	
   

  
	
  Print Name:  Kelly L. Wyche

  	
  Gregory Benson, individually [SEAL]

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  COMSTOCK L’AMBIANCE, L.C.,

  a Virginia limited liability company

  
	
   

  	
   

  
	
   

  	
  By:

  	
  Comstock Holding Company, Inc.,

  a Virginia corporation, Manager

  
	
   

  	
   

  
	
   

  	
   

  
	
  /s/ Kelly L. Wyche

  	
   

  	
   

  	
  By:

  	
  /s/ Christopher Clemente

  	
   

  
	
  Print Name:  Kelly L. Wyche

  	
   

  	
  Christopher Clemente

  	
   

  
	
  Print Title:

  	
   

  	
  Chief Executive Officer

  	
   

  
	
   

  	
   

  
	
  [SEAL]

  	
   

  
	
   

  	
   

  
	
  ATTEST/WITNESS:

  	
   

  	
  TRUSTEES

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Print Name:

  	
   

  	
  Patricia DuBois, Trustee

  
	
   

  	
   

  
	
  /s/ Lisa M Moore

  	
   

  	
   

  	
  /s/ Gregory L. Carter

  	
   

  
	
  Print Name:  Lisa M Moore

  	
   

  	
  Gregory L. Carter, Trustee

  
										

 

 

[acknowledgements on following pages]

 

7

 

THIRD LOAN MODIFICATION AGREEMENT

 

THIS THIRD LOAN MODIFICATION AGREEMENT (this “Agreement”) is made as of
the 30th day of September, 1998, by and among (a) COMSTOCKHOLDING COMPANY, INC.
(“Borrower”), a Virginia corporation, (b) COMSTOCK L’AMBIANCE, L.C., a Virginia
limited liability company (“Comstock L’Ambiance”) and CHRISTOPHER CLEMENTE and
GREGORY BENSON, jointly and severally (collectively, the “Guarantor”), (c)
PATRICIA I. DUBOIS, a resident of Fairfax County, Virginia and GREGORY L.
CARTER, a resident of Fairfax County, Virginia (“Trustees”), and (d)
NATIONSBANK, N.A., a national banking association (the “Lender”).

 

RECITALS:

 

WHEREAS, pursuant to the terms of that certain Loan Agreement (the
“Original Loan Agreement”) dated as of December 17, 1997, by and among
Lender, Borrower, and Comstock L’Ambiance, as modified (as modified, and as the
same may be further modified, renewed, supplemented or restated, the “Loan
Agreement”). Lender made a loan (the “Loan”) to Borrower in the original
principal amount of Two Million and No/100 Dollars ($2,000,000.00), as
evidenced by that certain Revolving Deed of Trust Note dated December 17,
1997 made by Borrower payable to the order of the Lender in the original principal
amount of Two Million and No/100 Dollars ($2,000,000.00), as modified and
Increased to the principal amount of Three Million Three Hundred Fifty Thousand
and No/100 Dollars ($3,350,000.00) (as amended, and as the same may be further
amended, renewed, supplemented or restated, the “Note”); and

 

WHEREAS, the Borrower’s obligations under the Note and the Loan are
jointly and severally guaranteed by that certain Guaranty Agreement dated as of
December 17, 1997, by the Guarantor for the benefit of the Lender (the
“Guaranty”); and

 

WHEREAS, the Loan is secured by that certain Credit Line Deed of Trust
and Security Agreement dated as of December 17, 1997 and recorded in Deed
Book 10211 at page 1879, among the Land Records of Fairfax County, Virginia, as
amended (as amended, and as the same may be further amended or supplemented
from time to time, the “Deed of Trust”) granting a security interest to the
Trustees in certain land located in Fairfax County, Virginia, as more
particularly described in Exhibit A attached thereto, and;

 

WHEREAS, the Borrower’s obligations under the Note and the other Loan
Documents (hereinafter defined) are hereinafter collectively called the
“Obligations”; the Note, the Deed of Trust, the Loan Agreement, the Guaranty,
and all other documents previously, now or hereafter executed and delivered to
evidence, secure, guarantee, or in connection with, the Obligations, as the
same may from time to time be renewed, extended, amended, supplemented or
restated, are hereinafter collectively called the “Loan Documents”; and all
liens, security interests, assignments, superior titles, rights, remedies,
powers, equities and priorities securing the Note or providing recourse to
Lender with respect thereto are hereinafter collectively called the “Liens”.

 

NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Borrower and Lender hereby agree
to amend the terms and

 

 

conditions of the Loan Documents as more specifically set forth below.

 

1.                                      Recitals.  The recitals set forth above are a material
part of this Agreement.  Borrower and
Guarantor each acknowledge and affirm the accuracy of the recitals set forth
above.

 

2.                                      Loan
Amount.  The maximum
principal amount that may be outstanding under the Loan at any time shall be
Four Million One Hundred Thousand and 00/100 Dollars ($4,100,000.00).

 

3.                                      Maturity
Date.  All of the Obligations,
including (without limitation) all outstanding principal, accrued and unpaid
interest, outstanding late charges, unpaid fees, and all other amounts
outstanding under the Note and the other Loan Documents, shall be due and
payable in full on June 30, 1999 (the “Maturity Date”). All references to
the Maturity Date contained in the Loan Documents shall refer to the Maturity
Date as defined in this Agreement. 
Notwithstanding the above, in the event the Lender does not agree in its
sole and absolute discretion to extend the Maturity Date prior to the date
thereof, the principal amount outstanding under the Loan on the Maturity Date
with respect to any Pre-Sold Unit, Speculative Unit or Inventory Lot shall be
due and payable on the earlier of (i) the date calculated in accordance with
Paragraph 2.2(g) of the Loan Agreement as amended or (ii) October 30,
1999.

 

4.                                      Fees.  Simultaneously with the execution of this
Agreement, Borrower shall pay to Lender a loan fee in the amount of
$6,406.25.  Borrower shall also pay to
Lender $6,406.25 on January 1, 1999 and April 1, 1999 as additional
loan fees so long as there is any amount outstanding under the Loan on any such
due date.

 

5.                                      Interest
Rate.  From and after the date
hereof, the Stated Rate as defined in the Note shall mean a variable rate equal
to Lender’s Prime Rate plus three-quarters of one percent (0.75%).

 

6.                                      Speculative
Unit Limit.  The maximum
aggregate amount of the Loan which may be budgeted at any time for Speculative
Units (including model Units) is $1,000,000. The number of Speculative Units
(including model Units) that may be financed with Loan proceeds with respect to
the following projects is as Follows:

 

	
  Project

  	
   

  	
  Number of approved Speculative and model Units

  
	
   

  	
   

  	
   

  
	
  L’Ambiance

  	
   

  	
  2

  

 

7.                                      Inventory
Lot Limit.  The maximum aggregate
amount of the Loan which may be outstanding at any time for Inventory Lots is
$300,000. With respect to each Inventory Lot, the Lender shall not advance
proceeds of the Loan for acquisition thereof in an amount greater than the
lesser of (i) eighty percent (80%) of the purchase price of such Lot and (ii)
seventy-five percent of the Appraised Value of such Lot. The number of
Inventory Lots that may be financed with Loan proceeds with respect to the
following projects is as follows:

 

	
  Project

  	
   

  	
  Number of approved Inventory Lots

  
	
   

  	
   

  	
   

  
	
  L’Ambiance

  	
   

  	
  3

  

 

2

 

8.                                      Other
Indebtedness.  At such time
Lender has approved a Project as eligible for financing with proceeds of the
Loan, (i) the Borrower shall not borrow any funds other than pursuant to the
Loan in connection with such Project without Lender’s prior written consent,
and (ii) there shall be no other mortages or deeds of trust encumbering the
land that is collateral for the Loan.

 

9.                                      Appraised
Value.  From and after the date
hereof, the Appraised Value of a Unit shall equal the then current market value
determined pursuant to the most recent appraisal for a base Unit type prepared
in accordance with the terms and conditions of the Loan Agreement together with
opinion of contributory value estimates for all options in a Unit, which
estimates must be acceptable to Lender in its sole discretion.

 

10.                               Year
2000 Compliance.  Borrower has
(i) initiated a review and assessment of all areas within its and each of its
Subsidiaries’ business and operations (including those affected by suppliers
and vendors) that could be adversely affected by the “Year 2000 Problem” (that
is, the risk that computer applications used by the Borrower or any of its
Subsidiaries (or its suppliers and vendors) may be unable to recognize and
perform properly date-sensitive functions involving certain dates prior to and
any date after December 31,1999), (ii) developed a plan and timeline for
addressing the Year 2000 Problem on a timely basis, and (iii) to date,
implemented that plan in accordance with that timetable. The Borrower reasonably
believes that all computer applications (including those of its suppliers and
vendors) that are material to its or any of its Subsidiaries’ business and
operations will on a timely basis be able to perform properly date-sensitive
functions for all dates before and after January 1, 2000 (that is, be
“Year 2000 compliant”), except to the extent that a failure to do so could not
reasonably be expected to have Material Adverse Effect. The Borrower will
promptly notify the Lender in the event the Borrower discovers or determines
that any computer application (including those of its suppliers and vendors)
that is material to its or any of its or any of its Subsidiaries’ business and
operations will not be Year 2000 compliant on a timely basis, except to the extent
that such a failure could not reasonably be expected to have a Material Adverse
Effect

 

11.                               Borrower’s
Representations and Warranties. 
The Borrower hereby reaffirms all of the representations and warranties
set forth in the Loan Documents (as defined in the Loan Agreement, as amended
hereby), and further represents and warrants that (a) the execution and
delivery of this Agreement do not contravene, resulting in an breach of, or
constitute a default under, any deed of trust, loan agreement, indenture or
other contract or agreement to which the Borrower is a party or by which the
Borrower or any of its properties may be bound (nor would such execution and
delivery constitute such a default with the passage of time or the giving of
notice or both), and do not violate or contravene any law, order, decree, rule,
regulation or restriction to which the Borrower or the Property is subject; (b)
this Agreement constitutes the legal, valid and binding obligations of the
Borrower enforceable in accordance with its terms; (c) the execution and
delivery of, and performance under, this Agreement are within the Borrower’s
power and authority without the joinder or consent of any other party and have
been duly authorized by all requisite action, and are not in contravention of
any law, or of the Borrower’s charter, bylaws or other corporate organizational
documents or of any indenture, agreement or undertaking to which the Borrower
is a party or by which it is bound; (d) there exists no default under the Note
or any other Loan Document; (e) there are no offsets, claims or defenses with
respect to the Borrower’s or Guarantor’s obligations under any of the Loan
Documents (the “Obligations”); and (f) the Borrower is duly organized and
legally existing under the laws of the Commonwealth of Virginia and is duly
qualified to do business in the Commonwealth of Virginia. The Borrower further
represents and warrants that, except as disclosed in writing to the Lender,
there is no suit, judicial or administrative action, claims, investigation,
inquiry, proceeding or demand pending (or, to the Borrower’s knowledge

 

3

 

threatened) against (i) the Borrower, or against any other person
liable directly or indirectly for the Obligations, or (ii) which affects the
Property or the Borrower’s title to the Property, or (iii) which affects the
validity, enforceability or priority of any of the Loan Documents. The Borrower
agrees to indemnify and hold the Lender harmless against any loss, claim, damage,
liability or expense (including, without limitation, attorneys’ fees) incurred
as a result of any representation or warranty made by the Borrower herein which
proves to be untrue or inaccurate in any respect, and any such occurrence shall
constitute a default under the Loan Documents.

 

12.                               Renewal;
Lien Continuation; No Novation. 
The Borrower hereby renews the Obligations and promises to pay and
perform the Obligations as modified by this Agreement. All liens evidenced by
the Loan Documents (the “Liens”) are hereby ratified and confirmed as valid,
subsisting and continuing to secure the Obligations, as modified hereby.
Nothing herein shall in any manner diminish, impair, waive or extinguish the
Note, the Obligations or the Liens. The execution and delivery of this
Agreement shall not constitute a novation of the debt evidenced and secured by
the Loan Documents.

 

13.                               Expenses.  The Borrower promises to pay all costs and
expenses and reimburse the Lender for any and all expenditures of every
character incurred or expended from time to time, regardless of whether a
default shall have occurred, in connection with this Agreement and all other
Loan Documents, and all such amounts shall constitute a portion of the
Obligations evidenced by the Note and secured by the Loan Documents.

 

14.                               Miscellaneous.  To the extent of any conflict between the
Loan Documents and this Agreement, this Agreement shall control. Unless
specifically modified hereby, all terms of the Loan Documents shall remain in
full force and effect. This Agreement (a) shall bind and benefit the parties
hereto and their respective heirs, beneficiaries administrators, executors,
receivers, trustees, successors and assigns; (b) shall be governed by the laws
of the Commonwealth of Virginia and United States federal law; and (c) may be
executed in several counterparts, and by the parties hereto on separate
counterparts, and each counterpart, when executed and delivered, shall
constitute an original agreement enforceable against all who signed it without production
of or accounting for any other counterpart, and all separate counterparts shall
constitute the same agreement. Any terms not defined herein shall have the
meanings set forth in the Loan Documents.

 

15.                               Reaffirmation
of Guaranty.  Each Guarantor, by
signature below as such, for a valuable consideration, the receipt and adequacy
of which are hereby acknowledged, hereby consents to and joins in this
Agreement and hereby declares to and agrees with the Lender that the Guaranty
is and shall continue in full force and effect for the benefit of the Lender
with respect to the Obligations, as amended by this Agreement, that there are
no offsets, claims or defenses of the Guarantor with respect to the Guaranty
nor, to Guarantor’s knowledge, with respect to the Obligations, that the
Guaranty is not released, diminished or impaired in any way by this Agreement
or the transactions contemplated hereby, and that the Guaranty is hereby
ratified and confirmed in all respects. Each Guarantor hereby reaffirms all of the
representations and warranties set forth in the Guaranty. Each Guarantor
acknowledges that without this consent and reaffirmation, Lender would not
execute this Agreement or otherwise consent to its terms.

 

16.                               Authorization
of Trustees.  Lender, by its execution
hereof, authorizes and instructs the Trustees to execute this instrument for
the purposes set forth herein and expressly acknowledges that either Trustee
may act and the execution by both Trustees shall not be required.

 

4

 

EXECUTED ON THE DATE OR DATES OF THE ACKNOWLEDGMENTS HEREOF, BUT
EFFECTIVE AS OF THE DATE FIRST STATED IN THIS AGREEMENT.

 

 

	
  ATTEST/WITNESS:

  	
  BORROWER

  
	
   

  	
   

  
	
   

  	
  COMSTOCK HOLDING COMPANY, INC.,

  
	
   

  	
  a Virginia corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/ Jubal R. Thomson

  	
   

  	
  By:

  	
  /s/ Christopher Clemente

  	
  (SEAL)

  	
   

  
	
  Name:

  	
  JUBAL R. THOMSON

  	
   

  	
   

  	
  Christopher Clemente

  	
   

  
	
  Title:

  	
   

  	
   

  	
   

  	
  Chief Executive Officer

  
	
   

  	
   

  
	
  (Seal)

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  ATTEST:

  	
   

  	
  COMSTOCK L’AMBIANCE:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  COMSTOCK L’AMBIANCE, L.C.,

  a Virginia limited liability company

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  Comstock Holding Company, Inc.,

  a Virginia corporation, Manager

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ Jubal R. Thomson

  	
   

  	
   

  	
  By:

  	
  /s/ Christopher Clemente

  	
   

  
	
  Name:

  	
  JUBAL R. THOMSON

  	
   

  	
   

  	
   

  	
  Christopher Clemente

  	
   

  
	
  Title:

  	
   

  	
   

  	
   

  	
  Chief Executive Officer

  
	
   

  	
   

  
	
  (Seal)

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  WITNESS:

  	
   

  	
  LENDER:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  NATIONSBANK, N.A.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  /s/ Katherine O’Leary McQuie

  	
  (seal)

  	
   

  	
  By:

  	
  /s/ Linda P. Long

  	
   

  
	
  Print Name: Katherine O’Leary McQuie

  	
   

  	
   

  	
  Linda P. Long

  
	
  Print Title: Vice President

  	
   

  	
   

  	
  Vice President

  
	
  [Corporate Seal]

  	
   

  	
   

  
																

 

5

 

	
  ATTEST/WITNESS:

  	
  GUARANTORS

  
	
   

  	
   

  
	
   

  	
   

  
	
  /s/ Jubal R. Thomson

  	
   

  	
  /s/ Christopher Clemente

  	
   

  
	
  Print Name:  JUBAL R. THOMSON

  	
  Christopher Clemente, individually [SEAL]

  
	
   

  	
   

  
	
  /s/ Jubal R. Thomson

  	
   

  	
  /s/ Gregory Benson

  	
   

  
	
  Print Name:  JUBAL R. THOMSON

  	
  Gregory Benson, individually [SEAL]

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  COMSTOCK L’AMBIANCE, L.C.,

  a Virginia limited liability company

  
	
   

  	
   

  
	
   

  	
  By:

  	
  Comstock Holding Company, Inc.,

  a Virginia corporation, Manager

  
	
   

  	
   

  
	
   

  	
   

  
	
  /s/ Jubal R. Thomson

  	
   

  	
   

  	
  By:

  	
  /s/ Christopher Clemente

  	
   

  
	
  Print Name:  JUBAL R. THOMSON

  	
   

  	
  Christopher Clemente

  	
   

  
	
  Print Title:

  	
   

  	
  Chief Executive Officer

  	
   

  
	
   

  	
   

  
	
  [SEAL]

  	
   

  
	
   

  	
   

  
	
  ATTEST/WITNESS:

  	
   

  	
  TRUSTEES

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Print Name:

  	
   

  	
  Patricia DuBois, Trustee

  
	
   

  	
   

  
	
  /s/ Lisa M Moore

  	
   

  	
   

  	
  /s/ Gregory L. Carter

  	
   

  
	
  Print Name:  

  	
   

  	
  Gregory L. Carter, Trustee

  
											

 

[acknowledgements on following pages]

 

6

 

FOURTH LOAN MODIFICATION AGREEMENT

 

THIS FOURTH LOAN MODIFICATION AGREEMENT (this “Agreement”) is made as
of the 14 day of July, 1999, by and among (a) COMSTOCK HOLDING COMPANY,
INC.  (“Borrower”), a Virginia
corporation, (b) COMSTOCK L’AMBIANCE, L.C., a Virginia limited liability
company (“Comstock L’Ambiance”) and CHRISTOPHER CLEMENTE and GREGORY BENSON,
jointly and severally (collectively, the “Guarantor”), (c) PATRICIA I. DUBOIS,
a resident of Fairfax County, Virginia and GREGORY L. CARTER, a resident of
Fairfax County, Virginia (“Trustees”), and (d) BANK OF AMERICA, N.A., a
national banking association, successor in interest to NationsBank, N.A. (the
“Lender”).

 

RECITALS:

 

WHEREAS, pursuant to the terms of that certain Loan Agreement (the
“Original Loan Agreement”) dated as of December 17, 1997, by and among
Lender, Borrower, and Comstock L’Ambiance, as modified (as modified, and as the
same may be further modified, renewed, supplemented or restated, the “Loan
Agreement”), Lender made a loan (the “Loan”) to Borrower in the original
principal amount of Two Million and No/100 Dollars ($2,000,000.00), as
evidenced by that certain Revolving Deed of Trust Note dated December 17,
1997 made by Borrower payable to the order of the Lender in the original
principal amount of Two Million and No/100 Dollars ($2,000,000.00), as modified
and increased to the principal amount of Four Million One Hundred Thousand and
No/100 Dollars ($4,100,000.00) (as amended, and as the same may be further
amended, renewed, supplemented or restated, the “Note”); and

 

WHEREAS, the Borrower’s obligations under the Note and the Loan are
jointly and severally guaranteed by that certain Guaranty Agreement dated as of
December 17, 1997, by the Guarantor for the benefit of the Lender (the
“Guaranty”); and

 

WHEREAS, the Loan is secured by that certain Credit Line Deed of Trust
and Security Agreement dated as of December 17,1997 and recorded in Deed
Book 10211 at page 1879, among the Land Records of Fairfax County, Virginia, as
amended (as amended, and as the same may be further amended or supplemented
from time to time, the “Deed of Trust”) granting a security interest to the
Trustees in certain land located in Fairfax County, Virginia, as more
particularly described in Exhibit A attached thereto, and;

 

WHEREAS, the Borrower’s obligations under the Note and the other Loan
Documents (hereinafter defined) are hereinafter collectively called the
“Obligations”; the Note, the Deed of Trust, the Loan Agreement, the Guaranty,
and all other documents previously, now or hereafter executed and delivered to
evidence, secure, guarantee, or in connection with, the Obligations, as the
same may from time to time be renewed, extended, amended, supplemented or
restated, are hereinafter collectively called the “Loan Documents”; and all
liens, security interests, assignments, superior titles, rights, remedies,
powers, equities and priorities securing the Note or providing recourse to
Lender with respect thereto are hereinafter collectively called the “Liens”

 

NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Borrower and Lender hereby agree
to amend the terms and conditions of the Loan Documents as more specifically
set forth below.

 

 

1.                                      Recitals.  The recitals set forth above are a material
part of this Agreement.  Borrower and
Guarantor each acknowledge and affirm the accuracy of the recitals set forth
above.

 

2.                                      Loan
Amount.  The maximum principal
amount that may be committed under the Loan at any time shall be Four Million
Five Hundred Thousand and 00/100 Dollars ($4,500,000.00).

 

3.                                      Maturity
Date.  All of the Obligations,
including (without limitation) all outstanding principal, accrued and unpaid
interest, outstanding late charges, unpaid fees, and all other amounts
outstanding under the Note and the other Loan Documents, shall be due and
payable in full on June 30, 2000 (the “Maturity Date”). All references to
the Maturity Date contained in the Loan Documents shall refer to the Maturity
Date as defined in this Agreement. Notwithstanding the above, in the event the
Lender does not agree in its sole and absolute discretion to extend the
Maturity Date prior to the date thereof, the principal amount outstanding under
the Loan on the Maturity Date with respect to any Pre-Sold Unit, Speculative
Unit or Inventory Lot shall be due and payable on the earlier of (i) the date
calculated in accordance with Paragraph 2.2(g) of the Loan Agreement as amended
or (ii) October 30, 2000.

 

4.                                      Fees.  Simultaneously with the execution of this
Agreement, Borrower shall pay to Lender a loan fee in the amount of $5,625.00
for the calendar quarter July 1, 1999 through September 30, 1999.
Borrower shall also pay to Lender a quarterly loan fee in an amount equal to
..125% of the total amount committed under the Loan on the first day of each
calendar quarter thereafter as an additional loan fee so long as there is any
Loan Amount committed under the Loan on any such due date.

 

5.                                      Interest
Rate.  From and after the date
hereof, the Stated Rate as defined in the Note shall mean a variable rate equal
to Lender’s Prime Rale plus one-half of one percent (0.50%).

 

6.                                      Speculative
Unit Limit.  The maximum
aggregate amount of the Loan which may be budgeted at any time for Speculative
Units (including model Units) is $1,800,000. The portion of any Loan advance
which pertains to a Lot comprising a Speculative Unit shall not exceed ninety
percent (90%) of the lesser of (i) the price paid for such Lot by Borrower, or
(ii) the Appraised Value for such Lot.

 

7.                                      Inventory
Lot Limit.  The maximum aggregate
amount of the Loan which may be budgeted at any time for Inventory Lots is
$425,000. With respect to each Inventory Lot, the Lender shall not fund under
the Loan an amount in excess of the lesser of (i) seventy-five percent (75%) of
the purchase price for such Lot, or (ii) seventy-five percent (75%) of the
Appraised Value for such Lot.

 

8.                                      Financial
Statements.  From and after the
date hereof, Section 4.1(b) of the Loan Agreement is hereby deleted in its
entirety and the following Section 4.1(b) is substituted in lieu thereof:

 

“4.1(b)          The Entities shall,
within forty-five (45) days after the close of the Entities’ respective
quarterly business period, provide to Lender an internally prepared balance
sheet and income statement of the Entities;

 

All financial information shall be certified on the Lender’s Financial
Statement Certification form attached hereto as Exhibit A by the Entities or by
the Guarantor, as applicable, with an original signature and date.”

 

2

 

9.                                      Profits.  From and after the date hereof,
Section 4.14 of the Loan Agreement is hereby deleted in its entirety.

 

10.                               Borrower’s
Representations and Warranties. 
The Borrower hereby reaffirms all of the representations and warranties
set forth in the Loan Documents (as defined in the Loan Agreement, as amended
hereby), and further represents and warrants that (a) the execution and
delivery of this Agreement do not contravene, resulting in an breach of, or
constitute a default under, any deed of trust, loan agreement, indenture or
other contract or agreement to which the Borrower is a party or by which the
Borrower or any of its properties may be bound (nor would such execution and
delivery constitute such a default with the passage of time or the giving of
notice or both), and do not violate or contravene any law, order, decree, rule,
regulation or restriction to which the Borrower or the Property is subject; (b)
this Agreement constitutes the legal, valid and binding obligations of the
Borrower enforceable in accordance with its terms; (c) the execution and
delivery of, and performance under, this Agreement are within the Borrower’s
power and authority without the joinder or consent of any other party and have
been duly authorized by all requisite action, and are not in contravention of
any law, or of the Borrower’s charter, bylaws or other corporate organizational
documents or of any indenture, agreement or undertaking to which the Borrower
is a party or by which it is bound; (d) there exists no default under the Note
or any other Loan Document; (e) there are no offsets, claims or defenses with
respect to the Borrower’s or Guarantor’s obligations under any of the Loan
Documents (the “Obligations.”); and (f) the Borrower is duly organized and
legally existing under the laws of the Commonwealth of Virginia and is duly
qualified to do business in the Commonwealth of Virginia. The Borrower further
represents and warrants that, except as disclosed in writing to the Lender,
there is no suit, judicial or administrative action, claims, investigation,
inquiry, proceeding or demand pending (or, to the Borrower’s knowledge
threatened)  against (i) the Borrower, or
against any other person liable directly or indirectly for the Obligations, or
(ii) which affects the Property or the Borrower’s title to the Property, or
(iii) which affects the validity, enforceability or priority of any of the Loan
Documents. The Borrower agrees to indemnify and hold the Lender harmless
against any loss, claim, damage, liability or expense (including, without
limitation, attorneys’ fees) incurred as a result of any representation or warranty
made by the Borrower herein which proves to be untrue or inaccurate in any
respect, and any such occurrence shall constitute a default under the Loan
Documents.

 

11.                               Renewal;
Lien Continuation; No Novation. 
The Borrower hereby renews the Obligations and promises to pay and
perform the Obligations as modified by this Agreement. All liens evidenced by
the Loan Documents (the “Liens”) are hereby ratified and confirmed as valid,
subsisting and continuing to secure the Obligations, as modified hereby. Nothing
herein shall in any manner diminish, impair, waive or extinguish the Note, the
Obligations or the Liens. The execution and delivery of this Agreement shall
not constitute a novation of the debt evidenced and secured by the Loan
Documents.

 

12.                               Expenses.  The Borrower promises to pay all costs and
expenses and reimburse the Lender for any and all expenditures of every
character incurred or expended from time to time, regardless of whether a
default shall have occurred, in connection with this Agreement and all other
Loan Documents, and all such amounts shall constitute a portion of the
Obligations evidenced by the Note and secured by the Loan Documents.

 

13.                               Miscellaneous.  To the extent of any conflict between the
Loan Documents and this Agreement, this Agreement shall control. Unless
specifically modified hereby, all terms of the Loan Documents shall remain in
full force and effect. This Agreement (a) shall bind and benefit the parties
hereto and their respective heirs, beneficiaries administrators, executors,
receivers, trustees, successors and assigns; (b) shall be governed by the laws
of the Commonwealth of Virginia and United States federal law; and (c) may be
executed in several counterparts, and by the parties hereto on separate
counterparts, and each counterpart, when executed and delivered, shall
constitute an

 

3

 

original agreement enforceable against all who signed it without
production of or accounting for any other counterpart, and all separate counterparts
shall constitute the same agreement. Any terms not defined herein shall have
the meanings set forth in the Loan Documents.

 

14.                               Reaffirmation
of Guaranty.  Each Guarantor, by
signature below as such, for a valuable consideration, the receipt and adequacy
of which are hereby acknowledged, hereby consents to and joins in this
Agreement and hereby declares to and agrees with the Lender that the Guaranty
is and shall continue in full force and effect for the benefit of the Lender
with respect to the Obligations, as amended by this Agreement, that there are
no offsets, claims or defenses of the Guarantor with respect to the Guaranty
nor, to Guarantor’s knowledge, with respect to the Obligations, that the
Guaranty is not released, diminished or impaired in any way by this Agreement
or the transactions contemplated hereby, and that the Guaranty is hereby
ratified and confirmed in all respects. Each Guarantor hereby reaffirms all of
the representations and warranties set forth in the Guaranty. Each Guarantor
acknowledges that without this consent and reaffirmation, Lender would not
execute this Agreement or otherwise consent to its terms.

 

15.                               Authorization
of Trustees.  Lender, by its
execution hereof, authorizes and instructs the Trustees to execute this instrument
for the purposes set forth herein and expressly acknowledges that either
Trustee may act and the execution by both Trustees shall not be required.

 

[SIGNATURES APPEAR ON FOLLOWING PAGES]

 

4

 

EXECUTED ON THE DATE OR DATES OF THE ACKNOWLEDGMENTS HEREOF, BUT
EFFECTIVE AS OF THE DATE FIRST STATED IN THIS AGREEMENT.

 

 

	
  ATTEST/WITNESS:

  	
  BORROWER

  
	
   

  	
   

  
	
   

  	
  COMSTOCK HOLDING COMPANY, INC.,

  
	
   

  	
  a Virginia corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/ Kelly L. Wyche

  	
   

  	
  By:

  	
  /s/ Christopher Clemente

  	
  (SEAL)

  	
   

  
	
  Name:

  	
  Kelly L. Wyche

  	
   

  	
   

  	
  Christopher Clemente

  	
   

  
	
  Title:

  	
   

  	
   

  	
   

  	
  Chief Executive Officer

  
	
   

  	
   

  
	
  (Seal)

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  ATTEST:

  	
   

  	
  COMSTOCK L’AMBIANCE:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  COMSTOCK L’AMBIANCE, L.C.,

  a Virginia limited liability company

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  Comstock Holding Company, Inc.,

  a Virginia corporation, Manager

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ Kelly L. Wyche

  	
   

  	
   

  	
  By:

  	
  /s/ Christopher Clemente

  	
   

  
	
  Name:

  	
  Kelly L. Wyche

  	
   

  	
   

  	
   

  	
  Christopher Clemente

  	
   

  
	
  Title:

  	
   

  	
   

  	
   

  	
  Chief Executive Officer

  
	
   

  	
   

  
	
  (Seal)

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  WITNESS:

  	
   

  	
  LENDER:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  BANK OF AMERICA, N.A.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  /s/ Katherine O’Leary McQuie

  	
   

  	
   

  	
  By:

  	
  /s/ Linda P. Long

  	
   

  
	
  Print Name: Katherine O’Leary McQuie

  	
   

  	
   

  	
  Linda P. Long

  
	
  Print Title: Vice President

  	
   

  	
   

  	
  Vice President

  
	
  [Corporate Seal]

  	
   

  	
   

  
																	

 

5

 

	
  ATTEST/WITNESS:

  	
  GUARANTORS

  
	
   

  	
   

  
	
   

  	
   

  
	
  /s/ Kelly Wyche

  	
   

  	
  /s/ Christopher Clemente

  	
   

  
	
  Print Name:  Kelly Wyche

  	
  Christopher Clemente, individually [SEAL]

  
	
   

  	
   

  
	
  /s/ Kelly Wyche

  	
   

  	
  /s/ Gregory Benson

  	
   

  
	
  Print Name:  Kelly Wyche

  	
  Gregory Benson, individually [SEAL]

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  COMSTOCK L’AMBIANCE, L.C.,

  a Virginia limited liability company

  
	
   

  	
   

  
	
   

  	
  By:

  	
  Comstock Holding Company, Inc.,

  a Virginia corporation, Manager

  
	
   

  	
   

  
	
   

  	
   

  
	
  /s/ Kelly L. Wyche

  	
   

  	
   

  	
  By:

  	
  /s/ Christopher Clemente

  	
   

  
	
  Print Name:  Kelly L. Wyche

  	
   

  	
  Christopher Clemente

  	
   

  
	
  Print Title:

  	
   

  	
  Chief Executive Officer

  	
   

  
	
   

  	
   

  
	
  [SEAL]

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  ATTEST/WITNESS:

  	
   

  	
  TRUSTEES

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Print Name:

  	
   

  	
  Patricia DuBois, Trustee

  
	
   

  	
   

  
	
  /s/ Linda P. Long

  	
   

  	
   

  	
  /s/ Gregory L. Carter

  	
   

  
	
  Print Name:  LINDA P. LONG

  	
   

  	
  Gregory L. Carter, Trustee

  
										

 

[acknowledgements on following pages]

 

6

 

PREPARED OUT OF STATE

 

FIFTH LOAN MODIFICATION AGREEMENT

 

THIS FIFTH LOAN MODIFICATION AGREEMENT (this “Agreement”) is made as of
the 6th day of March, 2000, by and among (a) COMSTOCK HOLDING
COMPANY, INC. (“Borrower”), a Virginia corporation, (b) COMSTOCK L’AMBIANCE,
L.C., a Virginia limited liability company (“Comstock L’Ambiance”), COMSTOCK
SHERBROOKE, L.C., a Virginia limited liability company (“Comstock Sherbrooke”)
and CHRISTOPHER CLEMENTE and GREGORY BENSON, jointly and severally
(collectively, the “Guarantor”), (c) KATHERINE O’LEARY MCQUIE, a resident of
Fairfax County, Virginia and GREGORY L. CARTER, a resident of Fairfax County,
Virginia (“Trustees”), and (d) BANK OF AMERICA, N.A., a national banking association,
successor in interest to NationsBank, N.A. (the “Lender”).

 

RECITALS:

 

WHEREAS, pursuant to the terms of that certain Loan Agreement (the
“Original Loan Agreement”) dated as of December 17, 1997, by and among
Lender, Borrower, and Comstock L’Ambiance, as modified (as modified, and as the
same may be further modified, renewed, supplemented or restated, the “Loan
Agreement”), Lender made a loan (the “Loan”) to Borrower in the original
principal amount of Two Million and No/100 Dollars ($2,000,000.00), as
evidenced by that certain Revolving Deed of Trust Note dated December 17,
1997 made by Borrower payable to the order of the Lender in the original
principal amount of Two Million and No/100 Dollars ($2,000,000.00), as modified
and increased to the principal amount of Four Million Five Hundred Thousand and
No/100 Dollars ($4,500,000.00) (as amended, and as the same may be further
amended, renewed, supplemented or restated, the “Note”); and

 

WHEREAS, the Borrower’s obligations under the Note and the Loan are
jointly and severally guaranteed by that certain Guaranty Agreement dated as of
December 17, 1997, by the Guarantor for the benefit of the Lender (the
“Guaranty”); and

 

WHEREAS, the Loan is secured by that certain Credit Line Deed of Trust
and Security Agreement dated as of December 17, 1997 and recorded in Deed
Book 10211 at page 1879, among the Land Records of Fairfax County, Virginia, as
amended (as amended, and as the same may be further amended or supplemented
from time to time, the “Deed of Trust”) granting a security interest to the
Trustees in certain land located in Fairfax County, Virginia, as more
particularly described in Exhibit A attached thereto, and;

 

WHEREAS, the Borrower’s obligations under the Note and the other Loan
Documents (hereinafter defined) are hereinafter collectively called the
“Obligations”; the Note, the Deed of Trust, the Loan Agreement, the Guaranty,
and all other documents previously, now or hereafter executed and delivered to
evidence, secure, guarantee, or in connection with, the Obligations, as the
same may from time to time be renewed, extended, amended, supplemented or
restated, are hereinafter collectively called the “Loan Documents”; and all
liens, security interests, assignments, superior titles, rights, remedies,
powers, equities and priorities securing the Note or providing recourse to
Lender with respect thereto are hereinafter collectively called

 

 

the “Liens”.

 

NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Borrower and Lender hereby agree
to amend the terms and conditions of the Loan Documents as more specifically
set forth below.

 

1.                                      Recitals.  The recitals set forth above are a material
part of this Agreement.  Borrower and
Guarantor each acknowledge and affirm the accuracy of the recitals set forth
above.

 

2.                                      Assumption
and Release.  Comstock Sherbrooke
hereby assumes all of the obligations of Comstock L’Ambiance under the Deed of
Trust and under the Guaranty as if it was an original Guarantor.  Lender hereby agrees that Comstock
L’Ambiance, but not Comstock Sherbrooke, is hereby released as a Grantor under
the Deed of Trust and as a Guarantor under the Guaranty subject to those
provisions contained in the Loan Documents which specifically survive the
expiration or earlier termination of the Loan Documents.

 

3.                                      The
Sherbrooke Project.  From and
after the date hereof, the Projects as defined in the Loan Documents, shall
include the acquisition of approximately seventy-three (73) townhouse
condominium lots and the construction of up to seventy-three (73) townhouse
condominium Units on such lots in the subdivision known as Sherbrooke subject
to that certain condominium regime known as the Sherbrooke – II Townhouse
Condominium (the “Sherbrooke Condominium”), located at the intersection of
Old Bridge Road and Smoketown Road in Prince William County, Virginia, known as
the Sherbrooke Project.

 

4.                                      Speculative
Unit Limit.  The maximum
aggregate amount of the Loan which may be budgeted at any time for Speculative
Units (including model Units) is $1,800,000. The portion of any Loan advance
which pertains to a Lot comprising a Speculative Unit shall not exceed ninety
percent (90%) of the lesser of (i) the price paid for such Lot by Borrower, or
(ii) the Appraised Value for such Lot. The maximum number of Speculative Units
(including model Units) that may be financed with Loan proceeds at any one time
with respect to any Project shall be ten (10); provided, however, that at the
time of the initial advance of Loan proceeds with respect to the Sherbrooke
Project, the maximum number of Speculative Units (including model Units) shall
be twelve (12), provided further that no subsequent advances of Loan proceeds
shall be made until such time as the number of Speculative Units (including
model Units) being financed with Loan proceeds at any Project has been reduced
to ten (10).

 

5.                                      Inventory
Lot Limit.  The maximum aggregate
amount of the Loan which may be budgeted at any time for Inventory Lots is
$425,000. With respect to each Inventory Lot, the Lender shall not fund under
the Loan an amount in excess of the lesser of (i) seventy-five percent (75%) of
the purchase price for such Lot, or (ii) seventy-five percent (75%) of the
Appraised Value for such Lot. The maximum number of Inventory Lots that may be
financed with Loan proceeds at any one time with respect to any Project shall
be nine (9).

 

6.                                      Plans
and Specifications.  Borrower
shall provide Lender with satisfactory evidence that any and all plans and
specifications prepared in connection with the Sherbrooke Project have been
approved by the applicable condominium association and the Commonwealth of
Virginia, if such approvals are required.

 

7.                                      Impositions.  Borrower shall provide Lender with
satisfactory evidence that any and all condominium dues and assessments imposed
upon the Sherbrooke Project by any condominium association in accordance with
any declaration of condominium or any other such

 

2

 

document of record are paid in full and to date and that no failure to
pay any assessment or dues has created a lien which would be superior to that
of Lender’s interest hereunder.

 

8.                                      Insurance.  In the event that any of the insurance
requirements contained in the Loan Documents shall be obtain by any condominium
association, Borrower shall provide certificates of insurance in a form
satisfactory to Lender evidencing that the Sherbrooke Project is covered by all
insurance required by the Loan Documents. Comstock Sherbrooke shall have the
Board of Directors of the Sherbrooke – II Townhouse Condominium Association
designate Lender to be Insurance Trustee pursuant to Section 7.6 of the
Sherbrooke By-Laws, hereinafter defined in Paragraph 9.

 

9.                                      Condominium.  Lender hereby acknowledges that,
notwithstanding anything to the contrary in Section 5.5 of the Deed of
Trust, the Sherbrooke Project is currently subject to a condominium regime
pursuant to that certain Declaration of Sherbrooke – II Townhouse Condominium
dated September 19, 1997 and recorded among the land records of Prince
William County, Virginia in Deed Book 2489 at Page 1067 (as the same may be
modified or amended, the “Sherbrooke Declaration”) and the By-Laws related
thereto attached to the Sherbrooke Declaration as Exhibit C (as the same may be
modified or amended, the “Sherbrooke By-Laws”) and that certain Declaration of
Covenants, Conditions and Restrictions by S. Brooke Corporation and Sherbrooke
Swim and Racquet Association dated December 31, 1991 and recorded among
the aforesaid Land Records in Deed Book 1877 at Page 1159 (as the same may be
modified or amended, the “Recreational Facility Declaration”). Comstock
Sherbrooke shall, on a phase by phase basis, become a Special Declarant under
the  “Sherbrooke Condominium Documents”
(as hereinafter defined) in connection with its acquisition of the Sherbrooke
Project on such phase by phase basis pursuant to that certain Transfer of
Special Declarant Rights for Sherbrooke – II Townhouse Condominium by and
between S. Brooke Corporation and Comstock Sherbrooke, L.C. dated on even date
herewith, as the same may be amended (the “Transfer of Special Declarant
Rights”) (Comstock Sherbrooke shall be known as “Declarant” for purposes of
Paragraphs 9, 10 and 11 herein).  Borrower
hereby agrees to provide to Lender a copy of the Transfer of Special Declarant
Rights executed in connection with its acquisition of each phase of the
Sherbrooke Project within five (5) days of the date hereof. It shall constitute
a default under the Loan Documents if there is any amendment, modification or
termination of the Sherbrooke Condominium Documents without Lender’s prior
written consent; provided, however, Lender understands that the Declarant
currently intends to apply to the Commonwealth of Virginia to amend the
Sherbrooke Condominium Documents to modify the public offering statement to
name Declarant as the declarant under the Sherbrooke Condominium Documents with
respect to those phases of the Sherbrooke Condominium which Declarant will be
acquiring and to amend the plans of the Sherbrooke Condominium Documents to
insert the Unit types which Borrower will be constructing on those phases of
the Sherbrooke Condominium which Declarant will acquire (the “Initial
Amendment”). Lender hereby consents to the Initial Amendment subject to the
following conditions: (i) the Initial Amendment shall be in substantially the
same form as that draft of the Initial Amendment previously delivered to the
Lender for its review in connection with this Agreement; (ii) no modification
to the form of the Initial Amendment shall be submitted to the Commonwealth of
Virginia for approval without the prior written consent of Lender; and
(iii)  evidence of approval of the
Initial Amendment by the Commonwealth of Virginia shall be received by Lender
within sixty (60) days following the date hereof. The “Sherbrooke Condominium
Documents” shall mean the Sherbrooke Declaration, the Sherbrooke By-Laws, any
public offering statement, any plats and plans of the Sherbrooke Condominium,
and any

 

3

 

other documents related to the Sherbrooke Condominium, as any of the
foregoing documents maybe amended or modified.

 

10.                               Future
Amendments to the Sherbrooke Condominium Documents.  Notwithstanding anything to the contrary
contained in Paragraph 9 of this Agreement, any amendments or modifications of
the Sherbrooke Condominium Documents (the “Future Amendments”), other than the
Initial Amendment, must have the prior written consent of Lender and shall be
subject to the following conditions: (i) no documents shall be submitted to the
Commonwealth of Virginia for approval in connection with the Future Amendments
without the prior written consent of Lender; (ii) evidence of approval of the
Future Amendments by the Commonwealth of Virginia (if required) shall be
received by Lender within sixty (60) days following the date of the submission
of any Future Amendment to the Commonwealth of Virginia; (iii) in the event
Declarant intends a Future Amendment be an amendment or modification of the
Sherbrooke Declaration or the Sherbrooke By-Laws, evidence shall be provided to
Lender that Declarant has received proper approval or consent, if any such
approval or consent is required, to amend the Sherbrooke Declaration or the
Sherbrooke By-Laws; and (iv) evidence shall be provided to Lender that any
Future Amendment has been executed by S. Brooke Corporation, if required
pursuant to the Transfer of Special Declarant Rights. In no event shall
Borrower or Declarant subject the Sherbrooke Project or any portion thereof to
a new condominium regime without the prior written consent of Lender and
approval of any such new condominium documents by Lender.

 

11.                               Assignment
of Declarant Rights.  The
Declarant hereby assigns to Lender all of its rights, title and interest as
Declarant and Special Declarant in and to the Sherbrooke Condominium and any
future condominium association.

 

12.                               Failure
to Pay Condominium Assessments. 
Any default by Borrower in the payment of any assessments or fees levied
pursuant to any by-laws or condominium declaration or any other condominium
instruments for which Borrower or Comstock Sherbrooke are responsible and to
which the Sherbrooke Project is subject or which would create a lien on the collateral,
or any installment thereof shall be a Default under the Loan Documents.

 

13.                               Notice
to Board of Directors and Managing Agent of Condominium Association.  Borrower agrees to notify the Board of
Directors and the Managing Agent of the Condominium Association with the name
and address of Lender in accordance with Section 9.1 of the Sherbrooke
By-Laws.

 

14.                               Spreader
of Lien.  Borrower hereby
irrevocably grants, bargains, and conveys (and to the extent any of such
property was previously conveyed to the Trustees pursuant to the Deed of Trust,
regrants, rebargains and reconveys) to the Trustees and their respective
successors in trust, and their assigns, with power of sale, and the lien of the
Deed of Trust is spread to include, the Additional Property as described on Exhibit
A-2 attached hereto, to have and to hold the same, together with all and
singular the rights, privileges, tenements, hereditaments and appurtenances
thereto in any way incident or belonging unto the Trustees and to their
successors and assigns forever, in and upon the same uses and trusts and with
all the powers and duties as set forth in the Deed of Trust, with like force
and effect. All terms, provisions, covenants, stipulations, conditions and
agreements contained in the Deed of Trust are incorporated herein by this
reference for all purposes. Simultaneously with the recordation hereof,
Comstock Sherbrooke agrees to record the Transfer of Special Declarant Rights.
In addition, Comstock Sherbrooke agrees that upon substantial completion by
Borrower of the

 

4

 

Units in any particular phase of the Sherbrooke Project to record the
form of amendment necessary to expand the Sherbrooke Condominium pursuant to
Article 4 of the Sherbrooke Declaration.

 

15.                               Borrower’s
Representations and Warranties. 
The Borrower hereby reaffirms all of the representations and warranties
set forth in the Loan Documents (as defined in the Loan Agreement, as amended
hereby), and further represents and warrants that (a) the execution and
delivery of this Agreement do not contravene, resulting in an breach of, or
constitute a default under, any deed of trust, loan agreement, indenture or
other contract or agreement to which the Borrower is a party or by which the Borrower
or any of its properties may be bound (nor would such execution and delivery
constitute such a default with the passage of time or the giving of notice or
both), and do not violate or contravene any law, order, decree, rule,
regulation or restriction to which the Borrower or the Property is subject; (b)
this Agreement constitutes the legal, valid and binding obligations of the
Borrower enforceable in accordance with its terms; (c) the execution and
delivery of, and performance under, this Agreement are within the Borrower’s
power and authority without the joinder or consent of any other party and have
been duly authorized by all requisite action, and are not in contravention of
any law, or of the Borrower’s charter, bylaws or other corporate organizational
documents or of any indenture, agreement or undertaking to which the Borrower
is a party or by which it is bound; (d) there exists no default under the Note
or any other Loan Document; (e) there are no offsets, claims or defenses with
respect to the Borrower’s or Guarantor’s obligations under any of the Loan
Documents (the “Obligations”); and (f) the Borrower is duly organized and
legally existing under the laws of the Commonwealth of Virginia and is duly
qualified to do business in the Commonwealth of Virginia. The Borrower further
represents and warrants that, except as disclosed in writing to the Lender,
there is no suit, judicial or administrative action, claims, investigation,
inquiry, proceeding or demand pending (or, to the Borrower’s knowledge threatened)
against (i) the Borrower, or against any other person liable directly or
indirectly for the Obligations, or (ii) which affects the Property or the
Borrower’s title to the Property, or (iii) which affects the validity,
enforceability or priority of any of the Loan Documents. The Borrower agrees to
indemnify and hold the Lender harmless against any loss, claim, damage,
liability or expense (including, without limitation, attorneys’ fees) incurred
as a result of any representation or warranty made by the Borrower herein which
proves to be untrue or inaccurate in any respect, and any such occurrence shall
constitute a default under the Loan Documents.

 

16.                               Renewal;
Lien Continuation; No Novation. 
The Borrower hereby renews the Obligations and promises to pay and
perform the Obligations as modified by this Agreement. All liens evidenced by
the Loan Documents (the “Liens”) are hereby ratified and confirmed as valid,
subsisting and continuing to secure the Obligations, as modified hereby.
Nothing herein shall in any manner diminish, impair, waive or extinguish the
Note, the Obligations or the Liens.  The
execution and delivery of this Agreement shall not constitute a novation of the
debt evidenced and secured by the Loan Documents.

 

17.                               Expenses.  The Borrower promises to pay all costs and
expenses and reimburse the Lender for any and all expenditures of every
character incurred or expended from time to time, regardless of whether a
default shall have occurred, in connection with this Agreement and all other
Loan Documents, and all such amounts shall constitute a portion of the
Obligations evidenced by the Note and secured by the Loan Documents.

 

18.                               Miscellaneous.  To the extent of any conflict between the
Loan Documents and this Agreement, this Agreement shall control. Unless
specifically modified hereby, all terms of the Loan Documents shall remain in
full force and effect. This Agreement (a) shall bind and benefit

 

5

 

the parties hereto and their respective heirs, beneficiaries
administrators, executors, receivers, trustees, successors and assigns; (b)
shall be governed by the laws of the Commonwealth of Virginia and United States
federal law; and (c) may be executed in several counterparts, and by the parties
hereto on separate counterparts, and each counterpart, when executed and
delivered, shall constitute an original agreement enforceable against all who
signed it without production of or accounting for any other counterpart, and
all separate counterparts shall constitute the same agreement. Any terms not
defined herein shall have the meanings set forth in the Loan Documents.

 

19.                               Reaffirmation
of Guaranty.  Each Guarantor, by
signature below as such, for a valuable consideration, the receipt and adequacy
of which are hereby acknowledged, hereby consents to and joins in this
Agreement and hereby declares to and agrees with the Lender that, subject to
the provisions of Paragraph 2 herein, the Guaranty is and shall continue in
full force and effect for the benefit of the Lender with respect to the
Obligations, as amended by this Agreement, that there are no offsets, claims or
defenses of the Guarantor with respect to the Guaranty nor, to Guarantor’s
knowledge, with respect to the Obligations, that the Guaranty is not released,
diminished or impaired in any way by this Agreement or the transactions
contemplated hereby, and that the Guaranty is hereby ratified and confirmed in
all respects.  Each Guarantor hereby
reaffirms all of the representations and warranties set forth in the
Guaranty.  Each Guarantor acknowledges
that without this consent and reaffirmation, Lender would not execute this
Agreement or otherwise consent to its terms. 
Each Guarantor, by signature below, hereby acknowledges and agrees that
Comstock Sherbrooke joins herein as a Guarantor under the Guaranty as if it was
an original Guarantor and that Comstock L’Ambiance is released as a Guarantor
under the Guaranty, subject to those provisions contained in the

Guaranty which expressly survive the expiration or earlier termination
of the Guaranty.

 

20.                               Authorization
of Trustees.  Lender, by
its execution hereof, authorizes and instructs the Trustees to execute this
instrument for the purposes set forth herein and expressly acknowledges that
either Trustee may act and the execution by both Trustees shall not be
required.

 

[SIGNATURES APPEAR ON FOLLOWING PAGES]

 

6

 

EXECUTED ON THE DATE OR DATES OF THE ACKNOWLEDGMENTS HEREOF, BUT
EFFECTIVE AS OF THE DATE FIRST STATED IN THIS AGREEMENT.

 

 

	
  ATTEST/WITNESS:

  	
  BORROWER

  
	
   

  	
   

  
	
   

  	
  COMSTOCK HOLDING COMPANY, INC.,

  
	
   

  	
  a Virginia corporation

  
	
   

  	
   

  
	
  By:

  	
  /s/ Kelly L. Wyche

  	
   

  	
  By:

  	
  /s/ Christopher Clemente

  	
  (SEAL)

  	
   

  
	
  Print Name:

  	
  KELLY L. WYCHE

  	
   

  	
   

  	
  Christopher Clemente

  	
   

  
	
  Print Title:

  	
   

  	
   

  	
   

  	
  Chief Executive Officer

  
	
   

  	
   

  
	
  [SEAL]

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  ATTEST/WITNESS:

  	
   

  	
  COMSTOCK SHERBROOKE:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  COMSTOCK SHERBROOKE, L.C.,
a Virginia limited liability company

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  Comstock Holding Company, Inc.,

  a Virginia corporation, Manager

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ Kelly L. Wyche

  	
   

  	
   

  	
  By:

  	
  /s/ Christopher Clemente

  	
  (SEAL)

  
	
  Print Name:

  	
  KELLY L. WYCHE

  	
   

  	
   

  	
   

  	
  Christopher Clemente

  	
   

  
	
  Print Title:

  	
   

  	
   

  	
   

  	
  Chief Executive Officer

  
	
   

  	
   

  
	
  [SEAL]

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  ATTEST/WITNESS:

  	
   

  	
  LENDER:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  BANK OF AMERICA, N.A.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ John M Dezinno

  	
   

  	
   

  	
  By:

  	
  /s/ Linda P. Long

  	
   

  
	
  Print Name: JOHN M DEZINNO

  	
   

  	
   

  	
  Linda P. Long

  
	
  Print Title: VICE PRESIDENT

  	
   

  	
   

  	
  Vice President

  
	
   

  	
   

  	
   

  	
   

  
	
  [SEAL]

  	
   

  	
   

  
																		

 

[signatures continue on next page]

 

7

 

 

	
  ATTEST/WITNESS:

  	
  GUARANTORS

  
	
   

  	
   

  
	
   

  	
   

  
	
  /s/ Kelly L. Wyche

  	
   

  	
  /s/ Christopher Clemente

  	
   

  
	
  Print Name:  KELLY L. WYCHE

  	
  Christopher Clemente, individually [SEAL]

  
	
   

  	
   

  
	
  /s/ Kelly  L.Wyche

  	
   

  	
  /s/ Gregory Benson

  	
   

  
	
  Print Name:  Kelly L. Wyche

  	
  Gregory Benson, individually [SEAL]

  
	
   

  	
   

  
	
   

  	
   

  
	
  ATTEST/WITNESS:

  	
  COMSTOCK L’AMBIANCE, L.C.,

  a Virginia limited liability company

  
	
   

  	
   

  
	
   

  	
  By:

  	
  Comstock Holding Company, Inc.,

  a Virginia corporation, Manager

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/ Kelly L. Wyche

  	
   

  	
   

  	
  By:

  	
  /s/ Christopher Clemente

  	
   

  
	
  Print Name:  KELLY L. WYCHE

  	
   

  	
  Christopher Clemente

  	
   

  
	
  Print Title:

  	
   

  	
  Chief Executive Officer

  	
   

  
	
   

  	
   

  
	
  [SEAL]

  	
   

  
	
   

  	
   

  
	
  ATTEST/WITNESS:

  	
  COMSTOCK SHERBROOKE, L.C.,

  a Virginia limited liability company

  
	
   

  	
   

  
	
   

  	
  By:

  	
  Comstock Holding Company, Inc.,

  a Virginia corporation, Manager

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/ Kelly L. Wyche

  	
   

  	
   

  	
  By:

  	
  /s/ Christopher Clemente

  	
   

  
	
  Print Name:  KELLY L. WYCHE

  	
   

  	
  Christopher Clemente

  	
   

  
	
  Print Title:

  	
   

  	
  Chief Executive Officer

  	
   

  
	
   

  	
   

  
	
  [SEAL]

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  ATTEST/WITNESS:

  	
   

  	
  TRUSTEES

  
	
   

  	
   

  
	
   

  	
   

  
	
  /s/ Linda Long

  	
   

  	
   

  	
  /s/ Katherine O’Leary McQuie

  	
   

  
	
  Print Name:  LINDA LONG

  	
   

  	
  Katherine O’Leary McQuie, Trustee

  
	
   

  	
   

  
	
  /s/ Linda Long

  	
   

  	
   

  	
  /s/ Gregory L. Carter

  	
   

  
	
  Print Name:  LINDA LONG

  	
   

  	
  Gregory L. Carter, Trustee

  
															

 

 

[acknowledgements on following pages]

 

8

 

PREPARED OUT OF STATE

 

SIXTH LOAN MODIFICATION AGREEMENT

 

THIS SIXTH LOAN MODIFICATION AGREEMENT (this “Agreement”) is made as of
the 20th day of July, 2000, by and among (a) COMSTOCK HOLDING
COMPANY, INC. (“Borrower”), a Virginia corporation, (b) COMSTOCK SHERBROOKE,
L.C., a Virginia limited liability company (“Comstock Sherbrooke”) and
CHRISTOPHER CLEMENTE and GREGORY BENSON, jointly and severally (collectively,
the “Guarantor”), (c) KATHERINE O’LEARY MCQUIE, a resident of Fairfax County,
Virginia and GREGORY L. CARTER, a resident of Fairfax County, Virginia
(“Trustees”), and (d) BANK OF AMERICA, N.A., a national banking association,
successor in interest to NationsBank, N.A. (the “Lender”).

 

RECITALS:

 

WHEREAS, pursuant to the terms of that certain Loan Agreement (the
“Original Loan Agreement”) dated as of December 17, 1997, by and among
Lender, Borrower, and Comstock L’Ambiance, as modified (as modified, and as the
same may be further modified, renewed, supplemented or restated, the “Loan
Agreement”), Lender made a loan (the “Loan”) to Borrower in the original
principal amount of Two Million and No/100 Dollars ($2,000,000.00), as
evidenced by that certain Revolving Deed of Trust Note dated December 17,
1997 made by Borrower payable to the order of the Lender in the original
principal amount of Two Million and No/100 Dollars ($2,000,000.00), as modified
and increased to the principal amount of Four Million Five Hundred Thousand and
No/100 Dollars ($4,500,000.00) (as amended, and as the same may be further
amended, renewed, supplemented or restated, the “Note”); and

 

WHEREAS, the Borrower’s obligations under the Note and the Loan are
jointly and severally guaranteed by that certain Guaranty Agreement dated as of
December 17, 1997, by the Guarantor for the benefit of the Lender (the
“Guaranty”); and

 

WHEREAS, the Loan is secured by that certain Credit Line Deed of Trust
and Security Agreement dated as of December 17, 1997 and recorded in Deed
Book 10211 at page 1879, among the Land Records of Fairfax County, Virginia, as
amended (as amended, and as the same may be further amended or supplemented
from time to time, the “Deed of Trust”) granting a security interest to the
Trustees in certain land located in Fairfax County, Virginia, as more
particularly described in Exhibit A attached thereto and that certain
Supplemental Credit Line Deed of Trust and Security Agreement dated as of
March 6, 2000 and recorded in Deed Book     at
page     , among the Land Records of Prince William
County, Virginia, as amended (as amended, and as the same may be further
amended or supplemented from time to time, the “Supplemental Deed of Trust”),
and;

 

WHEREAS, the Borrower’s obligations under the Note and the other Loan
Documents (hereinafter defined) are hereinafter collectively called the
“Obligations”; the Note, the Deed of Trust, the Supplemental Deed of Trust, the
Loan Agreement, the Guaranty, and all other documents previously, now or
hereafter executed and delivered to evidence, secure, guarantee, or in
connection with, the Obligations, as the same may from time to time be renewed,
extended,

 

 

amended, supplemented or restated, are hereinafter collectively called
the “Loan Documents”; and all liens, security interests, assignments, superior
titles, rights, remedies, powers, equities and priorities securing the Note or
providing recourse to Lender with respect thereto are hereinafter collectively
called the “Liens”

 

NOW,
THEREFORE, for good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, Borrower and Lender hereby agree to amend the
terms and conditions of the Loan Documents as more specifically set forth
below.

 

1.                                      Recitals.  The recitals set forth above are a material
part of this Agreement.  Borrower and
Guarantor each acknowledge and affirm the accuracy of the recitals set forth
above.

 

2.                                      Loan
Amount. The maximum principal amount that may be committed under the
Loan at any time shall be Two Million Five Hundred Thousand and 00/100 Dollars
($2,500,000.00).

 

3.                                      Maturity
Date.  All of the Obligations,
including (without limitation) all outstanding principal, accrued and unpaid
interest, outstanding late charges, unpaid fees, and all other amounts
outstanding under the Note and the other Loan Documents, shall be due and
payable in full on June 30, 2001 (the “Maturity Date”). All references to
the Maturity Date contained in the Loan Documents shall refer to the Maturity
Date as defined in this Agreement. Notwithstanding the above, in the event the
Lender does not agree in its sole and absolute discretion to extend the
Maturity Date prior to the date thereof, the principal amount outstanding under
the Loan on the Maturity Date with respect to any Pre-Sold Unit, Speculative
Unit or Inventory Lot shall be due and payable on the earlier of (i) the date
calculated in accordance with Paragraph 2.2(g) of the Loan Agreement as amended
or (ii) October 30, 2001.

 

4.                                      Financial
Statements.  From and after the
date hereof, annual financial statements required to be furnished to Lender by
the Borrower and Guarantor shall be furnished to Lender as soon as available,
but in no event later than one hundred fifty (150) days after the end of each
calendar year.

 

5.                                      Restrictions
on Future Purchases.  From and
after the date hereof, Section 5.1 of the Loan Agreement is hereby deleted
in its entirety and shall be of no further force and effect.

 

6.                                      Borrower’s
Representations and Warranties. 
The Borrower hereby reaffirms all of the representations and warranties
set forth in the Loan Documents (as defined in the Loan Agreement, as amended
hereby), and further represents and warrants that (a) the execution and
delivery of this Agreement do not contravene, resulting in an breach of, or
constitute a default under, any deed of trust, loan agreement, indenture or
other contract or agreement to which the Borrower is a party or by which the
Borrower or any of its properties may be bound (nor would such execution and
delivery constitute such a default with the passage of time or the giving of
notice or both), and do not violate or contravene any law, order, decree, rule,
regulation or restriction to which the Borrower or the Property is subject; (b)
this Agreement constitutes the legal, valid and binding obligations of the
Borrower enforceable in accordance with its terms; (c) the execution and
delivery of, and performance under, this Agreement are within the Borrower’s
power and authority without the joinder or consent of any other party and have
been duly authorized by all requisite action, and are not in contravention of
any law, or of the Borrower’s charter, bylaws or other corporate organizational
documents or of any indenture, agreement or undertaking to which the Borrower
is a party or by which it is bound; (d) there exists no default under the Note
or any other Loan Document; (e) there are no offsets, claims or defenses with
respect to the Borrower’s or

 

2

 

Guarantor’s obligations under any of the Loan Documents (the
“Obligations”); and (f) the Borrower is duly organized and legally existing
under the laws of the Commonwealth of Virginia and is duly qualified to do
business in the Commonwealth of Virginia. The Borrower further represents and
warrants that, except as disclosed in writing to the Lender, there is no suit,
judicial or administrative action, claims, investigation, inquiry, proceeding
or demand pending (or, to the Borrower’s knowledge threatened) against (i) the
Borrower, or against any other person liable directly or indirectly for the
Obligations, or (ii) which affects the Property or the Borrower’s title to the
Property, or (iii) which affects the validity, enforceability or priority of
any of the Loan Documents. The Borrower agrees to indemnify and hold the Lender
harmless against any loss, claim, damage, liability or expense (including,
without limitation, attorneys’ fees) incurred as a result of any representation
or warranty made by the Borrower herein which proves to be untrue or inaccurate
in any respect, and any such occurrence shall constitute a default under the
Loan Documents.

 

7.                                      Renewal;
Lien Continuation: No Novation. 
The Borrower hereby renews the Obligations and promises to pay and
perform the Obligations as modified by this Agreement. All liens evidenced by
the Loan Documents (the “Liens”) are hereby ratified and confirmed as valid,
subsisting and continuing to secure the Obligations, as modified hereby.
Nothing herein shall in any manner diminish, impair, waive or extinguish the
Note, the Obligations or the Liens.  The
execution and delivery of this Agreement shall not constitute a novation of the
debt evidenced and secured by the Loan Documents.

 

8.                                      Expenses.  The Borrower promises to pay all costs and
expenses and reimburse the Lender for any and all expenditures of every
character incurred or expended from time to time, regardless of whether a
default shall have occurred, in connection with this Agreement and all other
Loan Documents, and all such amounts shall constitute a portion of the
Obligations evidenced by the Note and secured by the Loan Documents.

 

9.                                      Miscellaneous.  To the extent of any conflict between the
Loan Documents and this Agreement, this Agreement shall control. Unless
specifically modified hereby, all terms of the Loan Documents shall remain in
full force and effect. This Agreement (a) shall bind and benefit the parties
hereto and their respective heirs, beneficiaries administrators, executors,
receivers, trustees, successors and assigns; (b) shall be governed by the laws
of the Commonwealth of Virginia and United States federal law; and (c) may be
executed in several counterparts, and by the parties hereto on separate
counterparts, and each counterpart, when executed and delivered, shall
constitute an original agreement enforceable against all who signed it without
production of or accounting for any other counterpart, and all separate
counterparts shall constitute the same agreement. Any terms not defined herein
shall have the meanings set forth in the Loan Documents.

 

10.                               Reaffirmation
of Guaranty.  Each Guarantor, by
signature below as such, for a valuable consideration, the receipt and adequacy
of which are hereby acknowledged, hereby consents to and joins in this
Agreement and hereby declares to and agrees with the Lender that, the Guaranty
is and shall continue in full force and effect for the benefit of the Lender
with respect to the Obligations, as amended by this Agreement, that there are
no offsets, claims or defenses of the Guarantor with respect to the Guaranty
nor, to Guarantor’s knowledge, with respect to the Obligations, that the
Guaranty is not released, diminished or impaired in any way by this Agreement
or the transactions contemplated hereby, and that the Guaranty is hereby
ratified and confirmed in all respects. Each Guarantor hereby reaffirms all of
the representations and warranties set forth in the Guaranty. Each Guarantor
acknowledges that without this consent and reaffirmation, Lender would not
execute this Agreement or otherwise consent to its terms.

 

3

 

11.                               Authorization
of Trustees.  Lender, by its
execution hereof, authorizes and instructs the Trustees to execute this
instrument for the purposes set forth herein and expressly acknowledges that
either Trustee may act and the execution by both Trustees shall not be
required.

 

EXECUTED ON THE DATE OR DATES OF THE ACKNOWLEDGMENTS HEREOF, BUT
EFFECTIVE AS OF THE DATE FIRST STATED IN THIS AGREEMENT.

 

 

	
  ATTEST/WITNESS:

  	
  BORROWER:

  
	
   

  	
   

  
	
   

  	
  COMSTOCK HOLDING COMPANY, INC.,

  
	
   

  	
  a Virginia corporation

  
	
   

  	
   

  
	
  By:

  	
  /s/ Kelly L. Wyche

  	
   

  	
  By:

  	
  /s/ Christopher Clemente

  	
  (SEAL)

  	
   

  
	
  Print Name:

  	
  KELLY L. WYCHE

  	
   

  	
   

  	
  Christopher Clemente

  	
   

  
	
  Print Title:

  	
   

  	
   

  	
   

  	
  Chief Executive Officer

  
	
   

  	
   

  
	
  [SEAL]

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  ATTEST/WITNESS:

  	
   

  	
  COMSTOCK SHERBROOKE:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  COMSTOCK SHERBROOKE, L.C.,
a Virginia limited liability company

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  Comstock Holding Company, Inc.,

  a Virginia corporation, Manager

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ Kelly L. Wyche

  	
   

  	
   

  	
  By:

  	
  /s/ Christopher Clemente

  	
  (SEAL)

  	
   

  
	
  Print Name:

  	
  KELLY L. WYCHE

  	
   

  	
   

  	
   

  	
  Christopher Clemente

  	
   

  
	
  Print Title:

  	
   

  	
   

  	
   

  	
  Chief Executive Officer

  
	
   

  	
   

  
	
  [SEAL]

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  ATTEST/WITNESS:

  	
   

  	
  LENDER:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  BANK OF AMERICA, N.A.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ John M De Zinno

  	
   

  	
   

  	
  By:

  	
  /s/ Linda P. Long

  	
   

  
	
  Print Name: JOHN M DE ZINNO

  	
   

  	
   

  	
  Linda P. Long

  
	
  Print Title: Vice President

  	
   

  	
   

  	
  Vice President

  
	
   

  	
   

  	
   

  	
   

  
	
  [SEAL]

  	
   

  	
   

  
																					

 

4

 

[signatures continue on next page]

 

	
  ATTEST/WITNESS:

  	
  GUARANTORS

  
	
   

  	
   

  
	
   

  	
   

  
	
  /s/ Kelly L. Wyche

  	
   

  	
  /s/ Christopher Clemente

  	
   

  
	
  Print Name:  KELLY L. WYCHE

  	
  Christopher Clemente, individually [SEAL]

  
	
   

  	
   

  
	
   

  	
   

  
	
  /s/ Kelly L. Wyche

  	
   

  	
  /s/ Gregory Benson

  	
   

  
	
  Print Name:  KELLY L. WYCHE

  	
  Gregory Benson, individually [SEAL]

  
	
   

  	
   

  
	
   

  	
   

  
	
  ATTEST/WITNESS:

  	
  COMSTOCK SHERBROOKE, L.C.,

  a Virginia limited liability company

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  Comstock Holding Company, Inc.,

  a Virginia corporation, Manager

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/ Kelly L. Wyche

  	
   

  	
   

  	
  By:

  	
  /s/ Christopher Clemente

  	
   

  
	
  Print Name:  KELLY L. WYCHE

  	
   

  	
  Christopher Clemente

  	
   

  
	
  Print Title:

  	
   

  	
  Chief Executive Officer

  	
   

  
	
   

  	
   

  
	
  [SEAL]

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  ATTEST/WITNESS:

  	
  TRUSTEES

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Print Name:  

  	
   

  	
  Katherine O’Leary McQuie, Trustee

  
	
   

  	
   

  
	
  /s/ John M De Zinno

  	
   

  	
   

  	
  /s/ Gregory L. Carter

  	
   

  
	
  Print Name:  JOHN M DE ZINNO

  	
   

  	
  Gregory L. Carter, Trustee

  
												

 

[acknowledgements on following pages]

 

5

 

PREPARED
OUT OF STATE

 

SEVENTH
LOAN MODIFICATION AGREEMENT

 

THIS SEVENTH LOAN MODIFICATION AGREEMENT (this “Agreement”) is made as
of the 18th day of January, 2001, by and among (a) COMSTOCK HOLDING
COMPANY, INC. (“Borrower”), a Virginia corporation, (b) COMSTOCK SHERBROOKE,
L.C., a Virginia limited liability company (“Comstock Sherbrooke”) and
CHRISTOPHER CLEMENTE and GREGORY BENSON, jointly and severally (collectively,
the “Guarantor”), (c) KATHERINE O’LEARY MCQUIE, a resident of Fairfax County,
Virginia and GREGORY L. CARTER, a resident of Fairfax County, Virginia
(“Trustees”), and (d) BANK OF AMERICA, N.A., a national banking association,
successor in interest to NationsBank, N.A. (the “Lender”).

 

RECITALS:

 

WHEREAS, pursuant to the terms of that certain Loan Agreement (the
“Original Loan Agreement”) dated as of December 17, 1997, by and among
Lender, Borrower, and Comstock L’Ambiance, as modified (as modified, and as the
same may be further modified, renewed, supplemented or restated, the “Loan
Agreement”), Lender made a loan (the “Loan”) to Borrower in the original
principal amount of Two Million and No/100 Dollars ($2,000,000.00), as
evidenced by that certain Revolving Deed of Trust Note dated December 17,
1997 made by Borrower payable to the order of the Lender in the original
principal amount of Two Million and No/100 Dollars ($2,000,000.00), as modified
and increased to the current principal amount of Two Million Five Hundred
Thousand and No/100 Dollars ($2,500,000.00) (as amended, and as the same may be
further amended, renewed, supplemented or restated, the “Note”); and

 

WHEREAS, the Borrower’s obligations under the Note and the Loan are
jointly and severally guaranteed by that certain Guaranty Agreement dated as of
December 17, 1997, by the Guarantor for the benefit of the Lender (the
“Guaranty”); and

 

WHEREAS, the Loan is secured by that certain Credit Line Deed of Trust
and Security Agreement dated as of December 17, 1997 and recorded in Deed
Book 10211 at page 1879, among the Land Records of Fairfax County, Virginia, as
amended (as amended, and as the same may be further amended or supplemented
from time to time, the “Deed of Trust”) granting a security interest to the
Trustees in certain land located in Fairfax County, Virginia, as more
particularly described in Exhibit A attached thereto and that certain
Supplemental Credit Line Deed of Trust and Security Agreement dated as of
March 6, 2000 and recorded among the Land Records of Prince William
County, Virginia, as amended (as amended, and as the same may be further
amended or supplemented from time to time, the “Supplemental Deed of Trust”),
and;

 

WHEREAS, the Borrower’s obligations under the Note and the other Loan
Documents (hereinafter defined) are hereinafter collectively called the
“Obligations”; the Note, the Deed of Trust, the Supplemental Deed of Trust, the
Loan Agreement, the Guaranty, and all other documents previously, now or
hereafter executed and delivered to evidence, secure, guarantee, or in
connection with, the Obligations, as the same may from time to time be renewed,
extended, amended, supplemented or restated, are hereinafter collectively
called the “Loan Documents”; and

 

 

all
liens, security interests, assignments, superior titles, rights, remedies,
powers, equities and priorities securing the Note or providing recourse to
Lender with respect thereto are hereinafter collectively called the “Liens”

 

NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Borrower and Lender hereby agree
to amend the terms and conditions of the Loan Documents as more specifically
set forth below.

 

1.                                      Recitals.  The
recitals set forth above are a material part of this Agreement. Borrower and
Guarantor each acknowledge and affirm the accuracy of the recitals set forth
above.

 

2.                                      Speculative Unit Limit. The maximum aggregate amount of the Loan
which may be budgeted at any time for Speculative Units (including model Units)
is $1,200,000.

 

3.                                      Inventory Lot Limit.  The
maximum aggregate amount of the Loan which may be budgeted at any time for
Inventory Lots is $200,000.

 

4.                                      Borrower’s Representations
and Warranties.  The Borrower hereby reaffirms all of the
representations and warranties set forth in the Loan Documents (as defined in
the Loan Agreement, as amended hereby), and further represents and warrants
that (a) the execution and delivery of this Agreement do not contravene,
resulting in an breach of, or constitute a default under, any deed of trust,
loan agreement, indenture or other contract or agreement to which the Borrower
is a party or by which the Borrower or any of its properties may be bound (nor
would such execution and delivery constitute such a default with the passage of
time or the giving of notice or both), and do not violate or contravene any
law, order, decree, rule, regulation or restriction to which the Borrower or
the Property is subject; (b) this Agreement constitutes the legal, valid and
binding obligations of the Borrower enforceable in accordance with its terms;
(c) the execution and delivery of, and performance under, this Agreement are
within the Borrower’s power and authority without the joinder or consent of any
other party and have been duly authorized by all requisite action, and are not
in contravention of any law, or of the Borrower’s charter, bylaws or other
corporate organizational documents or of any indenture, agreement or
undertaking to which the Borrower is a party or by which it is bound; (d) there
exists no default under the Note or any other Loan Document; (e) there are no
offsets, claims or defenses with respect to the Borrower’s or Guarantor’s
obligations under any of the Loan Documents (the “Obligations”); and (f) the
Borrower is duly organized and legally existing under the laws of the
Commonwealth of Virginia and is duly qualified to do business in the
Commonwealth of Virginia. The Borrower further represents and warrants that,
except as disclosed in writing to the Lender, there is no suit, judicial or
administrative action, claims, investigation, inquiry, proceeding or demand
pending (or, to the Borrower’s knowledge threatened) against (i) the Borrower,
or against any other person liable directly or indirectly for the Obligations,
or (ii) which affects the Property or the Borrower’s title to the Property, or
(iii) which affects the validity, enforceability or priority of any of the Loan
Documents.  The Borrower agrees to
indemnify and hold the Lender harmless against any loss, claim, damage,
liability or expense (including, without limitation, attorneys’ fees) incurred
as a result of any representation or warranty made by the Borrower herein which
proves to be untrue or inaccurate in any respect, and any such occurrence shall
constitute a default under the Loan Documents.

 

5.                                      Renewal; Lien Continuation;
No Novation.  The Borrower hereby renews the Obligations
and promises to pay and perform the Obligations as modified by this Agreement.
All liens evidenced by the Loan Documents (the “Liens”) are hereby ratified and
confirmed as valid, subsisting and continuing to secure the Obligations, as
modified hereby. Nothing herein shall in

 

2

 

any
manner diminish, impair, waive or extinguish the Note, the Obligations or the
Liens. The execution and delivery of this Agreement shall not constitute a
novation of the debt evidenced and secured by the Loan Documents.

 

6.                                      Expenses.  The
Borrower promises to pay all costs and expenses and reimburse the Lender for
any and all expenditures of every character incurred or expended from time to
time, regardless of whether a default shall have occurred, in connection with
this Agreement and all other Loan Documents, and all such amounts shall
constitute a portion of the Obligations evidenced by the Note and secured by
the Loan Documents.

 

7.                                      Miscellaneous.  To
the extent of any conflict between the Loan Documents and this Agreement, this
Agreement shall control. Unless specifically modified hereby, all terms of the
Loan Documents shall remain in full force and effect. This Agreement (a) shall
bind and benefit the parties hereto and their respective heirs, beneficiaries
administrators, executors, receivers, trustees, successors and assigns; (b)
shall be governed by the laws of the Commonwealth of Virginia and United States
federal law; and (c) may be executed in several counterparts, and by the
parties hereto on separate counterparts, and each counterpart, when executed
and delivered, shall constitute an original agreement enforceable against all
who signed it without production of or accounting for any other counterpart,
and all separate counterparts shall constitute the same agreement.  Any terms not defined herein shall have the
meanings set forth in the Loan Documents.

 

8.                                      Reaffirmation of Guaranty.  Each
Guarantor, by signature below as such, for a valuable consideration, the
receipt and adequacy of which are hereby acknowledged, hereby consents to and
joins in this Agreement and hereby declares to and agrees with the Lender that,
the Guaranty is and shall continue in full force and effect for the benefit of
the Lender with respect to the Obligations, as amended by this Agreement, that
there are no offsets, claims or defenses of the Guarantor with respect to the
Guaranty nor, to Guarantor’s knowledge, with respect to the Obligations, that
the Guaranty is not released, diminished or impaired in any way by this
Agreement or the transactions contemplated hereby, and that the Guaranty is hereby
ratified and confirmed in all respects. Each Guarantor hereby reaffirms ail of
the representations and warranties set forth in the Guaranty. Each Guarantor
acknowledges that without this consent and reaffirmation, Lender would not
execute this Agreement or otherwise consent to its terms.

 

9.                                      Authorization of Trustees. 
Lender, by its execution hereof, authorizes and instructs the Trustees
to execute this instrument for the purposes set forth herein and expressly
acknowledges that either Trustee may act and the execution by both Trustees
shall not be required.

 

3

 

EXECUTED ON THE DATE OR DATES OF THE ACKNOWLEDGMENTS HEREOF, BUT
EFFECTIVE AS OF THE DATE FIRST STATED IN THIS AGREEMENT.

 

 

	
  ATTEST/WITNESS:

  	
  BORROWER

  
	
   

  	
   

  
	
   

  	
  COMSTOCK HOLDING COMPANY, INC.,

  
	
   

  	
  a Virginia corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/ Jubal Thompson

  	
   

  	
  By:

  	
  /s/ Christopher Clemente

  	
  (SEAL)

  
	
  Print Name:  JUBAL THOMPSON

  	
   

  	
  Christopher Clemente

  
	
  Print
  Title:  Counsel

  	
   

  	
  Chief Executive Officer

  
	
   

  	
   

  
	
  [SEAL]

  	
   

  
	
   

  	
   

  
	
  ATTEST/WITNESS:

  	
  COMSTOCK SHERBROOKE:

  
	
   

  	
   

  
	
   

  	
  COMSTOCK SHERBROOKE, LC.,

  
	
   

  	
  a
  Virginia limited liability company

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  Comstock Holding Company, Inc.,

  
	
   

  	
   

  	
  a Virginia corporation, Manager

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/ Jubal Thompson

  	
   

  	
   

  	
  By:

  	
  /s/ Christopher Clemente

  	
  (SEAL)

  
	
  Print Name:  JUBAL THOMPSON

  	
   

  	
  Christopher Clemente

  
	
  Print
  Title:  Counsel

  	
   

  	
  Chief Executive Officer

  
	
   

  	
   

  
	
  [SEAL]

  	
   

  
	
   

  	
   

  
	
  ATTEST/WITNESS:

  	
  LENDER:

  
	
   

  	
   

  
	
   

  	
  BANK
  OF AMERICA, N.A.

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/
  Lendra E. Lundofer

  	
   

  	
  By:

  	
  /s/ Linda
  P. Long

  	
   

  
	
  Print
  Name: Lendra E. Lundofer

  	
   

  	
  Linda
  P. Long

  
	
  Print
  Title: Vice President

  	
   

  	
  Vice
  President

  
	
   

  	
   

  
	
  [SEAL]

  	
   

  
											

 

[signatures continue on next page]

 

4

 

	
  ATTEST/WITNESS:

  	
  GUARANTORS

  
	
   

  	
   

  
	
   

  	
   

  
	
  /s/ Jubal Thompson

  	
   

  	
  /s/ Christopher
  Clemente

  	
   

  
	
  Print Name:  JUBAL THOMPSON

  	
  Christopher
  Clemente, individually [SEAL]

  
	
   

  	
   

  
	
  /s/ Jubal Thompson

  	
   

  	
  /s/ Gregory Benson

  	
   

  
	
  Print Name:  JUBAL THOMPSON

  	
  Gregory Benson, individually [SEAL]

  
	
   

  	
   

  
	
   

  	
   

  
	
  ATTEST/WITNESS:

  	
  COMSTOCK SHERBROOKE, L.C.,

  
	
   

  	
  a
  Virginia limited liability company

  
	
   

  	
   

  
	
   

  	
  By:

  	
  Comstock
  Holding Company, Inc.,

  
	
   

  	
   

  	
  a Virginia corporation, Manager

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/ Jubal Thompson

  	
   

  	
   

  	
  By:

  	
  /s/ Christopher Clemente

  	
   

  
	
  Print Name:  JUBAL THOMPSON

  	
   

  	
   

  	
  Christopher Clemente

  
	
  Print
  Title:  Counsel

  	
   

  	
   

  	
  Chief Executive Officer

  
	
   

  	
   

  
	
  [SEAL]

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  ATTEST/WITNESS:

  	
   

  	
  TRUSTEES

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Print Name:

  	
   

  	
  Katherine O’Leary McQuie, Trustee

  
	
   

  	
   

  	
   

  
	
  /s/ Lendra E. Lundofer

  	
   

  	
   

  	
  /s/ Gregory L. Carter

  	
   

  
	
  Print Name:  LENDRA E. LUNDOFER

  	
   

  	
  Gregory L. Carter,
  Trustee

  
													

 

[acknowledgements
on following pages]

 

5

 

PREPARED
OUT OF STATE

 

 

EIGHTH LOAN
MODIFICATION AND SPREADER AGREEMENT

 

THIS EIGHTH LOAN MODIFICATION AND SPREADER AGREEMENT (this “Agreement”)
is made as of the 5  day of March,
2001, by and among (a) COMSTOCK HOLDING COMPANY, INC. (“Borrower”), a Virginia
corporation, (b) COMSTOCK SHERBROOKE, L.C., a Virginia limited liability
company (“Comstock Sherbrooke”) and CHRISTOPHER CLEMENTE and GREGORY BENSON,
jointly and severally (collectively, the “Guarantor”), (c) KATHERINE O’LEARY
MCQUIE, a resident of Fairfax County, Virginia and GREGORY L. CARTER, a
resident of Fairfax County, Virginia (Trustees”), and (d) BANK OF AMERICA,
N.A., a national banking association, successor in interest to NationsBank,
N.A. (the “Lender”).

 

RECITALS:

 

WHEREAS, pursuant to the terms of that certain Loan Agreement (the
“Original Loan Agreement”) dated as of December 17, 1997, by and among
Lender, Borrower, and Comstock L’Ambiance, as modified (as modified, and as the
same may be further modified, renewed, supplemented or restated, the “Loan
Agreement”), Lender made a loan (the “Loan”) to Borrower in the original
principal amount of Two Million and No/100 Dollars ($2,000,000.00), as
evidenced by that certain Revolving Deed of Trust Note dated December 17,
1997 made by Borrower payable to the order of the Lender in the original
principal amount of Two Million and No/100 Dollars ($2,000,000.00), as modified
and increased to the current principal amount of Two Million Five Hundred
Thousand and No/100 Dollars ($2,500,000.00) (as amended, and as the same may be
further amended, renewed, supplemented or restated, the “Note”); and

 

WHEREAS, the Borrower’s obligations under the Note and the Loan are
jointly and severally guaranteed by that certain Guaranty Agreement dated as of
December 17,1997, by the Guarantor for the benefit of the Lender (the
“Guaranty”); and

 

WHEREAS, the Loan is secured by that certain Credit Line Deed of Trust
and Security Agreement dated as of December 17, 1997 and recorded in Deed
Book 10211 at page 1879, among the Land Records of Fairfax County, Virginia, as
amended (as amended, and as the same may be further amended or supplemented
from time to time, the “Deed of Trust”) granting a security interest to the
Trustees in certain land located in Fairfax County, Virginia, as more
particularly described in Exhibit A attached thereto and that certain
Supplemental Credit Line Deed of Trust and Security Agreement dated as of
March 6, 2000 and recorded among the Land Records of Prince William County,
Virginia, as amended (as amended, and as the same may be further amended or
supplemented from time to time, the “Supplemental Deed of Trust”), and;

 

WHEREAS, the Borrower’s obligations under the Note and the other Loan
Documents (hereinafter defined) are hereinafter collectively called the
“Obligations”; the Note, the Deed of Trust, the Supplemental Deed of Trust, the
Loan Agreement, the Guaranty, and all other documents previously, now or
hereafter executed and delivered to evidence, secure, guarantee, or in
connection with, the Obligations, as the same may from time to time be renewed,
extended, amended, supplemented or restated, are hereinafter collectively
called the “Loan Documents”; and all liens, security interests, assignments,
superior titles, rights, remedies, powers, equities and priorities securing the
Note or providing recourse to Lender with respect thereto are hereinafter

 

 

collectively
called the “Liens”

 

NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Borrower, Guarantor and Lender
hereby agree to amend the terms and conditions of the Loan Documents as more
specifically set forth below.

 

1.                                      Recitals.  The
recitals set forth above are a material part of this Agreement. Borrower and
Guarantor each acknowledge and affirm the accuracy of the recitals set forth
above.

 

2.                                      Loan Amount.  The
maximum principal amount that may be committed under the Loan at any time shall
be Three Million Three Hundred Thousand and 00/100 Dollars ($3,300,000.00).

 

3.                                      Spread of Lien. 
Comstock Sherbrooke hereby irrevocably grants, bargains, and conveys
(and to the extent any of such property was previously conveyed to the Trustees
pursuant to the Deed of Trust, regrants, rebargains and reconveys) to the
Trustee and its respective successors in trust, and their assigns, with power
of sale, and the lien of the Deed of Trust is spread to include, the Additional
Property as described on Exhibit A-1 attached hereto, to have and to
hold the same, together with all and singular the rights, privileges,
tenements, hereditaments and appurtenances thereto in any way incident or
belonging unto the Trustee and to its successors and assigns forever, in and
upon the same uses and trusts and with all the powers and duties as set forth
in the Deed of Trust, with like force and effect. All terms, provisions,
covenants, stipulations, conditions and agreements contained in the Deed of
Trust are incorporated herein by this reference for all purposes.

 

All references in the Deed of Trust to the “Land” shall be deemed to
include the Additional Property described in Exhibit A-1 attached hereto
in addition to the real property described in Exhibit A attached hereto.
The parties hereto agree that whenever the term “Land” is used in the Deed of
Trust and the other Loan Documents, shall be deemed to include not only the
real property described in Exhibit A, but also the real property
described in Exhibit A-1.

 

4.                                      Loan Fee.  Upon
execution hereof, Borrower shall pay to Lender an irrevocable Loan fee in the
amount of Three Hundred Thirty-Three Dollars ($333.00).

 

5.                                      Borrower’s and Comstock
Sherbrooke’s Representations and Warranties.  The
Borrower and Comstock Sherbrooke hereby jointly and severally reaffirm all of
the representations and warranties set forth in the Loan Documents (as defined
in the Loan Agreement, as amended hereby), and further jointly and severally
represent and warrant that (a) the execution and delivery of this Agreement do
not contravene, resulting in an breach of, or constitute a default under, any
deed of trust, loan agreement, indenture or other contract or agreement to
which the Borrower or Comstock Sherbrooke is a party or by which the Borrower,
Comstock Sherbrooke or any of their respective properties may be bound (nor
would such execution and delivery constitute such a default with the passage of
time or the giving of notice or both), and do not violate or contravene any
law, order, decree, rule, regulation or restriction to which the Borrower,
Comstock Sherbrooke or the Property is subject; (b) this Agreement constitutes
the legal, valid and binding obligations of the Borrower and Comstock
Sherbrooke enforceable in accordance with its terms; (c) the execution and
delivery of, and performance under, this Agreement are within the Borrower’s
and Comstock Sherbrooke’s power and authority without the joinder or consent of
any other party and have been duly authorized by all requisite action, and are
not in contravention of any law, or of the Borrower’s or Comstock Sherbrooke’s
charter, bylaws or other corporate organizational documents or of any
indenture, agreement or undertaking to which the Borrower or Comstock
Sherbrooke is a party or by which it is bound; (d) there exists no default
under the Note or any other Loan

 

2

 

Document;
(e) there are no offsets, claims or defenses with respect to the Borrower’s or
Guarantor’s obligations under any of the Loan Documents (the “Obligations”);
and (f) the Borrower and Comstock Sherbrooke are each duly organized and
legally existing under the laws of the Commonwealth of Virginia and is duly
qualified to do business in the Commonwealth of Virginia. The Borrower and
Comstock Sherbrooke further jointly and severally represent and warrant that,
except as disclosed in writing to the Lender, there is no suit, judicial or
administrative action, claims, investigation, inquiry, proceeding or demand
pending (or, to the Borrower’s or Comstock Sherbrooke’s knowledge threatened)
against (i) the Borrower, or against any other person liable directly or
indirectly for the Obligations, or (ii) which affects the Property or the
Borrower’s or Comstock Sherbrooke’s title to the Property, or (iii) which
affects the validity, enforceability or priority of any of the Loan Documents.
The Borrower and Comstock Sherbrooke jointly and severally agree to indemnify
and hold the Lender harmless against any loss, claim, damage, liability or
expense (including, without limitation, attorneys’ fees) incurred as a result
of any representation or warranty made by the Borrower or Comstock Sherbrooke
herein which proves to be untrue or inaccurate in any respect, and any such
occurrence shall constitute a default under the Loan Documents.

 

6.                                      Renewal; Lien Continuation;
No Novation.  The Borrower hereby renews the Obligations
and promises to pay and perform the Obligations as modified by this Agreement.
All liens evidenced by the Loan Documents (the “Liens”) are hereby ratified and
confirmed as valid, subsisting and continuing to secure the Obligations, as
modified hereby. Nothing herein shall in any manner diminish, impair, waive or
extinguish the Note, the Obligations or the Liens. The execution and delivery
of this Agreement shall not constitute a novation of the debt evidenced and
secured by the Loan Documents.

 

7.                                      Expenses.  The
Borrower promises to pay all costs and expenses and reimburse the Lender for
any and all expenditures of every character incurred or expended from time to
time, regardless of whether a default shall have occurred, in connection with
this Agreement and all other Loan Documents, and all such amounts shall
constitute a portion of the Obligations evidenced by the Note and secured by
the Loan Documents.

 

8.                                      Miscellaneous.  To
the extent of any conflict between the Loan Documents and this Agreement, this
Agreement shall control. Unless specifically modified hereby, all terms of the
Loan Documents shall remain in full force and effect. This Agreement (a) shall
bind and benefit the parties hereto and their respective heirs, beneficiaries
administrators, executors, receivers, trustees, successors and assigns; (b)
shall be governed by the laws of the Commonwealth of Virginia and United States
federal law; and (c) may be executed in several counterparts, and by the
parties hereto on separate counterparts, and each counterpart, when executed
and delivered, shall constitute an original agreement enforceable against all
who signed it without production of or accounting for any other counterpart,
and all separate counterparts shall constitute the same agreement.  Any terms not defined herein shall have the
meanings set forth in the Loan Documents.

 

9.                                      Reaffirmation of Guaranty.  Each
Guarantor, by signature below as such, for a valuable consideration, the receipt
and adequacy of which are hereby acknowledged, hereby consents to and joins in
this Agreement and hereby declares to and agrees with the Lender that, the
Guaranty is and shall continue in full force and effect for the benefit of the
Lender with respect to the Obligations, as amended by this Agreement, that
there are no offsets, claims or defenses of the Guarantor with respect to the
Guaranty nor, to Guarantor’s knowledge, with respect to the Obligations, that
the Guaranty is not released, diminished or impaired in any way by this
Agreement or the transactions contemplated hereby, and that the Guaranty is
hereby ratified and confirmed in all respects. Each Guarantor hereby reaffirms
all of the representations and warranties set forth in the Guaranty. Each
Guarantor acknowledges that without this consent and reaffirmation, Lender
would not execute this Agreement or otherwise consent to its terms.

 

3

 

10.                               Authorization of Trustees. 
Lender, by its execution hereof, authorizes and instructs the Trustees
to execute this instrument for the purposes set forth herein and expressly
acknowledges that either Trustee may act and the execution by both Trustees
shall not be required.

 

4

 

EXECUTED ON THE DATE OR DATES OF THE ACKNOWLEDGMENTS
HEREOF, BUT EFFECTIVE AS OF THE DATE FIRST STATED IN THIS AGREEMENT.

 

	
  ATTEST/WITNESS:

  	
   

  	
  BORROWER

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  COMSTOCK HOLDING COMPANY, INC.,

  
	
   

  	
   

  	
  a Virginia corporation

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ Kelly L. Wyche

  	
   

  	
  By:

  	
  /s/ Christopher Clemente

  	
  (SEAL)

  
	
  Print Name:

  	
  KELLY L. WYCHE

  	
   

  	
   

  	
  Christopher Clemente

  	
   

  
	
  Print Title:

  	
   

  	
   

  	
   

  	
  Chief Executive Officer

  	
   

  
	
   

  	
   

  	
   

  
	
  [SEAL]

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  ATTEST/WITNESS:

  	
   

  	
  COMSTOCK SHERBROOKE:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  COMSTOCK SHERBROOKE, LC.,

  
	
   

  	
   

  	
  a Virginia limited liability company

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  By:

  	
  Comstock Holding Company, Inc.,

  a Virginia corporation, Manager

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ Kelly L. Wyche

  	
   

  	
   

  	
  By:

  	
  /s/ Christopher Clemente

  	
  (SEAL)

  
	
  Print Name:

  	
  KELLY L. WYCHE

  	
   

  	
   

  	
  Christopher Clemente

  
	
  Print Title:

  	
   

  	
   

  	
   

  	
  Chief Executive Officer

  
	
   

  	
   

  	
   

  
	
  [SEAL]

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  ATTEST/WITNESS:

  	
   

  	
  LENDER:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  BANK OF AMERICA, N.A.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ John M De Zinno

  	
   

  	
  By:

  	
  /s/ Linda P. Long

  	
   

  
	
  Print Name:

  	
  JOHN M DE ZINNO

  	
   

  	
   

  	
  Linda P. Long

  	
   

  
	
  Print Title:

  	
  SR. VICE PRESIDENT

  	
   

  	
   

  	
  Vice President

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  [SEAL]

  	
   

  	
   

  
										

 

[signatures
continue on next page]

 

5

 

	
  ATTEST/WITNESS:

  	
  GUARANTORS

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  /s/ Kelly L. Wyche

  	
   

  	
  /s/ Christopher Clemente

  	
   

  
	
  Print Name:

  	
  KELLY L. WYCHE

  	
   

  	
  Christopher Clemente, individually [SEAL]

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  /s/ Kelly L Wyche

  	
   

  	
  /s/ Gregory Benson

  	
   

  
	
  Print Name:

  	
  KELLY L WYCHE

  	
   

  	
  Gregory Benson, individually [SEAL]

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  ATTEST/WITNESS:

  	
   

  	
  COMSTOCK SHERBROOKE, L.C.,

  a Virginia limited liability company

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  Comstock
  Holding Company, Inc.,

  a Virginia corporation, Manager

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ Kelly L. Wyche

  	
   

  	
   

  	
  By:

  	
  /s/ Christopher Clemente

  	
   

  
	
  Print Name:

  	
  KELLY L. WYCHE

  	
   

  	
   

  	
   

  	
  Christopher Clemente

  
	
  Print Title:

  	
   

  	
   

  	
   

  	
   

  	
  Chief Executive Officer

  
	
   

  	
   

  	
   

  	
   

  
	
  [SEAL]

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  ATTEST/WITNESS:

  	
   

  	
   

  	
  TRUSTEES

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Print Name:

  	
   

  	
   

  	
  Katherine O’Leary McQuie, Trustee

  
	
   

  	
   

  	
   

  	
   

  
	
  /s/
  John M De Zinno

  	
   

  	
   

  	
  /s/ Gregory L. Carter

  	
   

  
	
  Print Name:

  	
  JOHN
  M DE ZINNO

  	
   

  	
  Gregory L. Carter, Trustee

  
															

 

[acknowledgements
on following pages]

 

6

 

PREPARED
OUT OF STATE

 

NINTH LOAN
MODIFICATION AND SPREADER AGREEMENT

 

THIS NINTH LOAN MODIFICATION AND SPREADER AGREEMENT
(this “Agreement”) is made as of the 31 day of August, 2001, by and among (a) COMSTOCK HOLDING COMPANY, INC. (“Borrower”),
a Virginia corporation, (b) COMSTOCK SHERBROOKE,
L.C., (“Comstock Sherbrooke”), a Virginia limited liability company,
COMSTOCK FAIRFAX I, L.C., (“Comstock
Fairfax”) a Virginia limited liability company, COMSTOCK SERVICE CORP., INC., (“Comstock Service”), a Virginia
corporation, CHRISTOPHER CLEMENTE and GREGORY
BENSON, jointly and severally (collectively, the “Guarantor”), (c) LINDA P. LONG,  a resident of Loudoun County, Virginia and GREGORY L. CARTER, a resident of Fairfax
County, Virginia (Trustees”), and (d) BANK OF
AMERICA, N.A., a national banking association, successor in interest
to NationsBank, N.A. (the “Lender”).

 

RECITALS:

 

WHEREAS, pursuant to the terms of that certain Loan
Agreement (the “Original Loan Agreement”) dated as of December 17, 1997,
by and among Lender, Borrower, and Comstock L’Ambiance (as modified, and as the
same may be further modified, renewed, supplemented or restated, the “Loan
Agreement”), Lender made a loan (the “Loan”) to Borrower in the original
principal amount of Two Million and No/100 Dollars ($2,000,000.00), as
evidenced by that certain Revolving Deed of Trust Note dated December 17,
1997 made by Borrower payable to the order of the Lender in the original
principal amount of Two Million and No/100 Dollars ($2,000,000,00), as modified
and increased to the current principal amount of Three Million Three Hundred
Thousand and No/100 Dollars ($3,300,000.00) (as amended, and as the same may be
further amended, renewed, supplemented or restated, the “Note”); and

 

WHEREAS, the Borrower’s obligations under the Note
and the Loan are jointly and severally guaranteed by that certain Guaranty
Agreement dated as of December 17, 1997, by the Guarantor for the benefit
of the Lender (the “Guaranty”); and

 

WHEREAS, the Loan is secured by that certain Credit
Line Deed of Trust and Security Agreement dated as of December 17, 1997
and recorded in Deed Book 10211 at page 1879, among the Land Records of Fairfax
County, Virginia, as amended (as amended, and as the same may be further
amended or supplemented from time to time, the “Deed of Trust”) granting a
security interest to the Trustees in certain land located in Fairfax County,
Virginia, as more particularly described in Exhibit A attached thereto
and that certain Supplemental Credit Line Deed of Trust and Security Agreement
dated as of March 6, 2000 and recorded among the Land Records of Prince
William County, Virginia, as amended (as amended, and as the same may be
further amended or supplemented from time to time, the “Supplemental Deed of
Trust”), and;

 

WHEREAS, Lender and Borrower have mutually agreed to
increase the principal amount of the Loan and the Note to the maximum aggregate
amount of Seven Million Four Hundred Thousand and No/100 Dollars
($7,400,000.00) which Borrower shall use for acquisition and construction of
Phase 16 at Sherbrooke Townhouse Condominium (the “Additional Property”) on the
terms and conditions set forth herein.

 

 

WHEREAS, all of the obligations under the Loan, as
modified hereby, shall be secured by the Deed of Trust as amended and spread
hereby to encumber the Additional Property.

 

NOW, THEREFORE, in consideration of the premises and of the sum of Ten
Dollars ($10.00), the receipt and sufficiency of which are hereby acknowledged
by all parties, the parties agree as follows:

 

1.                                        Recitals.  The
recitals set forth above are a material part of this Agreement.  Borrower and Guarantor each acknowledge and
affirm the accuracy of the recitals set forth above.

 

2.                                        Definitions.  All
capitalized terms herein, unless otherwise defined, shall have the same meaning
ascribed to such terms as in the Loan Documents.

 

3.                                         Loan Amount.  The
second sentence of Paragraph 1.1 (r) of the Loan Agreement is hereby deleted
and replaced with the following:

 

During the term of the Loan, as set forth in the Note, the Borrower may
borrow, repay and reborrow amounts under the Loan; provided, however, that the
maximum amount available for disbursement at any time under the Loan shall
equal (a) Seven Million Four Hundred Thousand and No/100 Dollars
($7,400,000.00) minus (b) the total amount then advanced and outstanding under
the Loan, provided however, that Lender shall not make the initial advance
under the Loan with respect to any Inventory Lot or Unit for which funds have
not previously been advanced under the Loan if the total amount budgeted under
the Loan for all Inventory Lots and Units for which funds have been advanced
under the Loan and not repaid in full equals or exceeds Twelve Million and
No/100 Dollars ($12,000,000.00).

 

4.                                         Maturity Date. All of the Obligations, including (without
limitation) all outstanding principal, accrued and unpaid interest, outstanding
late charges, unpaid fees, and all other amounts outstanding under the Note and
the other Loan Documents, shall be due and payable in full on December 31,
2002 (the “Maturity Date”). All references to the Maturity Date contained in
the Loan Documents shall refer to the Maturity Date as defined in this
Agreement.  Notwithstanding the above, in
the event the Lender does not agree in its sole and absolute discretion to extend
the Maturity Date prior to June 30, 2002, the principal amount outstanding
under the Loan on the Maturity Date with respect to any Pre-Sold Unit,
Speculative Unit or Inventory Lot shall be due and payable on the earlier of
(i) the date calculated in accordance with Paragraph 2.2(g) of the Loan
Agreement as amended or (ii) the Maturity Date.

 

5.                                        Spread of Lien. Comstock Holding and Comstock Sherbrooke
hereby irrevocably grant, bargain, and convey (and to the extent any of such
property was previously conveyed to the Trustees pursuant to the Deed of Trust,
regrants, rebargains and reconveys) to the Trustee and its respective
successors in trust, and their assigns, with power of sale, and the lien of the
Deed of Trust is spread to include the Additional Property as described in Exhibit
A-1 attached hereto, to have and to hold the same, together with all and
singular the rights, privileges, tenements, hereditaments and appurtenances
thereto in any way incident or belonging unto the Trustee and to its successors
and assigns forever, in and upon the same uses and trusts and with all the
powers and duties as set forth in the Deed of Trust, with like force and
effect.  All terms, provisions,
covenants, stipulations, conditions and agreements contained in the Deed of
Trust are incorporated herein by this reference for all purposes.

 

2

 

All references in the Deed of Trust to the “Land”
shall be deemed to include the Additional Property described in Exhibit A-1
attached hereto in addition to the real property described in Exhibit A
attached hereto. The parties hereto agree that whenever the term “Land” is used
in the Deed of Trust and the other Loan Documents, shall be deemed to include
not only the real property described in Exhibit A, but also the real
property described in Exhibit A-1.

 

6.                                       Financial Statements. From and after the date hereof, financial
statements required to be furnished to Lender by the Borrower and Guarantor
shall be furnished to Lender as follows:

 

	
   

  	
   

  	
   

  	
   

  	
  Days Due After Period End

  	
   

  	
  Quality

  	
   

  
	
  Name

  	
   

  	
  Frequency

  	
   

  	
  Annual

  	
   

  	
  Interim

  	
   

  	
  Annual

  	
   

  	
  Interim

  	
   

  
	
  Comstock
  Holding Company, Inc.*

  	
   

  	
  Quarterly

  	
   

  	
  150

  	
   

  	
  45

  	
   

  	
  CPA Audited

  	
   

  	
  Internal

  	
   

  
	
  Comstock
  Sherbrooke, L.C.

  	
   

  	
  Annual

  	
   

  	
  150

  	
   

  	
   

  	
   

  	
  Internal

  	
   

  	
   

  	
   

  
	
  Comstock
  Fairfax I, LC.

  	
   

  	
  Annual

  	
   

  	
  150

  	
   

  	
   

  	
   

  	
  Internal

  	
   

  	
   

  	
   

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

  	
   

  	
  Quarterly

  	
   

  	
  150

  	
   

  	
  45

  	
   

  	
  CPA  Reviewed

  	
   

  	
  Internal

  	
   

  
	
  Comstock
  Service Corp.,  Inc. *

  	
   

  	
  Quarterly

  	
   

  	
  150

  	
   

  	
  45

  	
   

  	
  CPA  Reviewed

  	
   

  	
  Internal

  	
   

  
	
  Comstock
  Beckett’s Crossing

  	
   

  	
  Annual

  	
   

  	
  150

  	
   

  	
   

  	
   

  	
  Internal

  	
   

  	
   

  	
   

  
	
  Comstock
  Haddon Hall

  	
   

  	
  Annual

  	
   

  	
  150

  	
   

  	
   

  	
   

  	
  Internal

  	
   

  	
   

  	
   

  
	
  Comstock
  Wakefield, L.L.C.

  	
   

  	
  Annual

  	
   

  	
  150

  	
   

  	
   

  	
   

  	
  Internal

  	
   

  	
   

  	
   

  
	
  Comstock
  Delta Ridge II, L.L.C.

  	
   

  	
  Annual

  	
   

  	
  150

  	
   

  	
   

  	
   

  	
  Internal

  	
   

  	
   

  	
   

  
	
  Any
  future new project entities

  	
   

  	
  Annual

  	
   

  	
  150

  	
   

  	
   

  	
   

  	
  Internal

  	
   

  	
   

  	
   

  
	
  Christopher
  Clemente

  	
   

  	
  Annual

  	
   

  	
  150

  	
   

  	
   

  	
   

  	
  Internal

  	
   

  	
   

  	
   

  
	
  Gregory
  Benson

  	
   

  	
  Annual

  	
   

  	
  150

  	
   

  	
   

  	
   

  	
  Internal

  	
   

  	
   

  	
   

  

 

*
Note:  The CPA Reviewed financial
statement for Comstock Service Corp.  is
defined as the consolidated financial statement of Comstock Service Corporation
and Project Entities, to include a line item representing Comstock Service
Corps, ownership interest and equity in earnings of affiliated entities  (Comstock North Carolina, LLC and any future
affiliated entities).  This reviewed
financial statement will be used to monitor covenant compliance.

 

3

 

 

7.                                      Wescott Ridge Project. From and after the date hereof, the Projects
as defined in the Loan Documents, shall include the acquisition of
approximately one hundred seventy (170) condominium lots and the construction
of up to one hundred thirty-three (133) market rate Units and thirty-seven (37)
affordable dwelling Units (the “Affordable Dwelling Units”) on such lots in the
subdivision known as the Courts of Wescott Ridge (the ‘Wescott Ridge Project”),
which shall be subject to a condominium regime to be formed in the future,
located in western Fairfax County, adjacent to the Fairfax County Government
Center.

 

8.                                        Speculative Unit Limit. The maximum aggregate number of Speculative
Units (including model Units) which may be constructed from the proceeds of the
Loan at any time shall be as follows:

 

	
  Project

  	
   

  	
  Maximum Number of Speculative Units

  	
   

  
	
  Sherbrooke

  	
   

  	
  8
  Units

  	
   

  
	
  Wescott Ridge

  	
   

  	
  14
  Units (excluding Affordable Dwelling Units)

  	
   

  

 

9.                                        Inventory Lot Limit.  The number
of Inventory Lots that may be financed with Loan proceeds with respect to the
following projects is as follows:

 

	
  Project

  	
   

  	
  Maximum Number of Inventory Lots

  	
   

  
	
  Sherbrooke

  	
   

  	
  0 Lots

  	
   

  
	
  Wescott
  Ridge

  	
   

  	
  39 Lots 
  (excluding Affordable Dwelling Units)

  	
   

  

 

10.                               Limitation on Amounts
Advanced and/or Readvanced and the Terms Therefor. 
Paragraph 2.2 of the Loan Agreement is hereby deleted and replaced with
the following:

 

Each of the following shall constitute a
limitation on the maximum principal amount to be advanced and/or readvanced
under the Loan:

 

(a)                                  With respect to each Pre-Sold Unit, the
Lender shall not fund under the Loan an amount in excess of eighty percent
(80%) of the lesser of (i) the contract price for such Pre-Sold Unit or (ii)
the Appraised Value for such Pre-Sold Unit including applicable appraised
options. Notwithstanding anything contained in this Agreement or any other Loan
Document to the contrary, the portion of any Loan advance which pertains to a
Lot comprising a Pre-Sold Unit shall not exceed one hundred percent (100%) of
the lesser of (i) the price paid for such Lot by Borrower, or (ii) the
Appraised Value for such Lot.

 

Construction of any townhouse building may be
commenced without meeting the Pre-Sold requirements so long as the Speculative
Unit Limit set forth hereinabove is not exceeded. At Wescott Ridge, the first
building may be started on a speculative basis, however, any buildings
thereafter must comply with a fifty percent (50%) pre-sale requirement.

 

(b)                                  With respect to each Speculative Unit, the
Lender shall not fund under the Loan an amount in excess of eighty percent
(80%) of the lesser of (i) the Appraised Value for such Speculative Unit
including applicable appraised options or (ii) the projected contract price for
such Speculative Unit.  Notwithstanding
anything

 

4

 

contained in this Agreement or any other Loan Document to the contrary,
the portion of any Loan advance which pertains to a Lot intended to be used for
a  Speculative Unit shall not
exceed one hundred percent (100%) of the lesser of (i) the price paid for such
Lot by Borrower, or (ii) the Appraised Value for such Lot.

 

(c)                                  With respect to each Affordable Dwelling
Unit, the Lender shall not fund under the Loan an amount in excess of the
lesser of (1) one hundred percent (100%) of the lesser of (a) the Appraised
Value for such Affordable Dwelling Unit including applicable appraised options
or (b) the projected contract price for such Affordable Dwelling Unit or (2)
one hundred percent (100%) of the total costs for such Affordable Dwelling Unit
including applicable options. Notwithstanding anything contained in this
Agreement or any other Loan Document to the contrary, the portion of any Loan
advance which pertains to a Lot intended to be used for a Affordable Dwelling
Unit shall not exceed one hundred percent (100%) of the lesser of (i) the price
paid for such Lot by Borrower, or (ii) the Appraised Value for such Lot, if
applicable.

 

(d)                                  With respect to each Lot, the Lender shall
not fund under the Loan an amount in excess of the lesser of seventy-five
percent (75%) of (i) the purchase price for such Lot, or (ii) the Appraised
Value for such Lot (which may be the discounted Appraised Value, if
applicable). No funding shall permitted for partial townhouse building pads
unless the entire building pad is encumbered by the Deed of Trust.

 

(e)                                  The outstanding principal balance of the Loan
(together with all accrued and unpaid interest and all other amounts due under
the Loan) attributable to each Unit and/or Inventory Lot shall be due and
payable on the earlier of:

 

(i)                                    with respect to Pre-Sold Units, the earlier
of (a) the date of settlement pursuant to any sale of any such Pre-Sold Unit to
a third party purchaser, or (b) the date which is nine (9) months after the
first advance attributable to such Pre-Sold Unit, unless extended pursuant to a
Courtesy Extension (as hereinafter defined);

 

(ii)                                With respect to Speculative Units (excluding
model units), the earlier of (a) the date which is twelve (12) months after the
first advance attributable to such Speculative Unit, unless extended pursuant
to a Courtesy Extension (as hereinafter defined) or (b) ninety (90) days after
“Project Withdrawal” (hereinafter defined);

 

(iii)                            with respect to any Speculative Units that
are considered to be model Units, the date which is the earlier of (a) ninety
(90) days after Project Withdrawal, (b) the date of settlement pursuant to any
sale of such Unit to a third party purchaser, or (c) the Maturity Date;

 

(iv)                               with respect to any Affordable Dwelling Units
the earlier of (a) the date which is twelve (12) months after the first advance
attributable to such Affordable Dwelling Units, unless extended pursuant to a
Courtesy Extension (as hereinafter defined) or (b) the date of settlement
pursuant to any sale of such Unit to a third party purchaser; and

 

(v)                                   with respect to any Inventory Lot, the date
which is nine (9)

 

5

 

months after the first advance attributable to such Inventory Lot,
unless extended pursuant to a Courtesy Extension (as hereinafter defined).

 

Notwithstanding anything to the contrary set forth
hereinabove (including Courtesy Extensions), at such time and in the event the
first advance of Loan proceeds allocated for a Unit repays the principal amount
outstanding with respect to an Inventory Lot, then the funds advanced for such
Unit shall have a maturity date calculated from the date of the initial advance
of Loan proceeds as a Pre-Sold Unit, a Speculative Unit or an Affordable
Dwelling Unit, as applicable.

 

The term “Project Withdrawal” as used herein
shall mean in the event Borrower withdraws its sales efforts at a particular
Project by permanently abandoning the sales efforts (no longer marketing from
sales trailer or model) and/or notifying the land seller of its intention not
to comply with the take-down schedule for lot purchases, as determined by
the Lender.

 

The term “Courtesy Extension” as used herein
shall refer to Borrower’s request and Lender’s approval of the extension of any
individual maturity date for one three (3) month period, with no additional fee
owed by Borrower to Lender; such individual maturity date may be further
extended for successive three (3) month periods at Borrower’s request and
Lender’s approval, so long as Borrower pays to Lender prior to each three (3)
month period a fee in the amount of one-fifth of one percent (0.20%) of the
amount committed under the Loan for such Unit. Notwithstanding anything further
to the contrary set forth hereinabove, the entire outstanding principal of the
Loan (together with all accrued and unpaid interest and all other amounts due
under the Loan), shall be due and payable in full on the Maturity Date.  In no event may any Courtesy Extension extend
beyond the Maturity Date.

 

11.                               Financial Covenants.

 

(a)                                    Comstock Holding Company.  From
and after the date hereof, it shall be an Event of Default under the Loan
entitling Lender to pursue any or all of its remedies if (i) the ratio of
Borrower’s Total Debt to Borrower’s Tangible Net Worth exceeds 7:1, and (ii)
Borrower’s Tangible Net Worth is less than the sum of $1,200,000.00 from
December 31, 2001 until June 30, 2002. Tangible Net Worth shall mean
(i) the Partner’s Capital as shown on the Borrower’s financial statements
approved by Lender less (ii) intangible assets as shown on such financial
statements, if any.

 

(b)                                    Comstock Service.  From
and after the date hereof, it shall be an Event of Default under the Loan
entitling Lender to pursue any or all of its remedies if (i) the ratio of
Comstock Service’s Total Debt to Comstock Service’s Tangible Net Worth exceeds
7:1, and (ii) Comstock Service’s Tangible Net Worth is less than the sum of
$1,500,000.00 from December 31, 2001 through June 30, 2002.  Tangible Net Worth shall mean (i) the
Shareholder’s Capital as shown on the Comstock Service’s financial statements
approved by Lender less (ii) intangible assets as shown on such financial
statements, if any.

 

12.                                Inspection Fee.  At
the time of the first advance under the Loan for any Unit, Borrower shall pay
to Lender a flat inspection fee in the amount of Fifty and No/100 Dollars
($50.00) per Unit to cover any internal inspection that may be performed by the
Lender. Inspection

 

6

 

Fees
incurred as a result of an inspection performed by a third party are the
responsibility of the Borrower.

 

13.                                 Loan Fee. 
Simultaneously with the execution of this Agreement, Borrower shall pay
to Lender a loan fee in the amount of $11,242.00 for the calendar quarter
July 1, 2001 through September 30, 2001. Borrower shall also pay to
Lender a quarterly loan fee in an amount equal to one-fifth of one percent
(0.20%) of the total amount committed under the Loan on the first day of each
calendar quarter thereafter as an additional loan fee so long as there is any
Loan Amount committed under the Loan on any such due date.

 

14.                                 Borrower’s Representations
and Warranties.  The Borrower and Comstock Sherbrooke hereby
jointly and severally reaffirm all of the representations and warranties set
forth in the Loan Documents (as defined in the Loan Agreement, as amended
hereby), and further jointly and severally represent and warrant that (a) the
execution and delivery of this Agreement do not contravene, resulting in an
breach of, or constitute a default under, any deed of trust, loan agreement,
indenture or other contract or agreement to which the Borrower or Comstock
Sherbrooke is a party or by which the Borrower, Comstock Sherbrooke or any of
their respective properties may be bound (nor would such execution and delivery
constitute such a default with the passage of time or the giving of notice or
both), and do not violate or contravene any law, order, decree, rule,
regulation or restriction to which the Borrower, Comstock Sherbrooke or the
Property is subject; (b) this Agreement constitutes the legal, valid and
binding obligations of the Borrower and Comstock Sherbrooke enforceable in
accordance with its terms; (c) the execution and delivery of, and performance
under, this Agreement are within the Borrower’s and Comstack Sherbrooke’s power
and authority without the joinder or consent of any other party and have been
duly authorized by all requisite action, and are not in contravention of any
law, or of the Borrower’s or Comstock Sherbrooke’s charter, bylaws or other
corporate organizational documents or of any indenture, agreement or
undertaking to which the Borrower or Comstock Sherbrooke is a party or by which
it is bound; (d) there exists no default under the Note or any other Loan
Document; (e) there are no offsets, claims or defenses with respect to the
Borrower’s or Guarantor’s obligations under any of the Loan Documents (the
“Obligations”); and (f) the Borrower and Comstock Sherbrooke are each duly
organized and legally existing under the laws of the Commonwealth of Virginia
and is duly qualified to do business in the Commonwealth of Virginia.  The Borrower and Comstock Sherbrooke further
jointly and severally represent and warrant that, except as disclosed in
writing to the Lender, there is no suit, judicial or administrative action,
claims, investigation, inquiry, proceeding or demand pending (or, to the
Borrower’s or Comstock Sherbrooke’s knowledge threatened) against (i) the Borrower,
or against any other person liable directly or indirectly for the Obligations,
or (ii) which affects the Property or the Borrower’s or Comstock Sherbrooke’s
title to the Property, or (iii) which affects the validity, enforceability or
priority of any of the Loan Documents. The Borrower and Comstock Sherbrooke
jointly and severally agree to indemnify and hold the Lender harmless against
any loss, claim, damage, liability or expense (including, without limitation,
attorneys’ fees) incurred as a result of any representation or warranty made by
the Borrower or Comstock Sherbrooke herein which proves to be untrue or
inaccurate in any respect, and any such occurrence shall constitute a default
under the Loan Documents.

 

15.                                Renewal; Lien Continuation;
No Novation.  The Borrower hereby renews the Obligations
and promises to pay and perform the Obligations as modified by this
Agreement.  All liens evidenced by the
Loan Documents (the “Liens”) are hereby ratified and confirmed as valid,
subsisting and continuing to secure the Obligations, as modified hereby.
Nothing herein shall in any manner diminish, impair, waive or extinguish the
Note, the Obligations or the Liens. The execution and delivery of this
Agreement shall not constitute a novation of the debt evidenced and secured by
the Loan Documents.

 

7

 

16.                                 Expenses.  The
Borrower promises to pay all costs and expenses and reimburse the Lender for
any and all expenditures of every character incurred or expended from time to
time, regardless of whether a default shall have occurred, in connection with
this Agreement and all other Loan Documents, and all such amounts shall
constitute a portion of the Obligations evidenced by the Note and secured by
the Loan Documents.

 

17.                                 Miscellaneous.  To
the extent of any conflict between the Loan Documents and this Agreement, this
Agreement shall control. Unless specifically modified hereby, all terms of the
Loan Documents shall remain in full force and effect.  This Agreement (a) shall bind and benefit the
parties hereto and their respective heirs, beneficiaries administrators,
executors, receivers, trustees, successors and assigns; (b) shall be governed
by the laws of the Commonwealth of Virginia and United States federal law: and
(c) may be executed in several counterparts, and by the parties hereto on
separate counterparts, and each counterpart, when executed and delivered, shall
constitute an original agreement enforceable against all who signed it without
production of or accounting for any other counterpart, and all separate
counterparts shall constitute the same agreement. Any terms not defined herein
shall have the meanings set forth in the Loan Documents.

 

18.                                Additional Guarantors;
Reaffirmation of Guaranty.  Comstock Service Corp., Inc. and Comstock
Fairfax I, L.C., by their execution hereof, jointly and severally hereby join
in and agree to be bound by all of the terms and conditions of the Guaranty as
if each were an original Guarantor thereunder. Each Guarantor, by its signature
below as such, for a valuable consideration, the receipt and adequacy of which
are hereby acknowledged, hereby consents to and joins in this Agreement and
hereby declares to and agrees with the Lender that, the Guaranty is and shall
continue in full force and effect for the benefit of the Lender with respect to
the Obligations, as amended by this Agreement, that there are no offsets,
claims or defenses of the Guarantor with respect to the Guaranty nor, to
Guarantor’s knowledge, with respect to the Obligations, that the Guaranty is
not released, diminished or impaired in any way by this Agreement or the
transactions contemplated hereby, and that the Guaranty is hereby ratified and
confirmed in all respects. Each Guarantor hereby reaffirms all of the
representations and warranties set forth in the Guaranty. Each Guarantor
acknowledges that without this consent and reaffirmation, Lender would not
execute this Agreement or otherwise consent to its terms.

 

19.                                Authorization of Trustees. 
Lender, by its execution hereof, authorizes and instructs the Trustees
to execute this instrument for the purposes set forth herein and expressly
acknowledges that either Trustee may act and the execution by both Trustees
shall not be required.

 

8

 

EXECUTED ON THE DATE OR DATES OF THE ACKNOWLEDGMENTS
HEREOF, BUT EFFECTIVE AS OF THE DATE FIRST STATED IN THIS AGREEMENT.

 

	
   

  	
  BORROWER

  
	
   

  	
   

  
	
  ATTEST/WITNESS:

  	
  COMSTOCK HOLDING COMPANY, INC.,

  
	
   

  	
  a Virginia corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/ KELLY L. WYCHE

  	
   

  	
  By:

  	
  /s/ Christopher Clemente

  	
  (SEAL)

  
	
  Print
  Name:  KELLY L. WYCHE

  	
   

  	
  Christopher Clemente

  
	
  Print
  Title:

  	
   

  	
  Chief Executive Officer

  
	
   

  	
   

  
	
  [CORPORATE SEAL]

  	
   

  
	
   

  	
   

  
	
   

  	
  COMSTOCK SHERBROOKE:

  
	
   

  	
   

  
	
  ATTEST/WITNESS:

  	
  COMSTOCK SHERBROOKE, LC.,

  
	
   

  	
  a
  Virginia limited liability company

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  Comstock Holding Company, Inc.,

  
	
   

  	
   

  	
  a Virginia corporation, Manager

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/ KELLY L. WYCHE

  	
   

  	
   

  	
  By:

  	
  /s/ Christopher Clemente

  	
  (SEAL)

  
	
  Print
  Name:  KELLY L. WYCHE

  	
   

  	
   

  	
  Christopher Clemente

  
	
  Print
  Title:  

  	
   

  	
   

  	
  Chief Executive Officer

  
	
   

  	
   

  
	
  [CORPORATE SEAL]

  	
   

  
									

 

9

 

	
   

  	
  GUARANTORS

  
	
  ATTEST/WITNESS:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  /s/ Kelly L. Wyche

  	
   

  	
  /s/ Christopher
  Clemente

  	
  (SEAL)

  
	
  Print
  Name: 

  	
  Christopher
  Clemente, individually 

  
	
   

  	
   

  
	
  /s/ Kelly L. Wyche

  	
   

  	
  /s/ Gregory Benson

  	
  (SEAL)

  
	
  Print
  Name: 

  	
  Gregory Benson, individually

  
	
   

  	
   

  
	
   

  	
   

  
	
  ATTEST/WITNESS:

  	
  COMSTOCK SHERBROOKE, L.C.,

  
	
   

  	
  a
  Virginia limited liability company

  
	
   

  	
   

  
	
   

  	
   

  	
   

  	
  By:

  	
  Comstock
  Holding Company, Inc.,

  
	
   

  	
   

  	
   

  	
   

  	
  a Virginia corporation, Manager

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ Kelly L. Wyche

  	
   

  	
   

  	
  By:

  	
  /s/
  Christopher Clemente

  	
  (SEAL)

  
	
  Print
  Name:

  	
   

  	
   

  	
   

  	
  Christopher
  Clemente

  
	
  Print
  Title:

  	
   

  	
   

  	
   

  	
  Chief
  Executive Officer

  
	
   

  	
   

  	
   

  	
   

  
	
  [CORPORATE SEAL]

  	
   

  
	
   

  	
   

  
	
  ATTEST/WITNESS:

  	
  COMSTOCK FAIRFAX I, L.C.,
a Virginia limited liability company

  
	
   

  	
   

  
	
   

  	
   

  	
   

  	
  By:

  	
  Comstock
  Holding Company, Inc.,

  
	
   

  	
   

  	
   

  	
   

  	
  a Virginia corporation, Manager

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/ Kelly L. Wyche

  	
   

  	
   

  	
  By:

  	
  /s/
  Christopher Clemente

  	
  (SEAL)

  
	
  Print
  Name:

  	
   

  	
   

  	
   

  	
  Christopher
  Clemente

  
	
  Print
  Title:

  	
   

  	
   

  	
   

  	
  Chief
  Executive Officer

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  [CORPORATE SEAL]

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  ATTEST/WITNESS:

  	
   

  	
  COMSTOCK SERVICE CORP., INC,

  a Virginia
  corporation

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  /s/ Kelly L. Wyche

  	
   

  	
  By:

  	
  /s/
  Gregory Benson

  	
  (SEAL)

  
	
   

  	
   

  	
   

  	
  Gregory
  Benson

  	
   

  
	
   

  	
   

  	
   

  	
  President

  	
   

  
	
  [CORPORATE SEAL]

  	
   

  
	
   

  	
   

  
										

 

10

 

	
   

  	
   

  	
  TRUSTEES

  	
   

  
	
  ATTEST/WITNESS:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  /s/
  John M. De Zinno

  	
   

  	
  /s/
  Linda P. Long

  	
  (SEAL)

  
	
  Print
  Name:

  	
  JOHN
  M. DE ZINNO

  	
   

  	
  Linda
  P. Long, Trustee

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  /s/
  John M. De Zinno

  	
   

  	
  /s/
  Gregory L. Carter

  	
  (SEAL)

  
	
  Print
  Name:

  	
  JOHN
  M. DE ZINNO

  	
   

  	
  Gregory
  L. Carter, Trustee

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  LENDER

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ATTEST/WITNESS:

  	
   

  	
  BANK OF AMERICA, N.A.

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
  /s/
  John M. De Zinno

  	
   

  	
  By:

  	
  /s/
  Linda P. Long

  	
  (SEAL)

  
	
  Print
  Name:  JOHN M. DE ZINNO

  	
   

  	
   

  	
  Linda
  P. Long

  
	
  Print
  Title:  SENIOR VICE PRESIDENT

  	
   

  	
   

  	
  Vice
  President

  
	
   

  	
   

  	
   

  	
   

  
	
  [CORPORATE
  SEAL]

  	
   

  	
   

  	
   

  
									

 

[acknowledgements
on following pages]

 

11

 

PREPARED
OUT OF STATE

 

 

TENTH LOAN
MODIFICATION AND SPREADER AGREEMENT

 

THIS TENTH LOAN MODIFICATION AND SPREADER AGREEMENT
(this “Agreement”) is made as of the 12  day
of September, 2002, by and among (a) COMSTOCK
HOLDING COMPANY, INC., a Virginia corporation and COMSTOCK FLYNN’S CROSSING, L.C., a Virginia
limited liability company (collectively “Borrower”), (b) COMSTOCK RIVERSIDE, L.C. (“Comstock
Riverside”), a Virginia limited liability company, COMSTOCK FAIRFAX I, L.C., (“Comstock Fairfax”) a Virginia
limited liability company, COMSTOCK SERVICE
CORP., INC., (“Comstock Service”), a Virginia corporation, CHRISTOPHER CLEMENTE and GREGORY BENSON, jointly and severally
(collectively, the “Guarantor”), (c) LINDA P.
LONG, a resident of Loudoun County, Virginia and GREGORY L. CARTER, a resident of Fairfax
County, Virginia (collectively the “Trustees”), and (d) BANK OF AMERICA, N.A., a national banking
association, successor in interest to NationsBank, N.A. (the “Lender”).

 

RECITALS:

 

WHEREAS, pursuant to the terms of that certain Loan Agreement (the
“Original Loan Agreement”) dated as of December 17, 1997, by and among
Lender, Borrower, and Comstock L’Ambiance (as modified, and as the same may be
further modified, renewed, supplemented or restated, the “Loan Agreement”),
Lender made a loan (the “Loan”) to Borrower in the original principal amount of
Two Million and No/100 Dollars ($2,000,000.00), as evidenced by that certain
Revolving Deed of Trust Note dated December 17, 1997 made by Borrower
payable to the order of the Lender in the original principal amount of Two
Million and No/100 Dollars ($2,000,000.00) (as amended, and as the same may be
further amended, renewed, supplemented or restated, the “Note”); and

 

WHEREAS, pursuant to the terms of that certain Fifth
Modification Agreement dated March 2000 and recorded among the land
records of Prince William County at Deed Book 2874, page 842 and re-recorded at
Deed Book 2932, page 680, the principal amount of the Loan was increased to
Four Million Five Hundred Thousand and No/100 dollars ($4,500,000.00); and

 

WHEREAS, pursuant to that certain Eighth
Modification Agreement dated March 2001 and recorded among the land
records of Prince William County as Instrument No. 2001 03 07 0021469 the
principal amount of the Loan was reduced to Three Million Three Hundred
Thousand and No/100 Dollars ($3,300,000.00); and

 

WHEREAS, pursuant to that certain Ninth Modification Agreement dated
August 31, 2001 and recorded among the land records of Prince William
County as Instrument No. 200109130095284 the principal amount of the Loan was
increased to the current amount of Seven Million Four Hundred Thousand and
No/100 Dollars ($7,400,000.00); and

 

WHEREAS, the Borrower’s obligations under the Note
and the Loan are jointly and severally guaranteed by that certain Guaranty
Agreement dated as of December 17, 1997, by the Guarantor for the benefit
of the Lender (the “Guaranty”); and

 

 

WHEREAS, the Loan is secured by that certain Credit
Line Deed of Trust and Security Agreement dated as of December 17, 1997
and recorded in Deed Book 10211 at page 1879, among the Land Records of Fairfax
County, Virginia, as amended (as amended, and as the same may be further
amended or supplemented from time to time, the “Deed of Trust”) granting a
security interest to the Trustees in certain land located in Fairfax County,
Virginia, as more particularly described in Exhibit A attached thereto
and that certain Supplemental Credit Line Deed of Trust and Security Agreement
dated as of March 6, 2000 and recorded among the Land Records of Prince
William County, Virginia, as amended (as amended, and as the same may be
further amended or supplemented from time to time, the “Supplemental Deed of
Trust”); and

 

WHEREAS, Lender and Borrower have mutually agreed to
increase the principal amount of the Loan and the Note by Four Million Six
Hundred Thousand and No/100 Dollars ($4,600,000.00) to the maximum aggregate
amount of Twelve Million and No/100 Dollars ($12,000,000.00) which Borrower
shall use for acquisition and construction of the Projects on the terms and
conditions set forth herein; and

 

WHEREAS, the Loan currently matures on
December 31, 2002 and Lender has agreed to extend the maturity date of the
Loan; and

 

WHEREAS, Comstock Flynn’s Crossing, L.C. is
purchasing the Future Project known as “Flynn’s Crossing” as particularly
described in Exhibit A-1 attached hereto (the “Flynn’s Crossing
Property”) and all of the obligations under the Loan, as modified hereby, shall
be secured by the Deed of Trust as amended and spread hereby to encumber the
Flynn’s Crossing Property.

 

NOW, THEREFORE, in consideration of the premises and
of the sum of Ten Dollars ($10.00), the receipt and sufficiency of which are
hereby acknowledged by all parties, the parties agree as follows:

 

1.                                       Recitals.  The
recitals set forth above are a material part of this Agreement. Borrower and
Guarantor each acknowledge and affirm the accuracy of the recitals set forth
above.

 

2.                                       Definitions. All capitalized terms herein, unless
otherwise defined, shall have the same meaning ascribed to such terms as in the
Loan Documents.

 

3.                                       Loan Amount. The second sentence of Paragraph 1.1(r) of
the Loan Agreement, as amended, is hereby deleted and replaced with the
following:

 

During the term of the Loan, as set forth in the Note, the Borrower may
borrow, repay and reborrow amounts under the Loan; provided, however, that the
maximum amount available for disbursement at any time under the Loan shall
equal (a) Twelve Million and No/100 Dollars ($12,000,000.00) minus (b) the
total amount then advanced and outstanding under the Loan, provided however,
that Lender shall not make the initial advance under the Loan with respect to
any Inventory Lot or Unit for which funds have not previously been advanced
under the Loan if the total amount budgeted under the Loan for all Inventory
Lots and Units for which funds have been advanced under the Loan and not repaid
in full equals or exceeds Seventeen Million and No/100 Dollars
($17,000,000.00).

 

4.                                       Maturity Date.  All
of the Obligations, including (without limitation) all outstanding principal,
accrued and unpaid interest, outstanding late charges, unpaid fees, and all
other amounts outstanding under the Note and the other Loan Documents, shall be
due and payable in full on

 

2

 

December 31,
2003 (the “Maturity Date”). All references to the Maturity Date contained in
the Loan Documents shall refer to the Maturity Date as defined in this
Agreement. Notwithstanding the above, in the event the Lender does not agree in
its sole and absolute discretion to extend the Maturity Date prior to
June 30, 2003, the principal amount outstanding under the Loan on the
Maturity Date with respect to any Pre-Sold Unit, Speculative Unit or Inventory
Lot shall be due and payable on the earlier of (i) the date calculated in
accordance with Paragraph 2.2(g) of the Loan Agreement as amended or (ii) the
Maturity Date.

 

5.                                       Spread of Lien. Borrower hereby irrevocably grants,
bargains, and conveys (and to the extent any of such property was previously
conveyed to the Trustees pursuant to the Deed of Trust, regrants, rebargains
and reconveys) to the Trustee and its respective successors in trust, and their
assigns, with power of sale, and the lien of the Deed of Trust is spread to
include the Additional Property as described in Exhibit A-1 attached
hereto, to have and to hold the same, together with all and singular the
rights, privileges, tenements, hereditaments and appurtenances thereto in any
way incident or belonging unto the Trustee and to its successors and assigns
forever, in and upon the same uses and trusts and with all the powers and
duties as set forth in the Deed of Trust, with like force and effect. All
terms, provisions, covenants, stipulations, conditions and agreements contained
in the Deed of Trust are incorporated herein by this reference for all
purposes.

 

All references in the Deed of Trust to the “Land”
shall be deemed to include the Additional Property described in Exhibit A-1
attached hereto in addition to the real property described in Exhibit A
attached hereto. The parties hereto agree that whenever the term “Land” is used
in the Deed of Trust and the other Loan Documents, shall be deemed to include
not only the real property described in Exhibit A, but also the real
property described in Exhibit A-1.

 

6.                                       Financial Statements. From and after the date hereof, financial
statements required to be furnished to Lender by the Borrower and Guarantor
shall be furnished to Lender as follows:

 

	
   

  	
   

  	
   

  	
   

  	
  Days Due After Period End

  	
   

  	
  Quality

  	
   

  
	
  Name

  	
   

  	
  Frequency

  	
   

  	
  Annual

  	
   

  	
  Interim

  	
   

  	
  Annual

  	
   

  	
  Interim

  	
   

  
	
  Comstock
  Holding Company, Inc.

  	
   

  	
  Quarterly

  	
   

  	
  150

  	
   

  	
  45

  	
   

  	
  CPA Audited

  	
   

  	
  Internal

  	
   

  
	
  Comstock
  Flynn’s Crossing, L.C.

  	
   

  	
  Annual

  	
   

  	
  150

  	
   

  	
   

  	
   

  	
  Internal

  	
   

  	
   

  	
   

  
	
  Comstock
  Fairfax I, L.C.

  	
   

  	
  Annual

  	
   

  	
  150

  	
   

  	
   

  	
   

  	
  Internal

  	
   

  	
   

  	
   

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

  	
   

  	
  Quarterly

  	
   

  	
  150

  	
   

  	
  45

  	
   

  	
  CPA Compiled

  	
   

  	
  Internal

  	
   

  
	
  Comstock
  Service Corp., Inc. *

  	
   

  	
  Quarterly

  	
   

  	
  150

  	
   

  	
  45

  	
   

  	
  CPA Audited

  	
   

  	
  Internal

  	
   

  
	
  Comstock
  Beckett’s Crossing

  	
   

  	
  Annual

  	
   

  	
  150

  	
   

  	
   

  	
   

  	
  Internal

  	
   

  	
   

  	
   

  
	
  Comstock
  Haddon Hall

  	
   

  	
  Annual

  	
   

  	
  150

  	
   

  	
   

  	
   

  	
  Internal

  	
   

  	
   

  	
   

  
	
  Comstock
  Wakefield, L.L.C.

  	
   

  	
  Annual

  	
   

  	
  150

  	
   

  	
   

  	
   

  	
  Internal

  	
   

  	
   

  	
   

  
	
  Comstock
  Delta Ridge II, L.L.C.

  	
   

  	
  Annual

  	
   

  	
  150

  	
   

  	
   

  	
   

  	
  Internal

  	
   

  	
   

  	
   

  
	
  Any
  future new project entities

  	
   

  	
  Annual

  	
   

  	
  150

  	
   

  	
   

  	
   

  	
  Internal

  	
   

  	
   

  	
   

  
	
  Christopher
  Clemente

  	
   

  	
  Annual

  	
   

  	
  150

  	
   

  	
   

  	
   

  	
  Internal

  	
   

  	
   

  	
   

  
	
  Gregory
  Benson

  	
   

  	
  Annual

  	
   

  	
  150

  	
   

  	
   

  	
   

  	
  Internal

  	
   

  	
   

  	
   

  

 

3

 

*
Note: The CPA Audited Financial Statement for Comstock Service Corp., Inc. is
defined as the consolidated financial statement of Comstock Service Corp., Inc.
and its project entities, to include a line item representing Comstock Service
Corp. Inc.’s ownership interest and equity and earnings in affiliated entities
(Comstock Homes of North Carolina, L.L.C. and any future affiliated entities).
This audited financial statement will be used to monitor covenant compliance.

 

7.                                        Flynn’s Crossing Project.  From
and after the date hereof, the Projects as defined in the Loan Documents, shall
include the acquisition of approximately 4.2965 acres of land currently
approved for the construction of up to forty-eight (48) condominium units
including forty-five (45) market rate units and three (3) affordable dwelling
units (the “Affordable Dwelling Units”) on such lots in the subdivision known
as the Flynn’s Crossing which shall be subject to a condominium regime to be
formed in the future, located in Ashburn, Virginia, just off the Dulles
Greenway at the intersection of Ashbum Village Boulevard and Shellhorn
Road in Loudoun County.

 

8.                                        Speculative Unit Limit.  The
maximum aggregate number of Speculative Units (including model Units) which may
be constructed from the proceeds of the Loan at any time shall be as follows:

 

	
  Project

  	
   

  	
  Maximum Number of Speculative Units

  
	
  Riverside Station

  	
   

  	
  10
  Units

  
	
  Wescott Ridge

  	
   

  	
  14
  Units (excluding Affordable Dwelling Units)

  
	
  Flynn’s Crossing

  	
   

  	
  22
  Units (excluding Affordable Dwelling Units)

  

 

9.              Inventory Lot Limit. The number of
Inventory Lots that may be financed with Loan proceeds with respect to the
following projects is as follows:

 

	
  Project

  	
   

  	
  Maximum Number of Inventory Lots

  
	
  Riverside Station

  	
   

  	
  9
  Lots

  
	
  Wescott Ridge

  	
   

  	
  39
  Lots (excluding Affordable Dwelling Units)

  
	
  Flynn’s Crossing

  	
   

  	
  45
  Lots* (excluding Affordable Dwelling Units)

  

 

*
Notwithstanding the foregoing, the Inventory Lot limit for the Flynn’s Crossing
Project shall be decreased to not more than twenty-four (24) Inventory Lots
upon commencement of construction as a condominium project.

 

10.                               Limitation on Amounts
Advanced and/or Readvanced and the Terms Therefor.  The following shall be added as Paragraph
2.2(e)(vi) of the Loan Agreement.

 

(vi)          with respect to any
Inventory Lot in the Flynn’s Crossing Project, the date which is twelve (12)
months after the first advance attributable to such Inventory Lot, unless
extended pursuant to a Courtesy Extension (as hereinafter defined).

 

4

 

11.                               Financial Covenants.

 

(a)                                  Comstock Holding Company.  From
and after the date hereof, it shall be an Event of Default under the Loan
entitling Lender to pursue any or all of its remedies if (i) the ratio of
Borrower’s Total Debt to Borrower’s Tangible Net Worth exceeds 6:1, and (ii)
Borrower’s Tangible Net Worth is less than the sum of $1,500,000.00 from
December 31, 2002 until June 30, 2003. Tangible Net Worth shall mean
(i) the Partner’s Capital as shown on the Borrower’s financial statements
approved by Lender less (ii) intangible assets as shown on such financial
statements, if any.

 

(b)                                  Comstock Service.  From
and after the date hereof, it shall be an Event of Default under the Loan
entitling Lender to pursue any or all of its remedies if (i) the ratio of
Comstock Service’s Total Debt to Comstock Service’s Tangible Net Worth exceeds
7:1, and (ii) Comstock Service’s Tangible Net Worth is less than the sum of
$1,500,000.00 from December 31, 2002 through June 30, 2003. Tangible
Net Worth shall mean (i) the Shareholder’s Capital as shown on the Comstock
Service’s financial statements approved by Lender less (ii) intangible assets
as shown on such financial statements, if any. The requirements of this
Section 11(b) are subject to the provisions of Section 6 contained in
the “*Note” with respect to monitoring covenant compliance.

 

(c)                                  Comstock Homes of North
Carolina, L.L.C.  From and after the date hereof, it shall be
an Event of Default under the Loan entitling Lender to pursue any or all of its
remedies if (i) the ratio of Comstock Homes of North Carolina, L.L.C. (“CNC”)
Total Debt to CNC’s Tangible Net Worth exceeds 6:1, and (ii) CNC’s Tangible Net
Worth is less than the sum of $1,500,000.00 from December 31, 2002 through
June 30, 2003. Tangible Net Worth shall mean (i) the Shareholder’s Capital
as shown on the Comstock Service’s financial statements approved by Lender less
(ii) intangible assets as shown on such financial statements, if any.

 

12.                                  Inspection Fee.  At
the time of the first advance under the Loan for any Unit, Borrower shall pay
to Lender a flat inspection fee in the amount of One Hundred and No/100 Dollars
($100.00) per Unit to cover any internal inspection that may be performed by
the Lender. Inspection Fees incurred as a result of an inspection performed by
a third party are the responsibility of the Borrower.

 

13.                                  Loan Fee. 
Simultaneously with the execution of this Agreement, Borrower shall pay
to Lender a loan fee on the Loan increase from the date hereof through
September 30, 2002 in the amount of $2,146.67. Borrower shall also pay to
Lender a quarterly loan fee in an amount equal to one-fifth of one percent
(0.20%) of the total amount committed under the Loan on the first day of each
calendar quarter thereafter as an additional loan fee so long as there is any
Loan Amount committed under the Loan on any such due date.

 

14.                               Borrower’s Representations
and Warranties.  The Borrower, Comstock Riverside, Comstock
Fairfax and Comstock Service hereby jointly and severally reaffirm all of the
representations and warranties set forth in the Loan Documents (as defined in
the Loan Agreement, as amended hereby), and further jointly and severally
represent and warrant that (a) the execution and delivery of this Agreement
does not contravene, resulting in an breach of, or constitute a default under,
any deed of trust, loan agreement, indenture or other contract or agreement to
which the Borrower, Comstock Riverside, Comstock Fairfax or Comstock Service is
a party or by which the Borrower, Comstock Riverside, Comstock Fairfax or
Comstock Service or any of their respective properties may be bound (nor would
such execution and delivery constitute such a default with the

 

5

 

passage
of time or the giving of notice or both), and do not violate or contravene any
law, order, decree, rule, regulation or restriction to which the Borrower,
Comstock Riverside, Comstock Fairfax or Comstock Service or the Property is
subject; (b) this Agreement constitutes the legal, valid and binding
obligations of the Borrower, Comstock Riverside, Comstock Fairfax and Comstock
Service enforceable in accordance with its terms; (c) the execution and
delivery of, and performance under, this Agreement are within the Borrower’s,
Comstock Riverside’s, Comstock Fairfax’s and Comstock Service’s power and
authority without the joinder or consent of any other party and have been duly
authorized by all requisite action, and are not in contravention of any law, or
of the Borrower’s, Comstock Riverside’s, Comstock Fairfax’s or Comstock
Service’s charter, bylaws or other corporate organizational documents or of any
indenture, agreement or undertaking to which the Borrower, Comstock Riverside,
Comstock Fairfax or Comstock Service is a party or by which it is bound; (d)
there exists no default under the Note or any other Loan Document; (e) there
are no offsets, claims or defenses with respect to the Borrower’s or
Guarantor’s obligations under any of the Loan Documents (the “Obligations”);
and (f) the Borrower, Comstock Riverside, Comstock Fairfax and Comstock Service
are each duly organized and legally existing under the laws of the Commonwealth
of Virginia and are duly qualified to do business in the Commonwealth of
Virginia. The Borrower, Comstock Riverside, Comstock Fairfax and Comstock
Service further jointly and severally represent and warrant that, except as
disclosed in writing to the Lender, there is no suit, judicial or
administrative action, claims, investigation, inquiry, proceeding or demand
pending (or, to the Borrower’s, Comstock Riverside’s, Comstock Fairfax’s and
Comstock Service’s knowledge threatened) against (i) the Borrower, or against
any other person liable directly or indirectly for the Obligations, or (ii)
which affects the Property or the Borrower’s, Comstock Riverside’s, Comstock
Fairfax’s or Comstock Service’s title to the Property, or (iii) which affects
the validity, enforceability or priority of any of the Loan Documents. The
Borrower, Comstock Riverside, Comstock Fairfax and Comstock Service jointly and
severally agree to indemnify and hold the Lender harmless against any loss,
claim, damage, liability or expense (including, without limitation, attorneys’
fees) incurred as a result of any representation or warranty made by the
Borrower, Comstock Riverside, Comstock Fairfax or Comstock Service herein which
proves to be untrue or inaccurate in any respect, and any such occurrence shall
constitute a default under the Loan Documents.

 

15.                             Renewal; Lien Continuation;
No Novation.  The Borrower hereby renews the Obligations
and promises to pay and perform the Obligations as modified by this Agreement.
All liens evidenced by the Loan Documents (the “Liens”) are hereby ratified and
confirmed as valid, subsisting and continuing to secure the Obligations, as
modified hereby. Nothing herein shall in any manner diminish, impair, waive or
extinguish the Note, the Obligations or the Liens. The execution and delivery
of this Agreement shall not constitute a novation of the debt evidenced and
secured by the Loan Documents.

 

16.                             Expenses.  The
Borrower promises to pay all costs and expenses and reimburse the Lender for
any and all expenditures of every character incurred or expended from time to
time, regardless of whether a default shall have occurred, in connection with
this Agreement and all other Loan Documents, and all such amounts shall constitute
a portion of the Obligations evidenced by the Note and secured by the Loan
Documents.

 

17.                             Miscellaneous.  To
the extent of any conflict between the Loan Documents and this Agreement, this
Agreement shall control. Unless specifically modified hereby, all terms of the
Loan Documents shall remain in full force and effect. This Agreement (a) shall
bind and benefit the parties hereto and their respective heirs, beneficiaries
administrators, executors, receivers, trustees, successors and assigns; (b) shall
be governed by the laws of the Commonwealth of Virginia and United States
federal law; and (c) may be executed in several counterparts, and by the
parties hereto on separate counterparts, and each counterpart, when executed
and delivered, shall

 

6

 

constitute
an original agreement enforceable against all who signed it without production
of or accounting for any other counterpart, and all separate counterparts shall
constitute the same agreement. Any terms not defined herein shall have the
meanings set forth in the Loan Documents.

 

18.                              Additional Guarantors;
Reaffirmation of Guaranty.  Each Guarantor, by its signature below as
such, for a valuable consideration, the receipt and adequacy of which are
hereby acknowledged, hereby consents to and joins in this Agreement and hereby
declares to and agrees with the Lender that, the Guaranty is and shall continue
in full force and effect for the benefit of the Lender with respect to the
Obligations, as amended by this Agreement, that there are no offsets, claims or
defenses of the Guarantor with respect to the Guaranty nor, to Guarantor’s
knowledge, with respect to the Obligations, that the Guaranty is not released,
diminished or impaired in any way by this Agreement or the transactions
contemplated hereby, and that the Guaranty is hereby ratified and confirmed in
all respects.  Each Guarantor hereby
reaffirms all of the representations and warranties set forth in the Guaranty.
Each Guarantor acknowledges that without this consent and reaffirmation, Lender
would not execute this Agreement or otherwise consent to its terms.

 

19.                              Authorization of Trustees. 
Lender, by its execution hereof, authorizes and instructs the Trustees
to execute this instrument for the purposes set forth herein and expressly
acknowledges that either Trustee may act and the execution by both Trustees
shall not be required.

 

20.                              Release of Comstock
Sherbrooke, L.C. Borrower
and Lender acknowledge that the Project known as Comstock Sherbrooke has been fully
completed and sold.  Accordingly, Lender
hereby releases and forever discharges Comstock Sherbrooke, L.C. from the
payment and performance of the Obligations as set forth in the Guaranty.

 

 

[Signatures on following pages]

 

7

 

EXECUTED ON THE DATE OR DATES OF THE ACKNOWLEDGMENTS
HEREOF, BUT EFFECTIVE AS OF THE DATE FIRST STATED IN THIS AGREEMENT.

 

	
   

  	
  BORROWER:

  
	
   

  	
   

  
	
  ATTEST/WITNESS:

  	
  COMSTOCK HOLDING COMPANY, INC.,

  
	
   

  	
  a Virginia corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/ Kelly L. Wyche

  	
   

  	
  By:

  	
  /s/ Christopher Clemente

  	
  (SEAL)

  
	
  Print
  Name:  KELLY L. WYCHE

  	
   

  	
  Christopher Clemente

  
	
  Print
  Title:

  	
   

  	
  Chief Executive Officer

  
	
   

  	
   

  
	
  [CORPORATE
  SEAL]

  	
   

  
	
   

  	
   

  
	
  ATTEST/WITNESS:

  	
  COMSTOCK FLYNN’S CROSSING L.C.,

  
	
   

  	
  a
  Virginia limited liability company

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  Comstock Holding Company, Inc.,

  
	
   

  	
   

  	
  a Virginia corporation, Manager

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/ Kelly L. Wyche

  	
   

  	
   

  	
  By:

  	
  /s/ Christopher Clemente

  	
  (SEAL)

  
	
  Print
  Name:  KELLY L. WYCHE

  	
   

  	
   

  	
   

  	
  Christopher Clemente

  	
   

  
	
  Print
  Title:

  	
   

  	
   

  	
   

  	
  Chief Executive Officer

  	
   

  
	
   

  	
   

  	
   

  
	
  [CORPORATE
  SEAL]

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  GUARANTORS:

  
	
   

  	
   

  
	
  ATTEST/WITNESS:

  	
  COMSTOCK RIVERSIDE, L.C.,

  a Virginia limited liability company

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  Comstock Holding Company, Inc.,

  
	
   

  	
   

  	
  a Virginia corporation, Manager

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/ Kelly L. Wyche

  	
   

  	
   

  	
  By:

  	
  /s/ Christopher Clemente

  	
  (SEAL)

  
	
  Print
  Name:  KELLY L. WYCHE

  	
   

  	
   

  	
   

  	
  Christopher Clemente

  	
   

  
	
  Print
  Title:

  	
   

  	
   

  	
   

  	
  Chief Executive Officer

  	
   

  
	
   

  	
   

  
	
  [CORPORATE
  SEAL]

  	
   

  
										

 

8

 

	
  ATTEST/WITNESS:

  	
  COMSTOCK FAIRFAX I, L.C.,

  a Virginia limited liability company

  
	
   

  	
   

  
	
   

  	
  By:

  	
  Comstock Holding Company, Inc.,

  
	
   

  	
   

  	
  a Virginia corporation, Manager

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/ Kelly L. Wyche

  	
   

  	
   

  	
  By:

  	
  /s/ Christopher Clemente

  	
  (SEAL)

  
	
  Print
  Name:  KELLY L. WYCHE

  	
   

  	
   

  	
   

  	
  Christopher Clemente

  	
   

  
	
  Print
  Title:  

  	
   

  	
   

  	
   

  	
  Chief Executive Officer

  	
   

  
	
   

  	
   

  
	
  [CORPORATE
  SEAL]

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  ATTEST/WITNESS:

  	
  COMSTOCK SERVICE CORP., INC,

  a Virginia corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
  /s/ Kelly L. Wyche

  	
   

  	
  By:

  	
  /s/ Gregory Benson

  	
  (SEAL)

  
	
  KELLY L. WYCHE

  	
   

  	
   

  	
  Gregory Benson

  	
   

  
	
   

  	
   

  	
   

  	
  President

  	
   

  
	
  [CORPORATE
  SEAL]

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  ATTEST/WITNESS:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  /s/ Kelly L. Wyche

  	
   

  	
  /s/ Christopher Clemente

  	
  (SEAL)

  
	
  Print Name: KELLY L. WYCHE

  	
   

  	
  Christopher Clemente,
  individually

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  /s/ Kelly L. Wyche

  	
   

  	
  /s/ Gregory Benson

  	
  (SEAL)

  
	
  Print Name: KELLY L. WYCHE

  	
   

  	
  Gregory Benson,
  individually

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  TRUSTEES:

  	
   

  
	
  ATTEST/WITNESS:

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  /s/ Lenra E. Lundofer

  	
   

  	
  /s/ Linda P. Long

  	
  (SEAL)

  
	
  Print Name:

  	
  9-16-02

  	
   

  	
  Linda P. Long, Trustee

  	
   

  
	
  Lenra E. Lundofer

  	
   

  	
   

  	
   

  	
   

  
								

 

9

 

	
   

  	
   

  	
   

  	
  (SEAL)

  
	
  Print Name:

  	
   

  	
   

  	
  Gregory L. Carter, Trustee

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  LENDER:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  ATTEST/WITNESS:

  	
   

  	
  BANK OF AMERICA, N.A.

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
  /s/
  Lenra E. Lundofer

  	
   

  	
  By:

  	
  /s/ Linda P. Long

  	
  (SEAL)

  
	
  Print
  Name:

  	
  Lenra E. Lundofer

  	
   

  	
   

  	
  Linda P. Long

  	
   

  
	
  Print
  Title:

  	
   Vice President

  	
   

  	
   

  	
  Vice President

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  [CORPORATE
  SEAL]

  	
   

  	
   

  	
   

  	
   

  
								

 

 

[Acknowledgements on following pages]

 

10

 

PREPARED OUT OF STATE

 

 

ELEVENTH LOAN MODIFICATION

 

THIS
ELEVENTH LOAN MODIFICATION (this “Agreement”) is made as of
the          day of May,
2003, by and among (a) COMSTOCK HOLDING
COMPANY, INC., a Virginia corporation and COMSTOCK FLYNN’S CROSSING, L.C., a Virginia limited liability
company (collectively “Borrower”), (b) COMSTOCK
RIVERSIDE, L.C. (“Comstock Riverside”), a Virginia limited liability
company, COMSTOCK FAIRFAX I, L.C.,
(“Comstock Fairfax”) a Virginia limited liability company, COMSTOCK SERVICE CORP., INC., (“Comstock
Service”), a Virginia corporation, CHRISTOPHER
CLEMENTE and GREGORY BENSON,
jointly and severally (collectively, the “Guarantor”), (c) LINDA P. LONG, a resident of Loudoun
County, Virginia and GREGORY L. CARTER,
a resident of Fairfax County, Virginia (collectively the Trustees”), and (d) BANK OF AMERICA, N.A., a national banking
association, successor in interest to NationsBank, N.A. (the “Lender”).

 

RECITALS:

 

WHEREAS,
pursuant to the terms of that certain Loan Agreement (the “Original Loan
Agreement”) dated as of December 17, 1997, by and among Lender, Borrower, and
Comstock L’Ambiance (as modified, and as the same may be further modified,
renewed, supplemented or restated, the “Loan Agreement”), Lender made a loan
(the “Loan”) to Borrower in the original principal amount of Two Million and
No/100 Dollars ($2,000,000.00), as evidenced by that certain Revolving Deed of
Trust Note dated December 17, 1997 made by Borrower payable to the order of the
Lender in the original principal amount of Two Million and No/100 Dollars
($2,000,000.00) (as amended, and as the same may be further amended, renewed,
supplemented or restated, the “Note”); and

 

WHEREAS,
pursuant to the terms of that certain Fifth Modification Agreement dated March
2000 and recorded among the land records of Prince William County at Deed Book
2874, page 842 and re-recorded at Deed Book 2932, page 680, the principal
amount of the Loan was increased to Four Million Five Hundred Thousand and
No/100 dollars ($4,500,000.00); and

 

WHEREAS,
pursuant to that certain Eighth Modification Agreement dated March 2001 and
recorded among the land records of Prince William County as Instrument No. 2001
03 07 0021469 the principal amount of the Loan was reduced to Three Million
Three Hundred Thousand and No/100 Dollars ($3,300,000.00); and

 

WHEREAS,
pursuant to that certain Ninth Modification Agreement dated August 31, 2001 and
recorded among the land records of Prince William County as Instrument No.
200109130095284 the principal amount of the Loan was increased to Seven Million
Four Hundred Thousand and No/100 Dollars ($7,400,000.00);

 

WHEREAS,
pursuant to that certain Tenth Modification Agreement dated September 12, 2002
and recorded among the land records of (i) Prince William County as Instrument
No. 200209250123106 and rerecorded as Instrument No. 200302130031301, (ii)
Fairfax County in Deed Book 13415 at page 859, and rerecorded in Deed Book
14169 at page 1644, and (iii) Loudoun County in Deed Book 2268 at page 977, the
principal amount of the Loan was increased to Twelve Million and No/100 Dollars
($12,000,000.00); and

 

 

WHEREAS,
the Borrower’s obligations under the Note and the Loan are jointly and severally
guaranteed by that certain Guaranty Agreement dated as of December 17, 1997, by
the Guarantor for the benefit of the Lender (the “Guaranty”); and

 

WHEREAS,
the Loan is secured by that certain Credit Line Deed of Trust and Security
Agreement dated as of December 17, 1997 and recorded in Deed Book 10211 at page
1879, among the Land Records of Fairfax County, Virginia, as amended (as
amended, and as the same may be further amended or supplemented from time to
time, the “Deed of Trust”) granting a security interest to the Trustees in
certain land located in Fairfax County, Virginia, as more particularly
described in Exhibit A attached thereto and that certain Supplemental
Credit Line Deed of Trust and Security Agreement dated as of March 6, 2000 and
recorded among the Land Records of Prince William County, Virginia, as amended
(as amended, and as the same may be further amended or supplemented from time
to time, the “Supplemental Deed of Trust”); and

 

WHEREAS,
Lender and Borrower have mutually agreed to increase the principal amount of
the Loan and the Note by Three Million and No/100 Dollars ($3,000,000.00) to
the maximum aggregate amount of Fifteen Million and No/100 Dollars
($15,000,000.00) which Borrower shall use for acquisition and construction of the
Projects on the terms and conditions set forth herein; and

 

WHEREAS,
the Loan currently matures on December 31, 2003; and

 

NOW,
THEREFORE, in consideration of the premises and of the sum of Ten Dollars
($10.00), the receipt and sufficiency of which are hereby acknowledged by all
parties, the parties agree as follows:

 

1.                                      Recitals.  The
recitals set forth above are a material part of this Agreement. Borrower and
Guarantor each acknowledge and affirm the accuracy of the recitals set forth
above.

 

2.                                      Definitions.  All
capitalized terms herein, unless otherwise defined, shall have the same meaning
ascribed to such terms as in the Loan Documents.

 

3.                                      Loan Amount.  The
second sentence of Paragraph 1.1(r) of the Loan Agreement, as amended, is
hereby deleted and replaced with the following:

 

During
the term of the Loan, as set forth in the Note, the Borrower may borrow, repay
and reborrow amounts under the Loan; provided, however, that the maximum amount
available for disbursement at any time under the Loan shall equal (a) Fifteen
Million and No/100 Dollars ($15,000,000.00) minus (b) the total amount then
advanced and outstanding under the Loan, provided however, that Lender shall
not make the initial advance under the Loan with respect to any Inventory Lot
or Unit for which funds have not previously been advanced under the Loan if the
total amount budgeted under the Loan for all Inventory Lots and Units for which
funds have been advanced under the Loan and not repaid in full equals or
exceeds Twenty-Two Million and No/100 Dollars ($22,000,000.00).

 

4.                                      Loan Fee. 
Simultaneously with the execution of this Agreement, Borrower shall pay
to Lender a loan fee on the Loan increase from the date hereof through June 30,
2003 in the amount of $2,000.00. Borrower shall also pay to Lender a quarterly
loan fee in an amount equal to one-fifth of one percent (0.20%) of the total
amount committed under the Loan on the first day of

 

2

 

each calendar quarter
thereafter as an additional loan fee so long as there is any Loan Amount
committed under the Loan on any such due date.

 

5.                                      Borrower’s Representations
and Warranties.  The Borrower, Comstock Riverside, Comstock
Fairfax and Comstock Service hereby jointly and severally reaffirm all of the
representations and warranties set forth in the Loan Documents (as defined in
the Loan Agreement, as amended hereby), and further jointly and severally
represent and warrant that (a) the execution and delivery of this Agreement
does not contravene, resulting in an breach of, or constitute a default under,
any deed of trust, loan agreement, indenture or other contract or agreement to
which the Borrower, Comstock Riverside, Comstock Fairfax or Comstock Service is
a party or by which the Borrower, Comstock Riverside, Comstock Fairfax or
Comstock Service or any of their respective properties may be bound (nor would
such execution and delivery constitute such a default with the passage of time
or the giving of notice or both), and do not violate or contravene any law,
order, decree, rule, regulation or restriction to which the Borrower, Comstock
Riverside, Comstock Fairfax or Comstock Service or the Property is subject; (b)
this Agreement constitutes the legal, valid and binding obligations of the
Borrower, Comstock Riverside, Comstock Fairfax and Comstock Service enforceable
in accordance with its terms; (c) the execution and delivery of, and
performance under, this Agreement are within the Borrower’s, Comstock
Riverside’s, Comstock Fairfax’s and Comstock Service’s power and authority
without the joinder or consent of any other party and have been duly authorized
by all requisite action, and are not in contravention of any law, or of the
Borrower’s, Comstock Riverside’s, Comstock Fairfax’s or Comstock Service’s
charter, bylaws or other corporate organizational documents or of any
indenture, agreement or undertaking to which the Borrower, Comstock Riverside,
Comstock Fairfax or Comstock Service is a party or by which it is bound; (d)
there exists no default under the Note or any other Loan Document; (e) there
are no offsets, claims or defenses with respect to the Borrower’s or
Guarantor’s obligations under any of the Loan Documents (the “Obligations”);
and (f) the Borrower, Comstock Riverside, Comstock Fairfax and Comstock Service
are each duly organized and legally existing under the laws of the Commonwealth
of Virginia and are duly qualified to do business in the Commonwealth of
Virginia. The Borrower, Comstock Riverside, Comstock Fairfax and Comstock
Service further jointly and severally represent and warrant that, except as
disclosed in writing to the Lender, there is no suit, judicial or
administrative action, claims, investigation, inquiry, proceeding or demand
pending (or, to the Borrower’s, Comstock Riverside’s, Comstock Fairfax’s and
Comstock Service’s knowledge threatened) against (i) the Borrower, or against
any other person liable directly or indirectly for the Obligations, or (ii)
which affects the Property or the Borrower’s, Comstock Riverside’s, Comstock
Fairfax’s or Comstock Service’s title to the Property, or (iii) which affects
the validity, enforceability or priority of any of the Loan Documents. The
Borrower, Comstock Riverside, Comstock Fairfax and Comstock Service jointly and
severally agree to indemnify and hold the Lender harmless against any loss,
claim, damage, liability or expense (including, without limitation, attorneys’
fees) incurred as a result of any representation or warranty made by the
Borrower, Comstock Riverside, Comstock Fairfax or Comstock Service herein which
proves to be untrue or inaccurate in any respect, and any such occurrence shall
constitute a default under the Loan Documents.

 

6.                                      Renewal; Lien Continuation;
No Novation.  The Borrower hereby renews the Obligations
and promises to pay and perform the Obligations as modified by this Agreement.
All liens evidenced by the Loan Documents (the “Liens”) are hereby ratified and
confirmed as valid, subsisting and continuing to secure the Obligations, as
modified hereby. Nothing herein shall in any manner diminish, impair, waive or
extinguish the Note, the Obligations or the Liens. The execution and delivery
of this Agreement shall not constitute a novation of the debt evidenced and
secured by the Loan Documents.

 

3

 

7.                                      Expenses.  The
Borrower promises to pay all costs and expenses and reimburse the Lender for
any and all expenditures of every character incurred or expended from time to
time, regardless of whether a default shall have occurred, in connection with
this Agreement and all other Loan Documents, and all such amounts shall
constitute a portion of the Obligations evidenced by the Note and secured by
the Loan Documents.

 

8.                                       Miscellaneous.  To
the extent of any conflict between the Loan Documents and this Agreement, this
Agreement shall control. Unless specifically modified hereby, all terms of the
Loan Documents shall remain in full force and effect. This Agreement (a) shall
bind and benefit the parties hereto and their respective heirs, beneficiaries
administrators, executors, receivers, trustees, successors and assigns; (b)
shall be governed by the laws of the Commonwealth of Virginia and United States
federal law; and (c) may be executed in several counterparts, and by the parties
hereto on separate counterparts, and each counterpart, when executed and
delivered, shall constitute an original agreement enforceable against all who
signed it without production of or accounting for any other counterpart, and
all separate counterparts shall constitute the same agreement. Any terms not
defined herein shall have the meanings set forth in the Loan Documents.

 

9.                                      Additional Guarantors;
Reaffirmation of Guaranty.  Each Guarantor, by its signature below as
such, for a valuable consideration, the receipt and adequacy of which are
hereby acknowledged, hereby consents to and joins in this Agreement and hereby
declares to and agrees with the Lender that, the Guaranty is and shall continue
in full force and effect for the benefit of the Lender with respect to the
Obligations, as amended by this Agreement, that there are no offsets, claims or
defenses of the Guarantor with respect to the Guaranty nor, to Guarantor’s
knowledge, with respect to the Obligations, that the Guaranty is not released, diminished
or impaired in any way by this Agreement or the transactions contemplated
hereby, and that the Guaranty is hereby ratified and confirmed in all
respects.  Each Guarantor hereby
reaffirms all of the representations and warranties set forth in the Guaranty.
Each Guarantor acknowledges that without this consent and reaffirmation, Lender
would not execute this Agreement or otherwise consent to its terms.

 

10.                              Authorization of Trustees. 
Lender, by its execution hereof, authorizes and instructs the Trustees
to execute this instrument for the purposes set forth herein and expressly
acknowledges that either Trustee may act and the execution by both Trustees
shall not be required.

 

 

[Signatures on following pages]

 

4

 

EXECUTED
ON THE DATE OR DATES OF THE ACKNOWLEDGMENTS HEREOF, BUT EFFECTIVE AS OF THE
DATE FIRST STATED IN THIS AGREEMENT.

 

 

	
   

  	
   

  	
  BORROWER:

  
	
   

  	
   

  	
   

  
	
  ATTEST/WITNESS:

  	
  COMSTOCK
  HOLDING COMPANY, INC.,

  
	
   

  	
  a Virginia corporation

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ Kelly L.
  Wyche

  	
   

  	
  By:

  	
  /s/
  Christopher Clemente

  	
  (SEAL)

  
	
  Print
  Name:  Kelly L. Wyche

  	
   

  	
  Christopher
  Clemente

  
	
  Print Title:

  	
   

  	
   

  	
  Chief
  Executive Officer

  
	
   

  	
   

  	
   

  
	
  [CORPORATE
  SEAL]

  	
   

  
	
   

  	
   

  	
   

  
	
  ATTEST/WITNESS:

  	
  COMSTOCK FLYNN’S CROSSING, L.C.,

  
	
   

  	
   

  	
  a Virginia
  limited liability company

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  Comstock
  Holding Company, Inc.,

  
	
   

  	
   

  	
   

  	
  a Virginia
  corporation, Manager

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ Kelly L.
  Wyche

  	
   

  	
   

  	
  By:

  	
  /s/
  Christopher Clemente

  	
  (SEAL)

  
	
  Print
  Name:  Kelly L. Wyche

  	
   

  	
   

  	
  Christopher
  Clemente

  
	
  Print Title:

  	
   

  	
   

  	
   

  	
  Chief
  Executive Officer

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  [CORPORATE SEAL]

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  GUARANTORS:

  
	
   

  	
   

  	
   

  
	
  ATTEST/WITNESS:

  	
  COMSTOCK RIVERSIDE, L.C.,

  
	
   

  	
   

  	
  a Virginia
  limited liability company

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  Comstock
  Holding Company, Inc.,

  
	
   

  	
   

  	
   

  	
  a Virginia
  corporation, Manager

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ Kelly L.
  Wyche

  	
   

  	
   

  	
  By:

  	
  /s/
  Christopher Clemente

  	
  (SEAL)

  
	
  Print
  Name:  Kelly L. Wyche

  	
   

  	
   

  	
  Christopher
  Clemente

  
	
  Print Title:

  	
   

  	
   

  	
   

  	
  Chief
  Executive Officer

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  [CORPORATE
  SEAL]

  	
   

  
												

 

5

 

	
  ATTEST/WITNESS:

  	
  COMSTOCK
  FAIRFAX I, L.C.,

  
	
   

  	
  a Virginia limited
  liability company

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  Comstock
  Holding Company, Inc.,

  
	
   

  	
   

  	
   

  	
  a Virginia
  corporation, Manager

  
	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ Kelly L.
  Wyche

  	
   

  	
   

  	
  By:

  	
  /s/
  Christopher Clemente

  	
  (SEAL)

  
	
  Print
  Name:  Kelly L. Wyche

  	
   

  	
   

  	
  Christopher
  Clemente

  
	
  Print Title:

  	
   

  	
   

  	
   

  	
  Chief
  Executive Officer

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  [CORPORATE
  SEAL]

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  ATTEST/WITNESS:

  	
  COMSTOCK
  SERVICE CORP., INC,

  
	
   

  	
  a Virginia corporation

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  /s/  Christopher Clemente

  	
   

  	
  By:

  	
  /s/ Gregory
  Benson

  	
  (SEAL)

  
	
  Assistant
  Secretary

  	
   

  	
  Gregory
  Benson

  
	
   

  	
   

  	
   

  	
  President

  
	
  [CORPORATE
  SEAL]

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  ATTEST/WITNESS:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  /s/ Kelly L.
  Wyche

  	
   

  	
  By:

  	
  /s/
  Christopher Clemente

  	
  (SEAL)

  
	
  Print
  Name:  Kelly L. Wyche

  	
   

  	
  Christopher Clemente, individually

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  /s/ Kelly
  Wyohe

  	
   

  	
  By:

  	
  /s/
  Christopher Clemente

  	
  (SEAL)

  
	
  Print
  Name:  Kelly L. Wyche

  	
   

  	
  Gregory Benson, individually

  
									

 

6

 

	
   

  	
  TRUSTEES:

  
	
  ATTEST/WITNESS:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  (SEAL)

  
	
  Print Name:

  	
   

  	
   

  	
  Linda P.
  Long, Trustee

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  (SEAL)

  
	
  Print Name:

  	
   

  	
   

  	
  Gregory L.
  Carter, Trustee

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  LENDER:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ATTEST/WITNESS:

  	
   

  	
  BANK OF AMERICA, N.A.

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
  By:

  	
   

  	
  (SEAL)

  
	
  Print Name:

  	
   

  	
   

  	
   

  	
  Linda P.
  Long

  	
   

  
	
  Print Title:

  	
   

  	
   

  	
   

  	
  Vice
  President

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  [CORPORATE
  SEAL]

  	
   

  	
   

  	
   

  
								

 

 

[Acknowledgements on following pages]

 

[GRAPHIC]

 

7

 

PREPARED OUT OF STATE

 

TWELFTH LOAN MODIFICATION

 

THIS
TWELFTH LOAN MODIFICATION (this “Agreement”) is made as of the 17th
day of June, 2003, by and among (a) COMSTOCK
HOLDING COMPANY, INC. (“Comstock Holding”), a Virginia corporation
and COMSTOCK FLYNN’S CROSSING, L.C.
(“Comstock Flynn’s Crossing”), a Virginia limited liability company
(collectively Comstock Holding and Comstock Flynn’s Crossing shall be referred
to herein as “Borrower”), (b) COMSTOCK
RIVERSIDE, L.C. (“Comstock Riverside”), a Virginia limited liability
company, COMSTOCK FAIRFAX I, L.C.,
(“ Comstock Fairfax”) a Virginia limited liability company, COMSTOCK SERVICE CORP., INC., (“Comstock
Service”), a Virginia corporation, CHRISTOPHER
CLEMENTE and GREGORY BENSON,
jointly and severally (collectively, the “Guarantor”), (c) LINDA P. LONG, a resident of Loudoun
County, Virginia and GREGORY L. CARTER,
a resident of Fairfax County, Virginia (collectively the “Trustees”), and (d) BANK OF AMERICA, N.A., a national banking
association, successor in interest to NationsBank, N.A. (the “Lender”).

 

RECITALS:

 

WHEREAS,
pursuant to the terms of that certain Loan Agreement (the “Original Loan
Agreement”) dated as of December 17, 1997, by and among Lender, Borrower, and
Comstock L’Ambiance (as modified, and as the same may be further modified,
renewed, supplemented or restated, the “Loan Agreement”), Lender made a loan
(the “Loan”) to Borrower in the original principal amount of Two Million and
No/100 Dollars ($2,000,000.00), as evidenced by that certain Revolving Deed of
Trust Note dated December 17, 1997 made by Borrower payable to the order of the
Lender in the original principal amount of Two Million and No/100 Dollars
($2,000,000.00) (as amended, and as the same may be further amended, renewed,
supplemented or restated, the “Note”); and

 

WHEREAS,
pursuant to the terms of that certain Fifth Modification Agreement dated March
2000 and recorded among the land records of Prince William County at Deed Book
2874, page 842 and re-recorded at Deed Book 2932, page 680, the principal
amount of the Loan was increased to Four Million Five Hundred Thousand and
No/100 dollars ($4,500,000.00); and

 

WHEREAS,
pursuant to that certain Eighth Modification Agreement dated March 2001 and
recorded among the land records of Prince William County as Instrument No. 2001
03 07 0021469 the principal amount of the Loan was reduced to Three Million
Three Hundred Thousand and No/100 Dollars ($3,300,000.00); and

 

WHEREAS,
pursuant to that certain Ninth Modification Agreement dated August 31, 2001 and
recorded among the land records of Prince William County as Instrument No.
200109130095284 the principal amount of the Loan was increased to Seven Million
Four Hundred Thousand and No/100 Dollars ($7,400,000.00); and

 

WHEREAS,
pursuant to that certain Tenth Modification Agreement dated September 12, 2002
and recorded among the land records of (i) Prince William County as Instrument
No. 200209250123106 and rerecorded as Instrument No. 200302130031301, (ii)
Fairfax County in Deed Book 13415 at page 859, and rerecorded in Deed Book
14169 at page 1644, and (iii) Loudoun

 

 

County in Deed Book 2268 at
page 977, the principal amount of the Loan was increased to Twelve Million and
No/100 Dollars ($12,000,000.00);

 

WHEREAS,
pursuant to that certain Eleventh Modification Agreement dated May 28, 2003 and
recorded among the land records of (i) Prince William County as Instrument No.
200306020096563 on June 2, 2003 and, (ii) Fairfax County in Deed Book 14539 at
page 236 on June 3, 2003, and (iii) Loudoun County as Instrument No.
20030603-0066383 on June 3, 2003, the principal amount of the Loan was
increased to Fifteen Million and No/100 Dollars ($15,000,000.00); and

 

WHEREAS,
the Borrower’s obligations under the Note and the Loan are jointly and
severally guaranteed by that certain Guaranty Agreement dated as of December
17, 1997, by the Guarantor for the benefit of the Lender (the “Guaranty”); and

 

WHEREAS,
the Loan is secured by that certain Credit Line Deed of Trust and Security
Agreement dated as of December 17, 1997 and recorded in Deed Book 10211 at page
1879, among the Land Records of Fairfax County, Virginia (as amended, and as
the same may be further amended or supplemented from time to time, the “Deed of
Trust”) granting a security interest to the Trustees in certain land located in
Fairfax County, Virginia, as more particularly described in Exhibit A
attached thereto and that certain Supplemental Credit Line Deed of Trust and
Security Agreement dated as of March 6, 2000 and recorded among the Land
Records of Prince William County, Virginia, as amended (as amended, and as the
same may be further amended or supplemented from time to time, the
“Supplemental Deed of Trust”); and

 

WHEREAS,
Borrower and Lender desire to modify the financial covenants of the Borrower
and the Guarantors.

 

NOW,
THEREFORE, in consideration of the premises and of the sum of Ten Dollars
($10.00), the receipt and sufficiency of which are hereby acknowledged by all
parties, the parties agree as follows:

 

1.                                      Recitals.   The
recitals set forth above are a material part of this Agreement. Borrower and
Guarantor each acknowledge and affirm the accuracy of the recitals set forth
above.

 

2.                                      Definitions. All capitalized terms herein, unless
otherwise defined, shall have the same meaning ascribed to such terms as in the
Loan Documents.

 

3.                                      Financial Covenants. Paragraph 11 of the Ninth Loan Modification
Agreement is hereby deleted in its entirety and the following is inserted in
lieu thereof:

 

11.                               Financial Covenants.

 

(a)                                  From and after the date hereof it shall be an
Event of Default under the Loan entitling Lender to pursue any or all remedies
if (i) the ratio of Comstock Holding’s Minimum Tangible Net Worth to Comstock
Holding’s Maximum Leverage Ratio exceeds 6:1; (ii) the ratio of Comstock Service’s
Minimum Tangible Net Worth to Comstock Service’s Maximum Leverage Ratio exceeds
7:1; (iii) each of Comstock Holding’s Minimum Tangible Net Worth and Comstock
Service’s Minimum Tangible Net Worth individually is less than the sum of
$1,500,000.00 from December 31, 2002 through June 30, 2003. No later than the
last day of each April, July, October and January during the term of the Loan,
Borrower shall deliver to

 

2

 

Lender
internally prepared financial statements in form and substance reasonably
satisfactory to Lender evidencing that the financial covenants are satisfied as
of the last day of the immediately preceding month. The calculations set forth
hereinabove were consistently applied in all prior periods relative to the
financial covenants then in effect. All terms not otherwise defined in
subsections (b) and (c) hereinbelow are given the meanings ascribed to them in
accordance with Generally Accepted Accounting Principals (“GAAP”).

 

(b)                                 “Minimum Tangible Net Worth” for Comstock
Holding and Comstock Service shall be determined in accordance with the
following formula: “Net Worth” less (i) “Intangible Assets,” less (ii) “Due
from Related,” plus (iii) “Due to Related” multiplied by the percentage subordinated
to the Lender and any other institutional lender, plus (iv) “Subordinated Debt”
multiplied by the percentage subordinated to the Lender and any other
institutional lender all as shown on the financial statements submitted by
Comstock Holding and Comstock Service.

 

(c)                                  “Maximum Leverage Ratio” for Comstock Holding
and Comstock Service shall be the ratio of “Total Adjusted Liabilities” to
“Adjusted Net Worth” as determined in accordance with the following formula:
(A) “Total Adjusted Liabilities” shall mean Total Liabilities” less (i) “Due to
Related” and less (ii) “Subordinated Debt,” and (B) “Adjusted Net Worth” shall
mean “Net Worth” less (i) “Intangible Assets,” less (ii) “Due From Related,”
plus (iii) “Due to Related” multiplied by the percentage subordinated to the
Lender and any other institutional lender, plus (iv) “Subordinated Debt”
multiplied by the percentage subordinated to the Lender and any other
institutional lender, plus (v) the “Minority Interest” multiplied by the
percentage subordinated to the Lender and any other institutional lender all as
shown on the financial statements submitted by Comstock Holding and Comstock
Service.

 

4.                                      Borrower’s Representations
and Warranties.  The Borrower, Comstock Riverside, Comstock
Fairfax and Comstock Service hereby jointly and severally reaffirm all of the
representations and warranties set forth in the Loan Documents (as defined in
the Loan Agreement, as amended hereby), and further jointly and severally
represent and warrant that (a) the execution and delivery of this Agreement
does not contravene, resulting in an breach of, or constitute a default under,
any deed of trust, loan agreement, indenture or other contract or agreement to
which the Borrower, Comstock Riverside, Comstock Fairfax or Comstock Service is
a party or by which the Borrower, Comstock Riverside, Comstock Fairfax or
Comstock Service or any of their respective properties may be bound (nor would
such execution and delivery constitute such a default with the passage of time
or the giving of notice or both), and do not violate or contravene any law,
order, decree, rule, regulation or restriction to which the Borrower,, Comstock
Riverside, Comstock Fairfax or Comstock Service or the Property is subject; (b)
this Agreement constitutes the legal, valid and binding obligations of the
Borrower, Comstock Riverside, Comstock Fairfax and Comstock Service enforceable
in accordance with its terms; (c) the execution and delivery of, and
performance under, this Agreement are within the Borrower’s, Comstock
Riverside’s, Comstock Fairfax’s and Comstock Service’s power and authority
without the joinder or consent of any other party and have been duly authorized
by all requisite action, and are not in contravention of any law, or of the
Borrower’s, Comstock Riverside’s, Comstock Fairfax’s or Comstock Service’s
charter, bylaws or other corporate organizational documents or of any
indenture, agreement or undertaking to which the Borrower, Comstock Riverside,
Comstock Fairfax or Comstock Service is a party or by which it is bound; (d)
there exists no default under the Note or any other Loan Document; (e) there
are no offsets, claims or defenses with respect to the Borrower’s or
Guarantor’s obligations under any of the Loan

 

3

 

Documents (the
“Obligations”); and (f) the Borrower, Comstock Riverside, Comstock Fairfax and
Comstock Service are each duly organized and legally existing under the laws of
the Commonwealth of Virginia and are duly qualified to do business in the
Commonwealth of Virginia. The Borrower, Comstock Riverside, Comstock Fairfax
and Comstock Service further jointly and severally represent and warrant that,
except as disclosed in writing to the Lender, there is no suit, judicial or
administrative action, claims, investigation, inquiry, proceeding or demand
pending (or, to the Borrower’s, Comstock Riverside’s, Comstock Fairfax’s and
Comstock Service’s knowledge threatened) against (i) the Borrower, or against
any other person liable directly or indirectly for the Obligations, or (ii)
which affects the Property or the Borrower’s, Comstock Riverside’s, Comstock
Fairfax’s or Comstock Service’s title to the Property, or (iii) which affects
the validity, enforceability or priority of any of the Loan Documents. The
Borrower, Comstock Riverside, Comstock Fairfax and Comstock Service jointly and
severally agree to indemnify and hold the Lender harmless against any loss,
claim, damage, liability or expense (including, without limitation, attorneys’
fees) incurred as a result of any representation or warranty made by the
Borrower, Comstock Riverside, Comstock Fairfax or Comstock Service herein which
proves to be untrue or inaccurate in any respect, and any such occurrence shall
constitute a default under the Loan Documents.

 

5.                                     Renewal; Lien Continuation;
No Novation.  The Borrower hereby renews the Obligations
and promises to pay and perform the Obligations as modified by this Agreement.
All liens evidenced by the Loan Documents (the “Liens”) are hereby ratified and
confirmed as valid, subsisting and continuing to secure the Obligations, as
modified hereby. Nothing herein shall in any manner diminish, impair, waive or
extinguish the Note, the Obligations or the Liens. The execution and delivery
of this Agreement shall not constitute a novation of the debt evidenced and
secured by the Loan Documents.

 

6.                                     Expenses.  The
Borrower promises to pay all costs and expenses and reimburse the Lender for
any and all expenditures of every character incurred or expended from time to
time, regardless of whether a default shall have occurred, in connection with
this Agreement and all other Loan Documents, and all such amounts shall
constitute a portion of the Obligations evidenced by the Note and secured by
the Loan Documents.

 

7.                                     Miscellaneous.  To
the extent of any conflict between the Loan Documents and this Agreement, this
Agreement shall control. Unless specifically modified hereby, all terms of the
Loan Documents shall remain in full force and effect. This Agreement (a) shall
bind and benefit the parties hereto and their respective heirs, beneficiaries
administrators, executors, receivers, trustees, successors and assigns; (b)
shall be governed by the laws of the Commonwealth of Virginia and United States
federal law; and (c) may be executed in several counterparts, and by the
parties hereto on separate counterparts, and each counterpart, when executed
and delivered, shall constitute an original agreement enforceable against all
who signed it without production of or accounting for any other counterpart,
and all separate counterparts shall constitute the same agreement. Any terms
not defined herein shall have the meanings set forth in the Loan Documents.

 

8.                                      Reaffirmation of Guaranty. Each Guarantor, by its signature below as such,
for a valuable consideration, the receipt and adequacy of which are hereby
acknowledged, hereby consents to and joins in this Agreement and hereby
declares to and agrees with the Lender that, the Guaranty is and shall continue
in full force and effect for the benefit of the Lender with respect to the
Obligations, as amended by this Agreement, that there are no offsets, claims or
defenses of the Guarantor with respect to the Guaranty nor, to Guarantor’s
knowledge, with respect to the Obligations, that the Guaranty is not released,
diminished or impaired in any way by this Agreement or the transactions
contemplated hereby, and that the Guaranty is hereby ratified and confirmed in
all respects. Each Guarantor hereby reaffirms all of the representations and
warranties set forth in

 

4

 

the Guaranty. Each Guarantor
acknowledges that without this consent and reaffirmation, Lender would not
execute this Agreement or otherwise consent to its terms.

 

9.                                     Authorization of Trustees. 
Lender, by its execution hereof, authorizes and instructs the Trustees
to execute this instrument for the purposes set forth herein and expressly
acknowledges that either Trustee may act and the execution by both Trustees
shall not be required.

 

 

[Signatures on following pages]

 

5

 

EXECUTED
ON THE DATE OR DATES OF THE ACKNOWLEDGMENTS HEREOF, BUT EFFECTIVE AS OF THE
DATE FIRST STATED IN THIS AGREEMENT.

 

 

	
   

  	
   

  	
  BORROWER:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  COMSTOCK
  HOLDING COMPANY, INC.,

  
	
  ATTEST/WITNESS:

  	
  a Virginia corporation

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ Kelly L.
  Wyche

  	
   

  	
  By:

  	
  /s/
  Christopher Clemente

  	
   (SEAL)

  
	
  Print
  Name:  Kelly L. Wyche

  	
   

  	
  Christopher
  Clemente

  
	
  Print Title:

  	
   

  	
   

  	
  Chief
  Executive Officer

  
	
   

  	
   

  	
   

  
	
  [CORPORATE
  SEAL]

  	
   

  
	
   

  	
   

  	
   

  
	
  ATTEST/WITNESS:

  	
  COMSTOCK FLYNN’S CROSSING, L.C.,

  
	
   

  	
   

  	
  a Virginia
  limited liability company

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  Comstock
  Holding Company, Inc.,

  
	
   

  	
   

  	
   

  	
  a Virginia
  corporation, Manager

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ Kelly L.
  Wyche

  	
   

  	
   

  	
  By:

  	
  /s/
  Christopher Clemente

  	
   (SEAL)

  
	
  Print
  Name:  Kelly L. Wyche

  	
   

  	
   

  	
  Christopher
  Clemente

  
	
  Print Title:

  	
   

  	
   

  	
   

  	
  Chief
  Executive Officer

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  [CORPORATE
  SEAL]

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  GUARANTORS:

  
	
   

  	
   

  	
   

  
	
  ATTEST/WITNESS:

  	
  COMSTOCK RIVERSIDE, L.C.,

  
	
   

  	
   

  	
  a Virginia
  limited liability company

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  Comstock
  Holding Company, Inc.,

  
	
   

  	
   

  	
   

  	
  a Virginia
  corporation, Manager

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ Kelly L.
  Wyche

  	
   

  	
   

  	
  By:

  	
  /s/
  Christopher Clemente

  	
   (SEAL)

  
	
  Print
  Name:  Kelly L. Wyche

  	
   

  	
   

  	
  Christopher
  Clemente

  
	
  Print Title:

  	
   

  	
   

  	
   

  	
  Chief
  Executive Officer

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  [CORPORATE
  SEAL]

  	
   

  
													

 

6

 

	
  ATTEST/WITNESS:

  	
  COMSTOCK
  FAIRFAX I, L.C.,

  
	
   

  	
  a Virginia limited
  liability company

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  Comstock
  Holding Company, Inc.,

  
	
   

  	
   

  	
   

  	
  a Virginia
  corporation, Manager

  
	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ Kelly L.
  Wyche

  	
   

  	
   

  	
  By:

  	
  /s/
  Christopher Clemente

  	
   (SEAL)

  
	
  Print
  Name:  Kelly L. Wyche

  	
   

  	
   

  	
  Christopher
  Clemente

  
	
  Print Title:

  	
   

  	
   

  	
   

  	
  Chief
  Executive Officer

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  [CORPORATE
  SEAL]

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  ATTEST/WITNESS:

  	
  COMSTOCK
  SERVICE CORP., INC,

  
	
   

  	
  a Virginia corporation

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  /s/
  Christopher Clemente

  	
   

  	
  By:

  	
  /s/ Gregory
  Benson

  	
   (SEAL)

  
	
  Assistant
  Secretary

  	
   

  	
  Gregory
  Benson

  
	
   

  	
   

  	
   

  	
  President

  
	
  [CORPORATE
  SEAL]

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  ATTEST/WITNESS:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  /s/ Kelly L.
  Wyche

  	
   

  	
  /s/
  Christopher Clemente

  	
   (SEAL)

  
	
  Print
  Name:  Kelly L. Wyche

  	
  Christopher Clemente, individually

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  /s/ Kelly L.
  Wyche

  	
   

  	
  /s/ Gregory
  Benson

  	
   (SEAL)

  
	
  Print
  Name:  Kelly L. Wyche

  	
  Gregory Benson, individually

  
									

 

7

 

	
   

  	
  TRUSTEES:

  
	
  ATTEST/WITNESS:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  /s/ Lenra E.
  Lundofer

  	
   

  	
  /s/ Linda P.
  Long

  	
   (SEAL)

  
	
  Print Name:

  	
  Lenra E.
  Lundofer

  	
   

  	
  Linda P. Long,
  Trustee

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  /s/ Lenra E.
  Lundofer

  	
   

  	
  /s/ Gregory
  L. Carter

  	
   (SEAL)

  
	
  Print Name:

  	
  Lenra E.
  Lundofer

  	
   

  	
  Gregory L.
  Carter, Trustee

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  LENDER:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ATTEST/WITNESS:

  	
   

  	
  BANK OF AMERICA, N.A.

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ Lenra E.
  Lundofer

  	
   

  	
  By:

  	
  /s/ Linda P.
  Long

  	
   (SEAL)

  
	
  Print Name:

  	
  Lenra E.
  Lundofer

  	
   

  	
   

  	
  Linda P.
  Long

  	
   

  
	
  Print Title:

  	
  Vice
  President

  	
   

  	
   

  	
  Vice
  President

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  [CORPORATE
  SEAL]

  	
   

  	
   

  	
   

  
								

 

 

[Acknowledgements on following pages]

 

8

 

PREPARED
OUT OF STATE

 

THIRTEENTH
LOAN MODIFICATION

 

THIS
THIRTEENTH LOAN MODIFICATION (this “Agreement”) is made as of the 23rd day of
December, 2003, by and among (a) COMSTOCK
HOLDING COMPANY, INC., a Virginia corporation and COMSTOCK FLYNN’S CROSSING, L.C., a Virginia
limited liability company (collectively “Borrower”), (b) COMSTOCK RIVERSIDE, L.C. (“Comstock
Riverside”), a Virginia limited liability company, COMSTOCK FAIRFAX I, L.C., (“Comstock Fairfax”) a Virginia
limited liability company, COMSTOCK SERVICE
CORP., INC., (“Comstock Service”‘), a Virginia corporation, CHRISTOPHER CLEMENTE and GREGORY BENSON, jointly and severally
(collectively, the “Guarantor”), (c) LINDA P.
LONG, a resident of Loudoun County, Virginia and GREGORY L. CARTER, a resident of Fairfax County,
Virginia (collectively the “Trustees”), and (d) BANK OF AMERICA, N.A., a national banking association,
successor in interest to NationsBank, N.A. (the “Lender”).

 

RECITALS:

 

WHEREAS,
pursuant to the terms of that certain Loan Agreement dated as of December 17,
1997, by and among Lender, Borrower, and Comstock L’Ambiance (as modified, and
as the same may be further modified, renewed, supplemented or restated, the
“Loan Agreement”), Lender made a loan (the “Loan”) to Borrower in the original
principal amount of Two Million and No/100 Dollars ($2,000,000.00), as
evidenced by that certain Revolving Deed of Trust Note dated December 17, 1997
made by Borrower payable to the order of the Lender in the original principal
amount of Two Million and No/100 Dollars ($2,000,000.00) (as amended, and as
the same may be further amended, renewed, supplemented or restated, the
“Note”); and

 

WHEREAS,
pursuant to the terms of that certain Fifth Modification Agreement dated March
2000 and recorded among the land records of Prince William County at Deed Book
2874, page 842 and re-recorded at Deed Book 2932, page 680, the principal
amount of the Loan was increased to Four Million Five Hundred Thousand and
No/100 dollars ($4,500,000.00); and

 

WHEREAS,
pursuant to that certain Eighth Modification Agreement dated March 2001 and
recorded among the land records of Prince William County as Instrument No. 2001
03 07 0021469 the principal amount of the Loan was reduced to Three Million
Three Hundred Thousand and No/100 Dollars ($3,300,000.00); and

 

WHEREAS,
pursuant to that certain Ninth Modification Agreement dated August 31, 2001 and
recorded among the land records of Prince William County as Instrument No.
200109130095284 the principal amount of the Loan was increased to Seven Million
Four Hundred Thousand and No/100 Dollars ($7,400,000.00); and

 

WHEREAS,
pursuant to that certain Tenth Modification Agreement dated September 12, 2002
and recorded among the land records of (i) Prince William County as Instrument
No. 200209250123106 and rerecorded as Instrument No. 200302130031301, (ii)
Fairfax County in Deed Book 13415 at page 859, and rerecorded in Deed Book
14169 at page 1644, and (iii) Loudoun County in Deed Book 2268 at page 977, the
principal amount of the Loan was increased to Twelve Million and No/100 Dollars
($12,000,000.00);

 

 

WHEREAS,
pursuant to that certain Eleventh Modification Agreement dated May 28, 2003 and
recorded among the land records of (i) Prince William County as Instrument No.
200306020096563 on June 2, 2003 and, (ii) Fairfax County in Deed Book 14539 at
page 236 on June 3, 2003, and (iii) Loudoun County as Instrument No.
20030603-0066383 on June 3, 2003, the principal amount of the Loan was
increased to Fifteen Million and No/100 Dollars ($15,000,000.00); and

 

WHEREAS,
the Borrower’s obligations under the Note and the Loan are jointly and
severally guaranteed by that certain Guaranty Agreement dated as of December
17, 1997, by the Guarantor for the benefit of the Lender (the “Guaranty”); and

 

WHEREAS,
the Loan is secured by that certain Credit Line Deed of Trust and Security
Agreement dated as of December 17, 1997 and recorded in Deed Book 10211 at page
1879, among the Land Records of Fairfax County, Virginia (as amended, and as
the same may be further amended or supplemented from time to time, the “Deed of
Trust”) granting a security interest to the Trustees in certain land located in
Fairfax County, Virginia, as more particularly described in Exhibit A
attached thereto and that certain Supplemental Credit Line Deed of Trust and
Security Agreement dated as of March 6, 2000 and recorded among the Land
Records of Prince William County, Virginia, as amended (as amended, and as the
same may be further amended or supplemented from time to time, the
“Supplemental Deed of Trust”); and

 

WHEREAS,
Lender and Borrower have mutually agreed to increase the principal amount of
the Loan and the Note by Two Million and No/100 Dollars ($2,000,000.00) which
Borrower shall use for acquisition and construction of the Projects on the terms
and conditions set forth herein; and

 

WHEREAS,
the Loan currently matures on December 31, 2003 and lender has agreed to extend
the maturity date of the Loan.

 

NOW,
THEREFORE, in consideration of the premises and of the sum of Ten Dollars
($10.00), the receipt and sufficiency of which are hereby acknowledged by all
parties, the parties agree as follows:

 

1.                                       Recitals.  The
recitals set forth above are a material part of this Agreement.  Borrower and Guarantor each acknowledge and
affirm the accuracy of the recitals set forth above.

 

2.                                      Definitions.  All
capitalized terms herein, unless otherwise defined, shall have the same meaning
ascribed to such terms as in the Loan Documents and the Flynn’s Crossing Loan
Documents (hereinafter defined).

 

3.                                      Loan Amount.  The
second sentence of Paragraph 1.1(r) of the Loan Agreement, as amended, is
hereby deleted and replaced with the following:

 

During
the term of the Loan, as set forth in the Note, the Borrower may borrow, repay
and reborrow amounts under the Loan; provided, however, that the maximum amount
available for disbursement at any time under the Loan shall equal (a) Seventeen
Million and No/100 Dollars ($17,000,000.00) minus (b) the total amount then
advanced and outstanding under the Loan, provided however, that Lender shall
not make the initial advance under the Loan with respect to any Inventory Lot
or Unit for which funds have not previously been advanced under the Loan if the
total amount budgeted under the Loan for all Inventory Lots and Units for which
funds

 

2

 

have
been advanced under the Loan and not repaid in full equals or exceeds
Twenty-Seven Million and No/100 Dollars ($27,000,000.00).

 

4.                                        Maturity Date.  All
of the Obligations, including (without limitation) all outstanding principal,
accrued and unpaid interest, outstanding late charges, unpaid fees, and all
other amounts outstanding under the Note and the other Loan Documents, shall be
due and payable in full on December 31, 2004 (the “Maturity Date”). All
references to the Maturity Date contained in the Loan Documents shall refer to
the Maturity Date as defined in this Agreement. 
Notwithstanding the above, in the event the Lender does not agree in its
sole and absolute discretion to extend the Maturity Date prior to September 30,
2004, the principal amount outstanding under the Loan on the Maturity Date with
respect to any Pre-Sold Unit, Speculative Unit or Inventory Lot shall be due
and payable on the earlier of (i) the date calculated in accordance with
Paragraph 2.2(g) of the Loan Agreement as amended or (ii) the Maturity Date.

 

5.                                      Financial Covenants. 
Paragraph 11 of the Tenth Loan Modification Agreement is hereby deleted
in its entirety and the following is inserted in lieu thereof:

 

11.                               Financial Covenants.

 

(a)                                  From and after the date hereof it shall be an
Event of Default under the Loan entitling Lender to pursue any or all remedies
if the combined financial results per the financial statements of Comstock
Holding Company, Inc. and Comstock Service Corp., adjusted for intercompany
transactions, results in a Maximum Leverage Ratio in excess of 5:1; and a
combined Minimum Tangible Net Worth less than the sum of $3,000,000.00 from
December 31, 2003 through December 31, 2004. No later than the last day of each
April, July, October and January during the term of the Loan, Borrower shall
deliver to Lender internally prepared financial statements for each quarterly
period and annual audited financial statements for the fiscal year-end of Comstock
Holding Company, Inc. and Comstock Service Corp. along with a combining
financial statement of Comstock Holding Company, Inc. and Comstock Service
Corp., adjusted for intercompany items, in form and substance reasonably
satisfactory to Lender evidencing that the financial covenants are satisfied
for each quarterly and annual period. All terms not otherwise defined in
subsections (b) and (c) hereinbelow are given the meanings ascribed to them in
accordance with Generally Accepted Accounting Principals (“GAAP”).

 

(b)                                  “Minimum Tangible Net Worth” for Comstock
Holding and Comstock Service shall be determined in accordance with the
following formula: “Net Worth” less (i) “Intangible Assets,” less 00 “Due from
Related,” plus (iii) “Due to Related” multiplied by the percentage subordinated
to the Lender and any other institutional lender, plus (iv) “Subordinated Debt”
multiplied by the percentage subordinated to the Lender and any other
institutional lender all as shown on the financial statements submitted by Comstock
Holding and Comstock Service.

 

(c)                                  “Maximum Leverage Ratio” for Comstock Holding
and Comstock Service shall be the ratio of Total Adjusted Liabilities” to
“Adjusted Net Worth” as determined in accordance with the following formula:
(A) “Total Adjusted Liabilities” shall mean “Total Liabilities” less (i) “Due
to Related” and less (ii) “Subordinated Debt,” and (B) “Adjusted Net Worth”
shall mean “Net Worth” less (i) “Intangible Assets,” less (ii) “Due From
Related,” plus (iii) “Due to Related” multiplied

 

3

 

by
the percentage subordinated to the Lender and any other institutional lender,
plus (iv) “Subordinated Debt” multiplied by the percentage subordinated to the
Lender and any other institutional lender, plus (v) the “Minority Interest”
multiplied by the percentage subordinated to the Lender and any other
institutional lender all as shown on the financial statements submitted by
Comstock Holding and Comstock Service.

 

6.                                      Speculative Unit Limit.  From
and after the date hereof, the maximum aggregate number of Speculative Units
(including model Units) which may be constructed from the proceeds of the Loan
at any time shall be as follows:

 

	
  Project

  	
   

  	
  Maximum Number of Speculative Units

  
	
  Wescott Ridge

  	
   

  	
  28 Units (excluding
  Affordable Dwelling Units)

  
	
  Riverside

  	
   

  	
    2 Units

  
	
  Flynn’s Crossing

  	
   

  	
  10 Units (excluding
  Affordable Dwelling Units)

  

 

7.                                     Inventory Lot Limit.  From
and after the date hereof, the number of Inventory Lots that may be financed
with Loan proceeds with respect to the following projects is as follows:

 

	
  Project

  	
   

  	
  Maximum Number of Inventory Lots

  
	
  Wescott Ridge

  	
   

  	
  40 Lots

  
	
  Riverside

  	
   

  	
    0 Lots

  

 

8.                                     Financial Statements.  From
and after the date hereof, financial statements required to be furnished to
Lender by the Borrower and Guarantor shall be furnished to Lender as follows:

 

	
   

  	
   

  	
   

  	
   

  	
  Days Due After Period

  End

  	
   

  	
  Quality

  
	
  Name

  	
   

  	
  Frequency

  	
   

  	
  Annual

  	
   

  	
  Interim

  	
   

  	
  Annual

  	
   

  	
  Interim

  
	
  Comstock Holding Company,
  Inc.

  	
   

  	
  Quarterly

  	
   

  	
  150

  	
   

  	
  45

  	
   

  	
  CPA
  Audited

  	
   

  	
  Internal

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

  	
   

  	
  Quarterly

  	
   

  	
  150

  	
   

  	
  45

  	
   

  	
  CPA
  Compiled

  	
   

  	
  Internal

  
	
  Comstock Service Corp.,
  Inc.

  	
   

  	
  Quarterly

  	
   

  	
  150

  	
   

  	
  45

  	
   

  	
  CPA
  Audited

  	
   

  	
  Internal

  
	
  Any project entity
  financed by Bank of America

  	
   

  	
  Annual

  	
   

  	
  150

  	
   

  	
   

  	
   

  	
  Internal

  	
   

  	
   

  
	
  Christopher Clemente

  	
   

  	
  Annual

  	
   

  	
  150

  	
   

  	
   

  	
   

  	
  Internal

  	
   

  	
   

  
	
  Gregory Benson

  	
   

  	
  Annual

  	
   

  	
  150

  	
   

  	
   

  	
   

  	
  Internal

  	
   

  	
   

  

 

9.                                      Fees. 
Borrower shall pay to Lender a quarterly loan fee in an amount equal to
one-fifth of one percent (0.20%) of the total amount committed under the Loan
on the first day of each calendar quarter thereafter as a loan fee so long as
there is any Loan Amount committed under the Loan on any such due date.

 

10.                               Borrower’s Representations
and Warranties.  The Borrower, Comstock Riverside, Comstock
Fairfax and Comstock Service hereby jointly and severally reaffirm all of the
representations and warranties set forth in the Loan Documents (as defined in
the Loan Agreement, as amended hereby), and further jointly and severally
represent and warrant that (a) the execution and delivery of this Agreement
does not contravene, resulting in an breach of, or constitute a default

 

4

 

under, any deed of trust,
loan agreement, indenture or other contract or agreement to which the Borrower,
Comstock Riverside, Comstock Fairfax or Comstock Service is a party or by which
the Borrower, Comstock Riverside, Comstock Fairfax or Comstock Service or any
of their respective properties may be bound (nor would such execution and
delivery constitute such a default with the passage of time or the giving of
notice or both), and do not violate or contravene any law, order, decree, rule,
regulation or restriction to which the Borrower, Comstock Riverside, Comstock
Fairfax or Comstock Service or the Property is subject; (b) this Agreement constitutes
the legal, valid and binding obligations of the Borrower, Comstock Riverside,
Comstock Fairfax and Comstock Service enforceable in accordance with its terms;
(c) the execution and delivery of, and performance under, this Agreement are
within the Borrower’s, Comstock Riverside’s, Comstock Fairfax’s and Comstock
Service’s power and authority without the joinder or consent of any other party
and have been duly authorized by all requisite action, and are not in
contravention of any law, or of the Borrower’s, Comstock Riverside’s, Comstock
Fairfax’s or Comstock Service’s charter, bylaws or other corporate
organizational documents or of any indenture, agreement or undertaking to which
the Borrower, Comstock Riverside, Comstock Fairfax or Comstock Service is a
party or by which it is bound; (d) there exists no default under the Note or
any other Loan Document; (e) there are no offsets, claims or defenses with
respect to the Borrowers or Guarantor’s obligations under any of the Loan
Documents (the “Obligations”); and (f) the Borrower, Comstock Riverside,
Comstock Fairfax and Comstock Service are each duly organized and legally
existing under the laws of the Commonwealth of Virginia and are duly qualified
to do business in the Commonwealth of Virginia. The Borrower, Comstock
Riverside, Comstock Fairfax and Comstock Service further jointly and severally
represent and warrant that, except as disclosed in writing to the Lender, there
is no suit, judicial or administrative action, claims, investigation, inquiry, proceeding
or demand pending (or, to the Borrower’s, Comstock Riverside’s, Comstock
Fairfax’s and Comstock Service’s knowledge threatened) against (i) the
Borrower, or against any other person liable directly or indirectly for the
Obligations, or (ii) which affects the Property or the Borrower’s, Comstock
Riverside’s, Comstock Fairfax’s or Comstock Service’s title to the Property, or
(iii) which affects the validity, enforceability or priority of any of the Loan
Documents. The Borrower, Comstock Riverside, Comstock Fairfax and Comstock
Service jointly and severally agree to indemnify and hold the Lender harmless
against any loss, claim, damage, liability or expense (including, without
limitation, attorneys’ fees) incurred as a result of any representation or
warranty made by the Borrower, Comstock Riverside, Comstock Fairfax or Comstock
Service herein which proves to be untrue or inaccurate in any respect, and any
such occurrence shall constitute a default under the Loan Documents.

 

11.                               Renewal; Lien Continuation;
No Novation.  The Borrower hereby renews the Obligations
and promises to pay and perform the Obligations as modified by this Agreement.
All liens evidenced by the Loan Documents (the “Liens”) are hereby ratified and
confirmed as valid, subsisting and continuing to secure the Obligations, as
modified hereby. Nothing herein shall in any manner diminish, impair, waive or
extinguish the Note, the Obligations or the Liens. The execution and delivery
of this Agreement shall not constitute a novation of the debt evidenced and
secured by the Loan Documents.

 

12.                               Expenses.  The
Borrower promises to pay all costs and expenses and reimburse the Lender for
any and all expenditures of every character incurred or expended from time to
time, regardless of whether a default shall have occurred, in connection with
this Agreement and all other Loan Documents, and all such amounts shall
constitute a portion of the Obligations evidenced by the Note and secured by
the Loan Documents.

 

13.                               Miscellaneous.  To
the extent of any conflict between the Loan Documents and this Agreement, this
Agreement shall control. Unless specifically modified hereby, all terms of the
Loan Documents shall remain in full force and effect. This Agreement (a) shall
bind and benefit the

 

5

 

parties hereto and their
respective heirs, beneficiaries administrators, executors, receivers, trustees,
successors and assigns; (b) shall be governed by the laws of the Commonwealth
of Virginia and United States federal law; and (c) may be executed in several
counterparts, and by the parties hereto on separate counterparts, and each
counterpart, when executed and delivered, shall constitute an original
agreement enforceable against all who signed it without production of or
accounting for any other counterpart, and all separate counterparts shall
constitute the same agreement.  Any terms
not defined herein shall have the meanings set forth in the Loan Documents.

 

14.                               Reaffirmation of Guaranty.  Each
Guarantor, by its signature below as such, for a valuable consideration, the
receipt and adequacy of which are hereby acknowledged, hereby consents to and
joins in this Agreement and hereby declares to and agrees with the Lender that,
the Guaranty is and shall continue in full force and effect for the benefit of
the Lender with respect to the Obligations, as amended by this Agreement, that
there are no offsets, claims or defenses of the Guarantor with respect to the
Guaranty nor, to Guarantor’s knowledge, with respect to the Obligations, that
the Guaranty is not released, diminished or impaired in any way by this
Agreement or the transactions contemplated hereby, and that the Guaranty is
hereby ratified and confirmed in all respects. Each Guarantor hereby reaffirms
all of the representations and warranties set forth in the Guaranty. Each
Guarantor acknowledges that without this consent and reaffirmation, Lender
would not execute this Agreement or otherwise consent to its terms.

 

15.                               Authorization of Trustees. 
Lender, by its execution hereof, authorizes and instructs the Trustees
to execute this instrument for the purposes set forth herein and expressly
acknowledges that either Trustee may act and the execution by both Trustees
shall not be required.

 

 

[Signatures on following pages]

 

6

 

EXECUTED
ON THE DATE OR DATES OF THE ACKNOWLEDGMENTS HEREOF, BUT EFFECTIVE AS OF THE
DATE FIRST STATED IN THIS AGREEMENT.

 

 

	
   

  	
   

  	
  BORROWER:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  COMSTOCK
  HOLDING COMPANY, INC.,

  
	
  ATTEST/WITNESS:

  	
  a Virginia corporation

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ Kelly L. Wyche

  	
   

  	
  By:

  	
  /s/
  Christopher Clemente

  	
   (SEAL)

  
	
  Print Name:

  	
   

  	
  Christopher
  Clemente

  
	
  Print Title:

  	
   

  	
   

  	
  Chief
  Executive Officer

  
	
   

  	
   

  	
   

  
	
  [CORPORATE
  SEAL]

  	
   

  
	
   

  	
   

  	
   

  
	
  ATTEST/WITNESS:

  	
  COMSTOCK FLYNN’S CROSSING, L.C.,

  
	
   

  	
   

  	
  a Virginia
  limited liability company

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  Comstock
  Holding Company, Inc.,

  
	
   

  	
   

  	
   

  	
  a Virginia
  corporation, Manager

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ Kelly L. Wyche

  	
   

  	
   

  	
  By:

  	
  /s/
  Christopher Clemente

  	
   (SEAL)

  
	
  Print Name:

  	
   

  	
   

  	
  Christopher
  Clemente

  
	
  Print Title:

  	
   

  	
   

  	
   

  	
  Chief
  Executive Officer

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  [CORPORATE
  SEAL]

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  GUARANTORS:

  
	
   

  	
   

  	
   

  
	
  ATTEST/WITNESS:

  	
  COMSTOCK RIVERSIDE, L.C.,

  
	
   

  	
   

  	
  a Virginia
  limited liability company

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  Comstock
  Holding Company, Inc.,

  
	
   

  	
   

  	
   

  	
  a Virginia
  corporation, Manager

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ Kelly L. Wyche

  	
   

  	
   

  	
  By:

  	
  /s/
  Christopher Clemente

  	
   (SEAL)

  
	
  Print Name:

  	
   

  	
   

  	
  Christopher
  Clemente

  
	
  Print Title:

  	
   

  	
   

  	
   

  	
  Chief
  Executive Officer

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  [CORPORATE
  SEAL]

  	
   

  
												

 

7

 

	
  ATTEST/WITNESS:

  	
  COMSTOCK
  FAIRFAX I, L.C.,

  
	
   

  	
  a Virginia limited liability
  company

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  Comstock
  Holding Company, Inc.,

  
	
   

  	
   

  	
   

  	
  a Virginia
  corporation, Manager

  
	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ Kelly L. Wyche

  	
   

  	
   

  	
  By:

  	
  /s/
  Christopher Clemente

  	
   (SEAL)

  
	
  Print Name:

  	
   

  	
   

  	
  Christopher
  Clemente

  
	
  Print Title:

  	
   

  	
   

  	
  Chief
  Executive Officer

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  [CORPORATE
  SEAL]

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  ATTEST/WITNESS:

  	
  COMSTOCK
  SERVICE CORP., INC,

  
	
   

  	
  a Virginia corporation

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  /s/ Kelly L.
  Wyche

  	
   

  	
  By:

  	
  /s/ Gregory
  Benson

  	
   (SEAL)

  
	
   

  	
   

  	
  Gregory
  Benson

  
	
   

  	
   

  	
   

  	
  President

  
	
  [CORPORATE
  SEAL]

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  ATTEST/WITNESS:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  /s/ Kelly L.
  Wyche

  	
   

  	
  /s/ Christopher
  Clemente

  	
   (SEAL)

  
	
  Print Name:

  	
  Christopher
  Clemente, individually

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  /s/ Kelly L.
  Wyche

  	
   

  	
  /s/ Gregory
  Benson

  	
   (SEAL)

  
	
  Print Name:

  	
  Gregory
  Benson, individually

  
										

 

8

 

	
   

  	
  TRUSTEES:

  
	
  ATTEST/WITNESS:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  /s/ Rebecca
  Greenspan

  	
   

  	
  /s/ Linda P.
  Long

  	
   (SEAL)

  
	
  Print Name:

  	
  Rebecca
  Greenspan

  	
   

  	
  Linda P.
  Long, Trustee

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   (SEAL)

  
	
  Print Name:

  	
   

  	
   

  	
  Gregory L.
  Carter, Trustee

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  LENDER:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ATTEST/WITNESS:

  	
   

  	
  BANK OF AMERICA, N.A.

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ Rebecca
  Greenspan

  	
   

  	
  By:

  	
  /s/ Linda P.
  Long

  	
   (SEAL)

  
	
  Print Name:

  	
  Rebecca
  Greenspan

  	
   

  	
   

  	
  Linda P.
  Long

  	
   

  
	
  Print Title:

  	
  Senior Vice
  President

  	
   

  	
   

  	
  Senior Vice
  President

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  [CORPORATE
  SEAL]

  	
   

  	
   

  	
   

  
								

 

 

[Acknowledgements on following pages]

 

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Exhibit 10.12  

 
  PURCHASE AND SALE AGREEMENT    
    

        THIS PURCHASE AND SALE AGREEMENT and all exhibits attached hereto, or to be attached hereto, and incorporated by
this reference (this "Agreement") is made and entered into as of April 25, 2003, by and between CRESCENT POTOMAC YARD
DEVELOPMENT, LLC, a Delaware limited liability company ("Seller"), and COMSTOCK POTOMAC YARD,
L.C., a Virginia limited liability company ("Purchaser"). (Seller and Purchaser are sometimes referred to individually as a
"Party" and collectively as "Parties"). 

Recitals  

        A.    Seller
is the owner of the Property (as defined below). 

        B.    Seller
desires to sell the Property to Purchaser, and Purchaser desires to purchase the Property from Seller, on the terms and conditions set forth in this Agreement. 

        NOW,
THEREFORE, in consideration of the mutual covenants set forth in this Agreement and for other good and valuable consideration, the receipt and sufficiency of which are acknowledged,
Seller and Purchaser agree as follows: 

ARTICLE I  

 DEFINITIONS  

        1.1    In addition to the terms defined elsewhere in this Agreement, the terms set forth in the attached  Annex A when used in this Agreement shall have
the meanings set forth in that Annex.    

ARTICLE II  

 DESCRIPTION OF THE PROPERTY AND ASSUMED LIABILITIES  

        2.1    Description of the Property.    Upon and subject to the terms and conditions set forth in this Agreement,
Seller shall sell, convey, transfer, assign and deliver to Purchaser, and Purchaser shall purchase and accept from Seller the following property (the
"Property"): 

        (a)    Land.    The tract of land described as Land Bay F in  Exhibit A, together with all casements and other rights and
interests appurtenant thereto, including, without limitation, all entitlements and
development rights appurtenant thereto including the Entitlements (collectively, the "Land"); 

        (b)    South Park A Easement.    An easement over the land described as South Park A Easement Area in  Exhibit A, for the
construction and maintenance of the South Park A Improvements (the "South Park A
Easement"). 

        (c)    Licenses and Permits.    All right, title and interest of Seller in and to licenses, permits, consents,
authorizations, approvals, variances, registrations and certificates of any Governmental Authority held by Seller and relating exclusively to the Land, which are in effect as of the Closing, to the
extent that the same are transferable; and 

        (d)    Intangible Property.    The nonexclusive right to use the name "Potomac Yard" in connection with and referring
to the Land and improvements to be constructed thereon. 

        2.2    Assumed Liabilities.    At Closing, Purchaser shall assume (i) all Liabilities created and arising with
respect to the Property on or after the Closing Date, except Taxes allocable to the period of ownership of the Land prior to the Closing Date, (ii) all Liabilities with respect to the Property
created 

1

 

and
arising on or after the Closing Date, (iii) all Liabilities with respect to the Entitlements applicable to the Land, whether arising or accruing prior to or after the Closing Date, except
to the extent of Seller's express obligations under this Agreement or the Development Agreement, (iv) all Liabilities arising or accruing prior to the Closing to the extent Purchaser has
received a credit under Section 10.1 (but only to the extent of such Credit), and (v) all Liabilities otherwise expressly assumed by Purchaser under any other provision in this Agreement
or the Closing Documents (collectively, the "Assumed Liabilities"). Any Liabilities with respect to the Property which are not "Assumed Liabilities"
shall remain the obligation of Seller. 

ARTICLE III  

 PURCHASE PRICE; EARNEST MONEY  

        3.1    Purchase Price.    The purchase price for the Property is Twenty-One Million, Two Hundred Thousand
and 00/100 Dollars ($21,150,000.00) (the "Purchase Price"). The Purchase Price shall be adjusted at Closing for the Prorations pursuant to
Section 10.1. 

        3.2    Earnest Money.    

        (a)    Initial Deposit.    Seller, Purchaser and Escrow Agent have entered into the Earnest Money Escrow Agreement,
dated as of the date of this Agreement (the "Earnest Money Escrow Agreement"), pursuant to which Purchaser shall, within two (2) Business Days of
the Effective Date, deposit Two Hundred Eleven Thousand, Five Hundred and 00/100 Dollars ($211,500.00) (the "Initial Deposit") into escrow with Escrow
Agent. 

        (b)    Additional Deposit.    Prior to 5:00 p.m. (Eastern Time) on the sixtieth (60th) day
after the Effective Date of this Agreement, Purchaser shall deposit an additional Eight Hundred Forty-Six Thousand and 00/100 Dollars ($846,000.00) (the "Additional
Deposit") in cash or an irrevocable, unconditional letter of credit (issued by an institution and in a form reasonably acceptable to Seller)
into escrow with Escrow Agent. If Purchaser fails to deposit the Additional Deposit with Escrow Agent as set forth herein, then Purchaser shall be deemed to have elected to terminate this Agreement
during the Due Diligence Period, and this Agreement shall terminate without any further action by the Parties, in which case Purchaser shall direct Escrow Agent promptly after such termination to
return the Initial Deposit (together with all interest earned thereon) to Purchaser, and Seller and Purchaser shall have no further rights or obligations under this Agreement, except those which
expressly survive such termination. 

        (c)    Investment of Earnest Money.    The Initial Deposit and the Additional Deposit (collectively, the
"Earnest Money") shall be invested in accordance with the Earnest Money Escrow Agreement. All earned interest shall belong to the Purchaser. 

        (d)    Disbursement of Earnest Money.    If Closing occurs under this Agreement, then at Closing, Purchaser shall
either (i) direct Escrow Agent to disburse the Earnest Money to Seller, and Purchaser shall receive a credit against the Purchase Price in the amount of the Earnest Money disbursed to Seller,
or (ii) pay the full Purchase Price to Escrow Agent and direct Escrow Agent to return the Earnest Money to Purchaser. If this Agreement is terminated for any reason and Closing does not occur,
the Earnest Money shall be disbursed by Escrow Agent to Seller or Purchaser (as the case may be) in accordance with the terms of this Agreement. 

        3.3    Payment of Purchase Price.    Purchaser shall deliver to Escrow Agent at Closing, for disbursement to Seller,
by wire transfer of immediately available U.S. Federal funds, an amount equal to the Purchase Price (as adjusted for the Prorations pursuant to Section 10.1). 

        3.4    Like-Kind Exchange.    Each Party acknowledges that the other Party may desire to effect a
Like-Kind Exchange in connection with the sale and purchase of the Property. Each Party agrees to 

2

 

cooperate
with the other Party in effecting the exchange; provided, however, that the exchanging Party shall be responsible for all additional costs associated with any such exchange, and provided
further, that the nonexchanging Party shall not assume any additional liability with respect to any such Like-Kind Exchange. The nonexchanging Party shall execute such additional
documents, at no cost to the nonexchanging Party, as shall be required to give effect to this provision. 

ARTICLE IV  

 DUE DILIGENCE; TITLE AND SURVEYS; OTHER ACTIONS  

        4.1    Due Diligence Period.    Purchaser shall have the period (the "Due Diligence
Period") commencing on the Effective Date and ending at 5:00 p.m. (Eastern Time) on the sixtieth (60th) day following the Effective Date to perform Purchaser's due
diligence review of the Property which Purchaser deems advisable, including, without limitation, the Entitlements, any engineering, environmental, title, survey, design, financial or legal compliance
matters affecting or relating to the Property or Purchaser's proposed improvements. If Purchaser, in its sole and absolute discretion, for any reason or no reason, is not satisfied with the results of
its due diligence review of the Property, Purchaser shall have the right, at its sole discretion, to terminate this Agreement by providing written notice to Seller and Escrow Agent prior to the
expiration of the Due Diligence Period, in which case Purchaser shall have the unilateral right to direct Escrow Agent promptly upon its receipt of such notice of termination to return the Earnest
Money (together with any interest earned thereon) to Purchaser, and neither Seller nor Purchaser shall have any further rights or obligations under this Agreement, except those that expressly survive
such termination. 

        4.2    Due Diligence Inspections.    During the Due Diligence Period, and thereafter during the term of this Agreement
if Purchaser does not terminate this Agreement during the Due Diligence Period, Purchaser, through its employees, agents and representatives ("Purchaser's
Inspectors"), shall have the right to: 

        (a)    perform such examinations, tests, investigations and studies of the Property (the
"Inspections") as Purchaser reasonably deems advisable, in accordance with the terms of this Section 4.2, and Seller shall provide access to the
Property at all reasonable hours for Purchaser's Inspectors to perform the Inspections; and    

        (b)    meet with land planners, engineers and other similar agents and consultants engaged from time to time by Seller to
perform services relating to the Property and with officials of Arlington and other Governmental Authorities concerning the proposed development of the Property (the "Planning
Meetings").    

        Purchaser's
right to make Inspections and participate in Planning Meetings shall be subject to (i) Purchaser's obligation to provide Seller with notice (which notice, for these
purposes, may be given either by telephone, facsimile or by electronic mail) at least one (1) Business Day in advance of each of the Inspections and Planning Meetings (other than unscheduled
meetings occurring in good faith and
not for purposes of avoiding the intent of this notice provision), and (ii) Seller's right to have one or more of its employees, agents or representatives accompany Purchaser's representatives. 

        Purchaser
shall not, without Seller's written approval, submit to any Governmental Authority a request for interpretation of the Entitlements that would be binding upon Seller and its
successors in interest as owners of any portion of the property subject to the PDSP. 

        Seller
hereby acknowledges that the Inspections may include drilling, coring or other invasive testing of the Property, if, and only if, Purchaser is given (a) written notice at
least three (3) Business Days in advance of each such test, (b) the opportunity to take and compare contemporaneous "split samples" corresponding to those taken by or for Purchaser (with
any testing of such samples performed 

3

 

by
or on behalf of Seller to be at Seller's sole cost and expense), and (c) Purchaser shall have obtained, and provided evidence of same to Seller, liability insurance covering Purchaser, its
agents and employees, in an amount of at least $1,000,000 and naming Seller as an additional insured, with respect to the activities to be undertaken by Purchaser on the Land. Following the completion
of any Inspections by Purchaser or Purchaser's Inspectors, Purchaser shall restore the areas of such Inspections to substantially the same condition as existed immediately prior to the Inspections. 

        4.3    Seller's Due Diligence Materials.    Seller has made or shall make available to Purchaser written or electronic
copies of the materials identified in Schedule 4.3, the Title Commitment identified in  Schedule 4.6(a) (including copies of all instruments
listed as exceptions in Schedule B of the Title Commitment) and the Survey identified
in Schedule 4.6(b). Within five (5) days after receiving a request from Purchaser, Seller shall make available to Purchaser for review and
copying, at its expense, in Seller's offices in Arlington, Virginia, any additional, unprivileged documents specified by Purchaser that (a) relate to the Property and (b) are within
Seller's possession. Purchaser agrees to acknowledge in writing, upon Seller's request, the receipt of any due diligence documents delivered by Seller to Purchaser. (All documents and materials
provided to Purchaser pursuant to this Agreement, including, without limitation, each of the documents identified in the first sentence of this Section 4.3, are referred to collectively herein
as the "Seller Due Diligence Materials"). 

        4.4    Purchaser's Due Diligence Reports.    If requested by Seller in writing not later than sixty (60) days
after termination of this Agreement, Purchaser shall provide a copy to Seller of all environmental and geotechnical studies, reports, and assessments prepared by any third-party for or on behalf of
Purchaser (other than any internal studies, reports and assessments prepared by any of the employees, attorneys or accountants of Purchaser or Affiliates of Purchaser) in connection with the
Inspections (the "Purchaser Due Diligence Reports"), which Purchaser Due Diligence Reports shall be delivered without representation or warranty of any
nature and with the understanding that Seller may not rely on such Purchaser Due Diligence Reports without the prior consent of the party(ies) preparing such Purchaser Due Diligence Reports. 

        4.5    Indemnification.    Purchaser shall indemnify and hold Seller harmless against and from all Losses incurred by
Seller by reason of (i) damage to the Property, or (ii) personal injury on the Property, or (iii) mechanics liens or materialmen's liens, in each case resulting from Purchaser's
conduct of the Inspections. The indemnifications set forth in this Section 4.5 survive Closing or any termination of this Agreement for a period of one (1) year following the date of
Closing or termination of this Agreement; provided, however, that to the extent that any claims or actions have arisen during that one (1) year period which result from the Inspections and
Seller notifies Purchaser of same prior to the expiration of the one (1) year period, Purchaser's indemnification obligations shall survive with respect to such claims and/or actions which have
arisen during said one (1) year period until such claims and/or actions have either been dismissed or are finally adjudicated, settled or otherwise resolved. 

        4.6    Title and Survey.    

        (a)    Title Commitment.    Purchaser shall receive the commitment (the "Title
Commitment") identified in Schedule 4.6(a) for an ALTA owner's title insurance policy from the Title Company for the
Land, together with a copy of all documents referenced therein obtained from the Title Company within three (3) Business Days of the Effective Date of this Agreement. 

        (b)    Survey.    Purchaser acknowledges receipt of the survey of the Land identified in  Schedule 4.6(b) (the "Survey"). 

        (c)    Identification of Title Objections.    If (i) the Title Commitment discloses any liens, encumbrances or
exceptions to title (the "Title Exceptions") which are not acceptable to Purchaser, or (ii) the Survey discloses any encroachments by
improvements on adjoining properties 

4

 

onto
or over the Land or other matters shown on the Survey adversely affecting Seller's ownership or use of the Land (the "Survey Defects") which are
not acceptable to Purchaser, Purchaser shall, within forty-five (45) days following the Effective Date, give Seller written Notice of Purchaser's objections (the
"Notice of Title Objections"). Seller shall, within seven (7) days following its receipt of the Notice of Title Objections, give written notice
to Purchaser (the "Seller's Title Response"), specifying which Title Exceptions and Survey Defects in the Notice of Title Objections Seller intends to
cure; provided, however, that Seller shall be required to cure at or prior to Closing (i) all mortgages, deeds of trust or other security interests for any financing encumbering the Property,
or any portion thereof, (ii) real estate taxes and assessments which would be delinquent if unpaid at Closing; provided, however, that if any real estate taxes and assessments are payable in
installments, such obligation shall apply only to the extent such installments would be delinquent if unpaid at Closing, and (iii) any other Title Exceptions objected to by Purchaser in the
Notice of Title Objections which may be removed in accordance with their terms by payment of liquidated amounts which, in the aggregate, do not exceed Twenty-Five Thousand and 00/100
Dollars ($25,000.00) (items described in (i), (ii) and (iii) being the "Mandatory Cure Items"). If Seller's Title Response is unacceptable
to Purchaser, Purchaser's sole and exclusive remedy shall be to terminate this Agreement by written notice to Seller prior to the expiration of the Due Diligence Period, in which event the Earnest
Money (including all interest accrued thereon) shall be returned to Purchaser and the Parties shall have no further obligations to each other hereunder, except for those obligations which expressly
survive a termination of this Agreement. 

        (d)    Permitted Exceptions.    Unless Purchaser terminates this Agreement prior to the expiration of the Due
Diligence Period, Purchaser shall be deemed to have waived any Title Exceptions or Survey Defects (other than Mandatory Cure Items) existing as of the effective date of the Title Commitment which are
either (i) not specified in the Notice of Title Objections or (ii) not specified in the Seller's Title Response as matters that Seller intends to cure in response to the Notice of Title
Objections (collectively, the "Permitted Exceptions"). All Title Exceptions and Survey Defects that are not Permitted Exceptions and not otherwise
accepted by Purchaser in writing are referred to as "Unpermitted Exceptions." Except as expressly provided in this Agreement or the Exhibits hereto,
Seller shall not cause the creation of any new Title Exception or Survey Defect between the effective date of the Title Commitment and the Closing Date (each a "New Title
Matter"), except with Purchaser's written approval. 

        (e)    Removal of Unpermitted Exceptions.    Seller shall not be obligated to cure any Unpermitted Exceptions other
than the Mandatory Cure Items and those Title Exceptions and Survey Defects that Seller has, in the Seller's Title Response, agreed to cure. Seller may by notice to Purchaser extend the scheduled
Closing or the Outside Closing Date for up to thirty (30) days to allow additional time to cure a New Title Matter which is an Unpermitted Exception. 

        (f)    Master Declaration.    On or before the Closing Date, Seller shall execute and record in the land records of
Arlington a Declaration of Covenants, Conditions and Restrictions (the "Master Declaration") in substantially the form attached as  Exhibit E, which
will benefit and burden all of the land known as the Arlington "South Tract" which includes the Land. The Master Declaration
shall be an additional Permitted Exception. 

ARTICLE V  

 SELLER'S REPRESENTATIONS AND WARRANTIES  

        5.1    Seller's Representations and Warranties.    To induce Purchaser to enter into this Agreement and to consummate
the transaction contemplated herein, Seller hereby makes the representations and warranties in this Section 5.1 upon which Purchaser is entitled to rely, subject to the limitations set forth in
Sections 5.2, 5.3, 5.4 and 5.5. 

5

 

        (a)    Organization and Power.    Seller is a duly formed, validly existing limited liability company, in good
standing under the laws of the State of Delaware, and is qualified to do business in the Commonwealth of Virginia, and has all requisite power and authority to own the Property as currently owned. 

        (b)    Authority and Binding Obligation.    (i) Seller has full power and authority to execute and deliver this
Agreement and all documents now or hereafter to be executed and delivered by Seller under this Agreement, and to perform all obligations arising under this Agreement and such other documents,
(ii) the execution by the undersigned on behalf of Seller, and the delivery and performance of this Agreement by Seller has been duly and validly authorized by all necessary action on the part
of Seller, and (iii) each of this Agreement and the Closing Documents to be executed and delivered by Seller, and such other documents now or hereafter to be executed and delivered by Seller
under this Agreement, when executed and delivered, will constitute the legal, valid and binding obligations of Seller enforceable against Seller in accordance with its terms. 

        (c)    Consents and Approvals; No Conflicts.    No filing with, and no permit, authorization, consent or approval of,
any Governmental Authority or other Person is necessary for the consummation by Seller of the transaction contemplated in this Agreement, and neither the execution and delivery of this Agreement by
Seller, nor the consummation by Seller of the transaction contemplated in this Agreement, nor compliance by Seller with any of the terms of this Agreement will: (i) violate any
provision of Seller's organizational or governing documents; (ii) violate any Applicable Law to which Seller is subject; or (iii) result in a violation or breach of, or constitute a
default under, any contract, agreement or other instrument or obligation to which Seller is a party or by which any of Seller's properties are subject. 

        (d)    Condemnation.    Seller has not received any written notice of any pending condemnation or other proceedings in
eminent domain against Seller or the Property, and to Seller's Knowledge, no such condemnation or eminent domain proceedings are currently threatened against Seller or the Property or any portion
thereof. 

        (e)    Compliance with Applicable Law.    Seller has not received any written notice of a violation of any Applicable
Law with respect to the Property which has not been cured or dismissed, and to Seller's Knowledge, no such violation of any Applicable Law exists. 

        (f)    Litigation.    Seller has not (i) been served with any court filing in any litigation with respect to
the Property, or (ii) received written notice of any charge or complaint from any Governmental Authority or other Person pursuant to, or threatening the commencement of, any judicial,
administrative, arbitration or similar adjudicatory proceeding with respect to the Property which has not been settled or dismissed. To Seller's Knowledge, there is no litigation, governmental
proceeding, judgment, action, suit, cause of action, claim or condemnation proceeding pending or threatened against or related to the Property or any portion thereof, or Seller with respect to the
Property or any portion thereof which would be binding upon the Property or Purchaser after the Closing Date. 

        (g)    Environmental Matters.    To Seller's Knowledge,  Schedule 4.3 (listing Seller Due Diligence Materials) includes an
accurate and complete list of all environmental and geotechnical assessments,
reports and studies relating to the Land prepared by or for Seller or its immediate predecessor in title since May, 1993, and Seller has made available to Purchaser for its review true and complete
copies of the same as requested by Purchaser. Seller has not received any written notice from any Governmental Authority or other Person of any Environmental Claims or violation of any Environmental
Laws with respect to the Property which has not been cured or dismissed. 

        (h)    Finders and Investment Brokers.    Seller has not dealt with any Person who has acted, directly or indirectly,
as a broker, finder, financial adviser or in such other capacity for or on 

6

 

behalf
of Seller in connection with the transaction contemplated by this Agreement in a manner which would entitle such Person to any fee or commission in connection with this Agreement or the
transaction contemplated in this Agreement. 

        (i)    Foreign Person.    Seller is a "United States person" (as defined in Section 7701(a)(30)(B) or
(C) of the Code) for the purposes of the provisions of Section 1445(a) of the Code. 

        (j)    Bankruptcy.    Seller has not filed a petition in bankruptcy or for reorganization pursuant to the Federal
Bankruptcy Code or any similar Federal, state or municipal law, or been adjudicated a bankrupt, or consented to the appointment of a receiver or receivers of all or any substantial portion of its
assets. To Seller's Knowledge, no creditor of Seller or any other person has filed a petition in bankruptcy against Seller or for reorganization of Seller pursuant to the Federal Bankruptcy Code or
any similar Federal, state or municipal law. Seller has not been declared insolvent by any Federal or state regulatory agency. 

        (k)    No Other Agreements To Sell.    Seller is not bound by and has not made or entered into any other agreement to
sell the Property to any other person or entity which remains in effect on the date of this Agreement. 

        5.2    Limitation on Seller's Representations and Warranties.    PURCHASER ACKNOWLEDGES AND AGREES THAT, EXCEPT AS
EXPRESSLY SET FORTH IN THIS AGREEMENT, (1) THE PURCHASE OF THE PROPERTY SHALL BE ON AN "AS IS," "WHERE IS," "WITH ALL FAULTS BASIS," SUBJECT TO REASONABLE WEAR AND TEAR FROM THE DATE OF THIS
AGREEMENT UNTIL CLOSING, AND (II) NEITHER SELLER NOR ANY OF ITS AFFILIATES, NOR ANY OF THEIR RESPECTIVE SHAREHOLDERS, MEMBERS, PARTNERS, TRUSTEES, DIRECTORS, OFFICERS, MANAGERS, EMPLOYEES,
ATTORNEYS, ACCOUNTANTS, CONSULTANTS, AGENTS OR REPRESENTATIVES, NOR ANY PERSON PURPORTING TO REPRESENT ANY OF THE FOREGOING, HAVE MADE ANY REPRESENTATION, WARRANTY, GUARANTY, PROMISE, PROJECTION OR
PREDICTION WHATSOEVER WITH RESPECT TO THE PROPERTY OR ANY PORTION OR ASPECT THEREOF, WRITTEN OR ORAL, EXPRESS OR IMPLIED, ARISING BY OPERATION OF LAW OR OTHERWISE, INCLUDING, WITHOUT LIMITATION, ANY
WARRANTY OF MERCHANT ABILITY OR FITNESS FOR A PARTICULAR PURPOSE, OR ANY REPRESENTATION OR WARRANTY AS TO (A) THE CONDITION, QUANTITY, QUALITY, USE, OCCUPANCY OR OPERATION OF THE PROPERTY OR
ANY PORTION OR ASPECT THEREOF, (B) THE PAST, PRESENT OR FUTURE REVENUES OR EXPENSES WITH RESPECT TO THE PROPERTY OR ANY PORTION OR ASPECT THEREOF, (C) THE COMPLIANCE OF THE PROPERTY OR
ANY PORTION OR ASPECT THEREOF, OR THE OPERATION THEREOF, WITH ANY ZONING REQUIREMENTS, BUILDING CODES OR OTHER APPLICABLE LAW, OR (D) THE ACCURACY OF ANY ENVIRONMENTAL REPORTS OR OTHER
INFORMATION SET FORTH IN MATERIALS PROVIDED TO PURCHASER BY OR THROUGH SELLER. 

        PURCHASER
ACKNOWLEDGES AND AGREES THAT PURCHASER (I) HAS OR SHALL HAVE HAD THE OPPORTUNITY TO CONDUCT ALL DUE DILIGENCE INSPECTIONS OF THE PROPERTY, INCLUDING REVIEWING ALL DUE
DILIGENCE DOCUMENTS AND MATERIALS AND OBTAINING ALL INFORMATION WHICH IT DEEMS NECESSARY TO MAKE AN INFORMED DECISION AS TO WHETHER IT SHOULD PROCEED WITH MAKING THE ADDITIONAL DEPOSIT AND PROCEED
WITH THE PURCHASE OF THE PROPERTY AS OF THE CLOSING; (II) IS OR WILL BE RELYING ONLY ON ITS DUE DILIGENCE INSPECTIONS OF THE PROPERTY AND ON THE REPRESENTATIONS, WARRANTIES AND COVENANTS
EXPRESSLY MADE BY SELLER IN THIS AGREEMENT AND IN THE AGREEMENTS TO BE ENTERED INTO BY THE PARTIES PURSUANT TO THIS AGREEMENT, INCLUDING, WITHOUT LIMITATION, THE CLOSING DOCUMENTS AND ON 

7

 

PURCHASER'S
INSPECTIONS OF THE SELLER DUE DILIGENCE MATERIALS DURING THE DUE DILIGENCE PERIOD FOR THE PURPOSES OF DEPOSITING THE ADDITIONAL DEPOSIT, AND AS OF THE CLOSING FOR THE PURPOSES OF
PURCHASING THE PROPERTY; AND (III) EXCEPT FOR THE REPRESENTATIONS AND WARRANTIES AND COVENANTS OF SELLER SET FORTH IN THIS AGREEMENT AND IN THE AGREEMENTS TO BE ENTERED INTO BY THE PARTIES
PURSUANT TO THIS AGREEMENT, IS NOT AND WILL NOT BE RELYING ON ANY OTHER STATEMENT MADE OR INFORMATION PROVIDED TO PURCHASER BY SELLER OR ANY OF ITS AFFILIATES, OR ANY OF THEIR RESPECTIVE SHAREHOLDERS,
MEMBERS, PARTNERS, TRUSTEES, DIRECTORS, MANAGERS, OFFICERS, EMPLOYEES, ATTORNEYS, ACCOUNTANTS, CONSULTANTS, AGENTS OR REPRESENTATIVES, OR ANY PERSON PURPORTING TO REPRESENT ANY OF THE FOREGOING. 

        5.3    Amendment to Schedules.    Notwithstanding anything to the contrary in this Agreement, Seller shall have the
right to amend and supplement the schedules to this Agreement from time to time to the extent that (i) any schedules need to be amended or supplemented to maintain the truth and accuracy of the
applicable representation or warranty or the information disclosed therein, and (ii) Seller did not have Knowledge as of the date of this Agreement of the matter being disclosed in such
amendment or supplement, by providing a written copy of such amendment or supplement to Purchaser. If Seller amends or supplements any schedules pursuant to this Section 5.3 after the
expiration of the Due Diligence Period (such amendment or supplement is referred to as a "Post-Due Diligence Schedule"), then for the
purposes of determining whether the Purchaser Closing Condition in Section 8.2 has been satisfied, the representations and warranties of Seller shall not be qualified by the schedules as
amended as of the expiration of the Due Diligence Period, and Purchaser may rely on the information disclosed in any Post-Due Diligence Schedule to establish that a Purchaser Closing
Condition has not been satisfied, if the matter disclosed in such Post-Due Diligence Schedule would cause Seller's representations and warranties to be untrue or incorrect in any material
respect. If Seller delivers any Post-Due Diligence Schedule(s) and Purchaser proceeds to Closing notwithstanding the delivery of any Post-Due Diligence Schedules to Purchaser,
the representations and warranties of Seller shall be qualified by all Post-Due Diligence Schedules for the purposes of limiting the defense and indemnification obligations of Seller for
the inaccuracy or untruth of any representation or warranty as qualified by a Post-Due Diligence Schedule. 

        5.4    Seller's Knowledge of Breach.    If Seller obtains actual knowledge (without any duty of inquiry) that any of
its representations and warranties set forth in Section 5.1 are or become untrue or incorrect in any respect, Seller shall promptly notify Purchaser in writing of same. If the representation
and warranty was untrue at the time that it was made, then Seller shall take all necessary actions to cure the underlying circumstances that give rise to the representation and warranty being untrue
or incorrect in some respect. From and after the Effective Date until Closing or termination of this Agreement, Seller shall not take or fail to take, or cause another party to take or fail to take,
any action which would result in any of the representations and warranties made by Seller set forth in this Agreement not being true and correct in all material respects as of the Closing Date. 

        5.5    Effect of Purchaser's Knowledge.    If Purchaser has Knowledge prior to Closing of a breach of any
representation or warranty made by Seller in this Agreement and Purchaser nevertheless elects to close this transaction, such representation or warranty by Seller with respect to such matter shall be
deemed to be modified to reflect such Purchaser's Knowledge, and Purchaser shall have no indemnification claims or other rights or remedies against Seller with respect thereto. 

8

 

ARTICLE VI  

 PURCHASER'S REPRESENTATIONS AND WARRANTIES  

        6.1    Representations and Warranties.    To induce Seller to enter into this Agreement and to consummate the
transaction contemplated hereby, Purchaser hereby makes the representations and warranties in this Section 6.1 upon which Purchaser acknowledges and agrees that Seller is entitled to rely,
subject to the limitation in Section 6.2. 

        (a)    Organization and Power.    Purchaser is a duly organized and validly existing limited liability company under
the laws of the Commonwealth of Virginia, and Purchaser has all requisite power and authority to own, lease and operate its properties and to carry on its business as now being conducted and as
contemplated under this Agreement. 

        (b)    Authority and Binding Obligation.    (i) Purchaser has full power and authority to execute and deliver
this Agreement and all documents now or hereafter to be executed and delivered by Purchaser under this Agreement, and to perform all obligations arising under this Agreement and such other documents,
(ii) the execution by the undersigned on behalf of Purchaser, and the delivery and performance of this Agreement by Purchaser has been duly and validly authorized by all necessary action on the
part of Purchaser, and (iii) each of this Agreement and the Closing Documents to be executed and delivered by Purchaser, and such other documents now or hereafter to be executed and delivered
by Purchaser under this Agreement, when executed and delivered, will constitute the legal, valid and binding obligations of Purchaser enforceable against Purchaser in accordance with its terms. 

        (c)    Consents and Approvals; No Conflicts.    (i) No filing with, and no permit, authorization, consent or
approval of, any Governmental Authority or other Person is necessary for the consummation by Purchaser of the transaction contemplated in this Agreement, and (ii) neither the execution and
delivery of this Agreement by Purchaser, nor the consummation by Purchaser of the transaction contemplated in this Agreement, nor compliance by Purchaser with any of the terms of this Agreement will:
(A) violate any provision of the organizational or governing documents of Purchaser; (B) violate any Applicable Law to which Purchaser is subject; or (C) result in a violation or
breach of or constitute a default under any contract, agreement or other instrument or obligation to which Purchaser is a party or by which any of Purchaser's properties are subject. 

        (d)    Finders and Investment Brokers.    Purchaser has not dealt with any Person who has acted, directly or
indirectly, as a broker, finder, financial adviser or in such other capacity for or on behalf of Purchaser in connection with the transaction contemplated by this Agreement in any manner which would
entitle such Person to any fee or commission in connection with this Agreement or the transaction contemplated in this Agreement. 

        6.2    Effect of Seller's Knowledge.    If Seller has Knowledge prior to Closing of a breach of any representation or
warranty made by Purchaser in this Agreement and Seller nevertheless elects to close this transaction, such representation or warranty by Purchaser with respect to such matter shall be deemed to be
modified to reflect such Seller's Knowledge, and Seller shall have no indemnification claims or rights or remedies against Purchaser with respect thereto. 

ARTICLE VII  

 COVENANTS  

        7.1    Operation of the Property Prior to Closing.    From the Effective Date until the Closing Date or earlier
termination of this Agreement, Seller shall not, without Purchaser's prior written consent (which shall not be unreasonably withheld, conditioned or delayed), make any material physical changes to the 

9

 

Land,
except as may be necessary or appropriate (a) to comply with Seller's obligations or to satisfy conditions under the Entitlements, Licenses and Permits or Applicable Law or (b) to
make infrastructure improvements or to prepare the Land for the improvements contemplated under the Entitlements. 

        7.2    Site Plan Submittal.    Purchaser, with cooperation from Seller, shall diligently pursue and prepare all
necessary applications and plans and shall endeavor to file a preliminary site plan by May 30, 2003, and, subject to obtaining necessary authorization from Arlington to do so, a final
site plan by June 13, 2003, each in accordance with Arlington Administrative Regulation 4.1 (collectively, the "4.1 Site Plan") for
development of the Land in accordance with the PDSP and other Applicable Law. Purchaser shall use commercially reasonable efforts to obtain a Final Site Plan by the County Board of Arlington as soon
as possible. At least ten (10) Business Days before submitting its initial version or any amended version of the 4.1 Site Plan to Arlington, Purchaser shall a deliver a copy of the proposed
submittal to Seller. Seller shall have the right, at its expense, to review and approve the proposed submittal, which approval shall not be unreasonably withheld, delayed or conditioned. Seller shall
respond to the proposed submittal (by approving, disapproving or approving subject to modification) within ten (10) Business Days after Seller receives the same. If the proposed submittal is
disapproved or approved subject to modification, Seller shall contemporaneously state with reasonable particularity the reasons or bases for its action. The limitations set forth in Section 4.2
shall apply to any Planning Meetings whether occurring during or after the Due Diligence Period. No provision in this Agreement and no approval by Seller of any proposed submittal shall relieve
Purchaser of its obligation to comply with the obligations under the Entitlements and to obtain all necessary Governmental Approvals applicable to improvements constructed pursuant to the Final Site
Plan. Arlington's approval of a Final Site Plan is not a condition precedent to Purchaser's obligation to close its purchase of the Property. 

        7.3    Further Assurances.    Subject to the terms of this Agreement, Seller and Purchaser shall use commercially
reasonable efforts to take, or cause to be taken, all actions and to do, or cause to be done, all things necessary, proper or advisable to consummate the transaction contemplated in this Agreement,
including, without limitation, (i) obtaining all necessary consents, approvals and authorizations required to be obtained from any Governmental Authority or other Person under this Agreement or
Applicable Law, and (ii) effecting all registrations, notifications, and filings required under this Agreement or Applicable Law. 

ARTICLE VIII  

 CONDITIONS PRECEDENT  

        8.1    Conditions Precedent to the Obligations of Seller and Purchaser.    The respective obligations of Seller and
Purchaser to close the transaction contemplated under this Agreement are subject to the satisfaction, at or prior to Closing, of the following conditions precedent (the "Mutual
Closing Conditions"): 

        (a)    Adverse Proceedings.    No preliminary or permanent injunction or other order, decree or ruling shall have been
issued by a court of competent jurisdiction or by any Governmental Authority and no Applicable Law shall have been enacted or announced which would make illegal or invalid or otherwise prevent the
consummation of the transaction contemplated under this Agreement or significantly delay the commencement or prosecution of the Infrastructure Improvements; 

        (b)    New Obligations Imposed.    In connection with the approval of plans submitted by one Party under this
Agreement and as conditions of their approval, neither Arlington nor any other Governmental Authority shall have imposed new obligations or conditions (not previously 

10

 

expressed
in the Entitlements or otherwise identified by the Parties) on the other Party that are unduly burdensome in the reasonable judgment of such other Party. 

        (c)    Negotiation of Exhibits.    During the Due Diligence Period, the Parties shall have negotiated, finalized and
initialed the form of the documents to be added as Exhibits C, E, F, G and H to this Agreement. 

        8.2    Additional Conditions Precedent to the Obligations of Purchaser.    Purchaser's obligation to close the
transaction contemplated under this Agreement is also subject to the satisfaction at or prior to Closing of the following conditions precedent (the "Purchaser Closing
Conditions"): 

        (a)    Seller's Deliveries.    Seller shall have delivered to Purchaser or deposited with Escrow Agent in the Closing
Escrow for the benefit of Purchaser, all of the Closing Documents and other items set forth in Section 9.3. 

        (b)    Representations and Warranties.    The representations and warranties made by Seller in this Agreement shall be
true and correct in all material respects as of the Closing Date. 

        (c)    Title Policy.    The Title Company shall have committed to issue an owner's title insurance policy to Purchaser
(which may be in the form of a mark-up of the Title Commitment) in accordance with the Title Commitment, insuring Purchaser's fee simple interest in the Land as of the Closing Date, with
gap coverage from the Closing through the date of recording, subject only to the Permitted Exceptions (the "Title Policy"). 

        (d)    Covenants and Obligations.    Seller shall not be in breach or default of its covenants and other obligations
under this Agreement in any material respect. 

        (e)    Declaration of Restriction.    Seller shall be ready, willing and able to record a Declaration of Restriction,
enforceable by Purchaser, in substantially the form attached as Exhibit H, prohibiting the use of Land Bay D and Land Bay E for the sale of
residential units, whether as condominium, cooperative, or townhouse units. The Declaration of Restriction shall continue in effect until the earlier of (i) the date on which all residential
units constructed on Land Bay F have been substantially completed, sold and conveyed, or (ii) December 31, 2008. 

        (f)    Commencement of Infrastructure Improvements.    Seller shall have commenced and thereafter prosecuted with due
diligence construction of the infrastructure improvements substantially as shown on the Infrastructure Plan in accordance with necessary approvals and permits issued by Arlington and other
Governmental Authorities. 

        (g)    Environmental Site Liability Insurance.    Seller shall be ready, willing and able at Closing to add Purchaser
and any guarantor(s) under a loan for the Property as an additional named insured on Seller's environmental site liability insurance policy issued by one of the Chubb Group of Insurance Companies
subject to an allocation of limits acceptable to Seller and Purchaser (to be determined during the Due Diligence Period), the existence and terms of which policy shall be kept confidential by
Purchaser, except for disclosure required by court order or disclosure to any Person on a "need-to-know" basis, such as Purchaser's members, directors, officers, employees,
attorneys, consultants and lenders who shall, in turn, be obligated to maintain such confidentiality. 

        The
Purchaser Closing Conditions are for the benefit of Purchaser, and Purchaser shall have the right to waive any of the Purchaser Closing Conditions at or prior to Closing. 

11

   
        8.3    Additional Conditions Precedent to Seller's Obligations.    Seller's obligation to close the transactions
contemplated under this Agreement is subject to the satisfaction at or prior to Closing of the following conditions precedent (the "Seller Closing
Conditions" ): 

        (a)    Purchaser's Deliveries.    Purchaser shall have delivered to Seller or deposited with Escrow Agent in the
Closing Escrow for the benefit of Seller, all of the Closing Documents and other items set forth in Section 9.4. 

        (b)    Representations and Warranties.    The representations and warranties made by Purchaser in this Agreement shall
be true and correct in all material respects as of the Closing Date (unless such representation or warranty is made expressly as of another date). 

        (c)    Covenants and Obligations.    Purchaser shall not be in breach or default of its covenants and other
obligations under this Agreement in any material respect. 

        The
Seller Closing Conditions are for the benefit of Seller, and Seller shall have the right to waive any of the Seller Closing Conditions at or prior to Closing. 

        8.4    Frustration of Closing Conditions.    Neither Seller nor Purchaser may rely on the failure of the Seller
Closing Conditions or Purchaser Closing Conditions, respectively, to excuse the performance of its obligations under this Agreement if such failure was caused by its failure to act in good faith or to
use its commercially reasonable efforts to cause the Closing to occur. 

        8.5    Failure of Purchaser Closing Condition.    If a Purchaser Closing Condition Failure or Mutual Closing Condition
Failure shall exist at the time of Closing stipulated in this Agreement (including any permitted extensions of the Closing), then Purchaser, as its sole and exclusive remedy for such Failure (but
without waiving any remedies available to Purchaser under this Agreement if such Failure was the result of a default by Seller), may elect to: 

        (a)   terminate
this Agreement, in which case, the Escrow Agent, upon demand from Purchaser, shall refund the Earnest Money (together with all interest earned thereon) to
Purchaser, and Seller and
Purchaser shall have no further rights or obligations under this Agreement, except those which expressly survive such termination; or 

        (b)   proceed
to Closing without any reduction in or setoff against the Purchase Price, in which case Purchaser shall be deemed to have waived such Purchaser Closing Condition
Failure or Mutual Condition Failure; or 

        (c)   in
the event of a Purchaser Closing Condition Failure set forth in Section 8.2, Purchaser shall be entitled to delay the Closing day for day until such condition
is satisfied or until such time as it may be reasonably concluded that the condition cannot be satisfied despite Seller's commercially reasonable efforts to do so, and in no event shall Purchaser's
election hereunder be deemed a waiver of its right to exercise its rights under Section 8.5(a) hereof. 

        8.6    Failure of Seller Closing Condition.    If a Seller Closing Condition Failure or Mutual Closing Condition shall
exist at the time for Closing stipulated in this Agreement, then Seller, as its sole and exclusive remedy for such Failure (but without waiving any remedies available to Seller under this Agreement if
such Failure was the result of a default by Purchaser), may elect to: 

        (a)   terminate
this Agreement, in which case, the Escrow Agent, upon demand from Purchaser, shall refund the Earnest Money (together with all interest earned thereon) to
Purchaser, and Seller and Purchaser shall have no further rights or obligations under this Agreement, except those which expressly survive such termination; or 

        (b)   proceed
to Closing without any change in the Purchase Price, in which case Seller shall be deemed to have waived such Seller Closing Condition Failure or Mutual Closing
Condition. 

12

 

ARTICLE IX  

 CLOSING  

        9.1    Closing Date.    Unless otherwise agreed in writing by Seller and Purchaser, the closing of the transaction
contemplated under this Agreement (the "Closing") shall occur on the earlier of (i) thirty (30) days after Arlington approval of the Final
Site Plan for the Land pursuant to the Entitlements or (ii) December 15, 2003 (the "Outside Closing Date"). The date on which the Closing
occurs is referred to in this Agreement as the "Closing Date." 

        9.2    Closing Escrow.    Closing shall be effected through an escrow arrangement with the Escrow Agent (the
"Closing Escrow") in which, on or prior to the Closing Date, Seller and Purchaser shall enter into a closing escrow agreement with the Escrow Agent with
respect to the Closing Escrow in form and substance reasonably acceptable to Seller, Purchaser and the Escrow Agent (the "Closing Escrow Agreement"),
pursuant to which (i) all of the documents required to be delivered by Seller and Purchaser pursuant to this Agreement (the "Closing Documents")
shall be deposited with Escrow Agent; (ii) the Purchase Price to be paid by Purchaser shall be deposited with Escrow Agent, and (iii) at Closing, the Purchase Price shall be disbursed to
Seller and the Closing Documents shall be delivered to Seller and Purchaser (as the case may be) pursuant to the Closing Escrow Agreement. 

        9.3    Seller's Deliveries.    At the Closing, Seller shall deliver or cause to be delivered to Purchaser or deposited
with Escrow Agent in the Closing Escrow for the benefit of Purchaser all of the documents and other items set forth in this Section 9.3, each of which shall have been duly executed and (if
required) acknowledged by Seller, as follows: 

        (a)    Deed.    A special warranty deed substantially in the form of  Exhibit B, conveying the Land to Purchaser or Purchaser's
assignees as permitted pursuant to Section 14.3, subject only to the Permitted
Exceptions (the "Deed"); 

        (b)    Development Agreement.    A development agreement substantially in the form of  Exhibit C (the "Development Agreement"); 

        (c)    Assignment and Assumption.    A General Assignment and Assumption substantially in the form of  Exhibit D with respect
to the Property described in Sections 2.1(b) and (c); 

        (d)    Deed of Easement.    A deed of casement substantially in the form of  Exhibit F, granting the South Park A Easement to
Purchaser or Purchaser's assignees as permitted pursuant to Section 14.3, subject only to
the Permitted Exceptions (the "Deed of Easement"); 

        (e)    Infrastructure Escrow Agreement.    An Infrastructure Escrow Agreement substantially in the form of  Exhibit G given as
security for the performance of Seller's infrastructure completion obligations under the Development Agreement (the
"Infrastructure Escrow Agreement"); 

        (f)    Declaration of Restriction.    A Declaration of Restriction, ready for recordation in the land records of the
applicable Governmental Authority, substantially in the form of Exhibit H, satisfying the condition set forth in Section 8.2(e). 

        (g)    Title Company Documents.    Such agreements, affidavits or other documents as may be reasonably required by the
Title Company from the Seller to issue the Title Policy; 

        (h)    FIRPTA Affidavit.    A FIRPTA affidavit in the form set forth in the regulations under Sections 897 and
1445 of the Code; 

        (i)    Settlement Statement.    The Settlement Statement prepared pursuant to Section 10.2; and 

        (j)    Closing Certificate.    A certificate confirming the effectiveness of Seller's representations and warranties
set forth in Article V of this Agreement. 

13

 

        (k)    Environmental Insurance.    An endorsement adding Purchaser to Seller's environmental site liability insurance
policy, together with a true and complete copy of the policy and an instrument allocating coverage limits to Purchaser. 

        9.4    Purchaser's Deliveries.    At the Closing, Purchaser shall deliver or cause to be delivered to Seller or
deposited with Escrow Agent in the Closing Escrow for the benefit of Seller all of the documents and other items set forth in this Section 9.4, each of which shall have been duly executed and
(if required) acknowledged by Purchaser, as follows: 

        (a)    Purchase Price.    The Purchase Price due and payable by Purchaser pursuant to Section 3.3. 

        (b)    Disbursement Letter.    A letter of direction to Escrow Agent directing Escrow Agent to disburse the Earnest
Money to Seller upon Closing. 

        (c)    Other Documents.    A counterpart of each of the documents and instruments to be delivered by Seller under
Section 9.3 which require execution by Purchaser; and 

        (d)    Closing Certificate.    A certificate confirming the effectiveness of Purchaser's representations and
warranties set forth in Article VI of this Agreement. 

        9.5    Possession.    Seller shall deliver possession of the Property to Purchaser upon the Closing, subject to the
Permitted Exceptions. 

ARTICLE X  

 PRORATIONS; TRANSACTION COSTS  

        10.1    Prorations.    The items of revenue and expense with respect to the Property set forth in this
Section 10.1 shall be prorated between Seller and Purchaser (the "Prorations") as of 11:59 p.m. on the day preceding the Closing Date, or
such other time expressly provided in this Section 10.1 (the "Cut-Off Time"), so that the Closing Date is a day of income and expense
for Purchaser. 

        (a)    Taxes.    All Taxes shall be prorated as of the Cut-Off Time between Purchaser and Seller. If the
amount of any such Taxes is not ascertainable on the Closing Date, the proration for such Taxes shall be based on the most recent available bill; provided, however, that after the Closing, Seller and
Purchaser shall reprorate the Taxes based on the actual bill(s) for the relevant tax period(s) when issued. Upon receipt of the actual bill(s) for the relevant taxable period(s), Purchaser shall
prepare a reproration statement showing the proration amount paid at Closing for the tax period(s) in question and the revised amount payable for such tax period(s) based on the actual bill(s)
therefor (a "Reproration Statement"). Purchaser shall use commercially reasonable efforts to cause the Reproration Statement for the tax period(s) in
question to be prepared and delivered to Seller not later than thirty (30) days after receipt by Purchaser of the actual tax bill(s) for the relevant tax period(s) in question, and if such
Reproration Statement shows a balance due to Seller, Purchaser shall pay such amount to Seller within such period. If the Reproration Statement shows a balance due to Purchaser, Seller shall pay such
amount to Purchaser no later than thirty (30) days after receipt of the Reproration Statement. 

        (b)    Other Adjustments and Prorations.    All other items of income and expense as are customarily adjusted or
prorated upon the sale and purchase of a property similar to the Property shall be adjusted and prorated between Seller and Purchaser as of the Cut-Off Time between Seller and Purchaser. 

        10.2    Settlement Statement.    Seller and Purchaser jointly shall prepare prior to Closing a settlement statement
(the "Settlement Statement") which shall set forth Seller's and Purchaser's best estimate of the amounts of the items to be adjusted and prorated under
this Agreement and the closing costs to be paid by the Parties pursuant to Section 10.3. The Settlement Statement shall be approved 

14

 

and
executed by Seller and Purchaser, and such adjustments and prorations shall be final with respect to the items set forth in the Settlement Statement, except to the extent any such items shall be
reprorated after the Closing, as expressly set forth in Section 10.1. 

        10.3    Closing Costs.    In addition to the other fees, costs and expenses to be paid by Seller or Purchaser set
forth elsewhere in this Agreement, Seller and Purchaser shall be responsible for the following additional costs relating to the transaction set forth in this Agreement: 

        (a)    Seller's Costs.    Seller shall pay for the following costs: (i) one-half
(1/2) of the fees and expenses for the Escrow Agent; (ii) the fees and expenses for obtaining the Title Commitment (iii) the fees and expenses of removing any Unpermitted
Exceptions as provided in Section 4.6(e), including, without limitation, the costs for the preparation of all releases to evidence such removal and the costs of recordation of the release
documents; (iv) the Virginia Grantor's Tax payable upon recordation of the Deed; (v) any fees for the preparation of the Deed; (v) the fees and expenses for the existing Survey
(as identified in Schedule 4.6(b)); and (vii) the fees and expenses for its attorneys, accountants and other consultants. 

        (b)    Purchaser's Costs.    Purchaser shall pay for the following costs: (i) the fees and expenses for the
Inspections; (ii) the fees and expenses for obtaining the Title Policy issued to Purchaser, including all endorsements thereto; (iii) the fees and expenses for any update of or revision
to the Survey; (iv) all recordation taxes (including taxes referred to as state and local Grantee Taxes, but excluding the Grantor's Tax) applicable to the recordation of the Deed;
(v) one-half (1/2) of the fees and expenses for the Escrow Agent, (vi) the fees and expenses of its attorneys, accountants and other consultants. 

        (c)    Other Closing Costs.    All other fees, costs and expenses not expressly addressed in this Section 10.3
or elsewhere in this Agreement shall be allocated between Seller and Purchaser in accordance with applicable local custom for similar transactions. 

ARTICLE XI  

 DEFAULT; TERMINATION  

        11.1    Purchaser's Pre-Closing Default.    If (i) Purchaser shall be in default of any of its
obligations hereunder in any material respect, or (ii) the Mutual Closing Conditions and all Purchaser Closing Conditions have been satisfied, and Purchaser fails to close on the acquisition of
the Property (a "Purchaser Default"), then Seller may terminate this Agreement and the Earnest Money shall be paid to Seller as its sole and exclusive
remedy as agreed and liquidated damages for such Purchaser Default, whereupon Seller and Purchaser shall have no further rights or obligations under this Agreement, except those which expressly
survive such termination. It is hereby agreed that Seller's damages in the event of a default by Purchaser hereunder are uncertain and impossible to ascertain, and that the Earnest Money constitutes a
reasonable liquidation of such damages and is intended not as a penalty, but as full liquidated damages. Seller covenants not to bring any action or suit, whether legal or equitable, against Purchaser
for additional damages or other redress in the event of Purchaser's default hereunder, and Purchaser covenants not to bring any action or suit challenging the amount of liquidated damages provided
hereunder in the event of such Purchaser Default. Notwithstanding the foregoing, Seller shall not have the right to exercise the foregoing remedy unless Seller has provided written notice to Purchaser
specifying in reasonable detail the nature of such Purchaser Default, and Purchaser has not cured such Purchaser Default within fifteen (15) Business Days after Seller's delivery of such notice
to Purchaser (the "Purchaser Cure Period"), in which case the Closing Date shall be postponed until the date which is fifteen (15) Business Days
after Seller's delivery of such notice to Purchaser. 

        11.2    Seller's Pre-Closing Default.    If (i) Seller shall fail or refuse to make settlement
hereunder as herein required, or (ii) any representation or warranty made by Seller herein shall be untrue or misleading in any material respect, or (iii) Seller shall otherwise be in
default in the performance of its 

15

 

obligations
hereunder in any material respect (each, a "Seller Default"), Purchaser shall have the right to (A) terminate this Agreement and
receive a return of its Earnest Money and all interest accrued thereon, and Purchaser shall be entitled to seek actual damages (and not speculative, consequential or punitive damages) against Seller
for out-of-pocket costs incurred by Purchaser in connection with this Agreement, its investigations and studies, all legal, accounting, engineering, architectural services and
other professional services rendered to Purchaser in connection with Purchaser's acquisition and intended development of the Property (not to exceed $250,000.00), or (B) seek and obtain
equitable relief to enforce the terms and conditions of this Agreement either through a decree for specific performance or an injunction. Notwithstanding the foregoing, Purchaser shall not have the
right to exercise the remedy under clause (A) unless Purchaser has provided written notice to Seller specifying in reasonable detail the nature of such Seller Default, and Seller has not cured
such Seller Default within fifteen (15) Business Days after Purchaser's delivery of such notice to Seller (the "Seller Cure Period"). 

ARTICLE XII  

 CONDEMNATION  

        12.1    Material Condemnation.    In the event of any actual condemnation or taking, or the delivery of any written
notice of any threatened condemnation or taking pursuant to the power of eminent domain, affecting all or any portion of the Land (a "Condemnation"),
Seller shall give written notice of such Condemnation to Purchaser as soon as possible after Seller receives notice of such Condemnation. If the Condemnation would result in a loss in excess of One
Hundred Thousand and 00/100 Dollars ($100,000.00) in the value of the Land or the inability to develop the Land as contemplated under the Development Guidelines (in either case, a
"Material Condemnation"), then Purchaser shall have the right, in its sole discretion, to (A) terminate this Agreement, in which case Seller
shall direct Escrow Agent promptly upon such termination to refund the Earnest Money to Purchaser, and Seller and Purchaser shall have no further rights or obligations under this Agreement, except
those which expressly survive such termination, or (B) proceed to Closing, without terminating this Agreement, in which case Seller shall assign to Purchaser all of Seller's right, title and
interest in all proceeds and awards from such Condemnation. Purchaser shall make an election under this Section 12.1 by giving written notice to Seller within ten (10) Business Days
after Seller's delivery to Purchaser of written notice of such Condemnation. If Purchaser fails to make an election under Section 12.1 within such time period, Purchaser shall be conclusively
deemed to have elected to proceed to Closing pursuant to clause (B) of Section 12.1. If the Closing is scheduled to occur within Purchaser's ten (10) Business Day election period,
the Closing Date shall be postponed until the date which is five (5) Business Days after the expiration of such ten (10) Business Day election period. 

        12.2    Nonmaterial Condemnation.    In the event of any Condemnation of any Land other than a Material Condemnation,
Purchaser shall not have the right to terminate this Agreement, but shall proceed to Closing, in which case Seller shall assign to Purchaser all of Seller's right, title and interest in all proceeds
and awards from such Condemnation. 

ARTICLE XIII  

 INDEMNIFICATION; SURVIVAL  

        13.1    Indemnification by Seller.    Subject to the limitations set forth in Sections 5.2, 5.3, 5.4, 5.5, 13.3 and
13.4, Seller shall indemnify and hold harmless the Purchaser Indemnitees from and against any Losses incurred (i) after the Closing to the extent resulting from (a) any material
inaccuracy or untruth of any representations or warranties made by Seller in this Agreement or (b) the material breach by Seller of any of its covenants or obligations under this Agreement
which expressly survive the Closing, or any Liabilities not assumed by Purchaser hereunder, or (ii) after the termination of this Agreement to the extent resulting from the breach by Seller of
any of its covenants or obligations under this Agreement which expressly survive such termination. 

16

 

        13.2    Indemnification by Purchaser.    Subject to the limitations set forth in Sections 6.2, 13.3 and 13.4,
Purchaser shall indemnify and hold harmless the Seller Indemnitees from and against any Losses incurred (i) after the Closing to the extent resulting from (a) any material inaccuracy or
breach of any representations or warranties made by Purchaser in this Agreement, (b) the material breach of any of its covenants or obligations under this Agreement which expressly survive the
closing, or (c) any Assumed Liabilities, or (ii) after the termination of this Agreement to the extent resulting from the breach by Purchaser of any of its covenants or obligations under
this Agreement which expressly survive such termination. 

        13.3    Limitations on Indemnification Obligations.    

        (a)    Survival.    Notwithstanding anything to the contrary in this Agreement, an Indemnitee which is seeking defense
or indemnification for a breach of (i) any representations or warranties shall be entitled to defense or indemnification for such breach only if the Indemnitee has given written notice to the
Indemnitor in accordance with Section 13.4(a) prior to the expiration of the applicable Survival Period as set forth in Section 13.5, and (ii) any covenants, liabilities or
obligations shall be entitled to defense of indemnification for such breach only if such covenants, liabilities or obligations survive the termination of this Agreement or the Closing (as the case may
be) as set forth in Section 13.5. 

        (b)    Indemnification Limit.    Notwithstanding anything to the contrary in this Agreement, the Losses recoverable
from Seller by Purchaser Indemnitees or from Purchaser by Seller Indemnitees under this Agreement shall not exceed an amount equal to Earnest Money (the "Indemnification Cap
Amount"). 

        13.4    Indemnification Procedure.    

        (a)    Notice of Indemnification Claim.    If any of the Seller Indemnitees or Purchaser Indemnitees (each, an
"Indemnitee") is entitled to defense or indemnification under any express provision in this Agreement (each, an "Indemnification
Claim"), the Party required to provide defense and/or indemnification to such Indemnitee (the "Indemnitor") shall not be
obligated to defend, indemnify and hold harmless
such Indemnitee unless and until such Indemnitee shall have provided written notice to such Indemnitor promptly after such Indemnitee has actual knowledge of the facts or circumstances or Third-Party
Claim on which such Indemnification Claim is based, describing in reasonable detail such facts and circumstances or Third-Party Claim with respect to such Indemnification Claim. 

        (b)    Resolution of Indemnification Claim Not Involving Third-Party Claim.    If the Indemnification Claim does not
involve a Third-Party Claim and is disputed by the Indemnitor, the dispute shall be resolved by litigation or other means as the Parties otherwise may agree in writing. 

        (c)    Resolution of Indemnification Claim Involving Third-Party Claim.    If the Indemnification Claim involves a
Third-Party Claim, the Indemnitor shall have the right (but not the obligation) to assume the defense of such Third-Party Claim, at its cost and expense, and shall use good faith efforts consistent
with prudent business judgment to defend such Third-Party Claim, provided that (i) the counsel for the Indemnitor who shall conduct the defense of the Third-Party Claim shall be reasonably
satisfactory to the Indemnitee (unless selected by Indemnitor's insurance company), (ii) the Indemnitee, at its cost and expense, may participate in, but shall not control, the defense of such
Third-Party Claim, and (iii) without the Indemnitee's prior written consent, which consent shall not be unreasonably withheld, conditioned or delayed, the Indemnitor shall not enter into any
settlement or other agreement which requires any performance by the Indemnitee, other than the payment of money which shall be paid by the Indemnitor. The Indemnitor shall notify the Indemnitee,
within five (5) days after the Indemnitor is notified of the Third-Party Claim, if the Indemnitor elects to assume the defense of the Third-Party Claim. If the Indemnitor fails to notify the
Indemnitee as provided in the foregoing sentence, then the Indemnitor shall be deemed to have elected not to assume the defense of the Third-Party Claim. If the Indemnitor elects to 

17

 

assume
the defense of the Third-Party Claim, then the Indemnitor shall use due diligence to resolve the Third-Party Claim in an expeditious manner. The Indemnitee shall not enter into any settlement
agreement with respect to the Third-Party Claim, without the Indemnitor's prior written consent, which consent may be withheld in Indemnitor's sole discretion; provided that the Indemnitor has elected
to assume the defense of the Third-Party Claim and diligently pursues a resolution of such Third-Party Claim. If the Indemnitor elects not to assume the defense of such Third-Party Claim (or is deemed
to have elected not to assume the defense of the Third-Party Claim), the Indemnitee shall have the right to retain the defense of such Third-Party Claim, at the cost of the Indemnitor, and shall use
good faith efforts consistent with prudent business judgment to defend such Third-Party Claim in an effective and cost-efficient manner, and shall have the right to enter into a settlement
agreement with respect to the Third-Party Claim. 

        (d)    Accrual of Indemnification Obligation.    Notwithstanding anything to the contrary in this Agreement, an
Indemnitee shall have no right to indemnification against an Indemnitor for any Indemnification Claim which (i) does not involve a Third-Party Claim and is disputed by Indemnitor until such
time as such dispute is resolved by written agreement or other means as the Parties otherwise may agree in writing, or by litigation, or (ii) which involves a Third-Party Claim until such time
as such Third-Party Claim is concluded, including any appeals with respect thereto. 

        (e)    Release of Seller for Environmental Liability.    NOTWITHSTANDING ANY INDEMNIFICATION OBLIGATION OF SELLER
UNDER THIS AGREEMENT, TO THE EXTENT PERMITTED UNDER APPLICABLE LAW, PURCHASER DOES HEREBY FOREVER RELEASE AND DISCHARGE THE SELLER INDEMNITEES FROM ANY AND ALL ENVIRONMENTAL CLAIMS AND ENVIRONMENTAL
LIABILITIES, WHETHER NOW KNOWN OR UNKNOWN TO PURCHASER; PROVIDED, HOWEVER, THAT SUCH RELEASE AND DISCHARGE SHALL NOT APPLY TO ANY INDEMNIFICATION OBLIGATION OF SELLER TO THE EXTENT RESULTING FROM A
BREACH OF SELLER'S REPRESENTATION OR WARRANTY SET FORTH IN SECTION 5.l(g). 

        13.5    Survival.    

        (a)    Survival of Representations and Warranties.    The representations and warranties of Seller in Article V
shall survive the Closing for a period commencing on the Closing Date and expiring at 5:00 p.m. (Eastern Time) on the date which is the first (1st) anniversary of the Closing Date (the period
any representation or warranty survives termination or the Closing as set forth in this Section 13.5(a) is referred to herein as the "Survival
Period"). 

        (b)    Survival of Covenants.    The covenants, obligations and liabilities of the Parties set forth in Sections 4.4,
4.5 (for the period set forth therein) 5.2, 7.2, 10.1(a), 10.3, Article XI, Article XIII, Article XIV (except for Section 14.3) shall survive Closing under this Agreement. 

        (c)    Survival of Definitions.    Any terms defined in this Agreement or the Annex to this Agreement shall also
survive Closing or termination of this Agreement. 

ARTICLE XIV  

 MISCELLANEOUS  

        14.1    Notices.    

        (a)    Method of Delivery.    All notices, requests, demands and other communications (each, a
"Notice") required to be provided to the other Party pursuant to this Agreement shall be in writing and shall be delivered (i) in person,
(ii) by certified U.S. mail, with postage prepaid and return receipt requested, (iii) by overnight courier service, or (iv) by facsimile transmittal, with a verification copy sent
on the same day by any of the methods set forth in clauses (i), (ii) and (iii), to the other Party to this Agreement at the following address or facsimile number [or to such 

18

 

other
address or facsimile number as Seller or Purchaser may designate from time to time pursuant to Section 14.1(c)]: 

If to Seller:

Crescent
Potomac Yard Development, LLC

2805 S. Crystal Drive

Arlington, Virginia 22202

Attn: Daniel B. Kohlhepp, President

Facsimile No.: (703) 416-4442 

With a copies to:

Crescent
Resources, LLC (courtesy copy only)

400 S. Church Street, Suite 1300

Charlotte, North Carolina 28202

Attn: Arthur W. Fields, President

Facsimile No.: (704) 382-6385 

Robinson,
Bradshaw & Hinson, P.A.

101 N. Tryon Street, Suite 1900

Charlotte, North Carolina 28246

Attn: Robert C. Sink, Esq.

Facsimile No.: (704) 373-3926 

If to Purchaser:

Comstock
Potomac Yard, L.C.

c/o Comstock Homes, Inc.

11465 Sunset Hills Road, Suite 510

Reston, Virginia 20190

Attn: Christopher Clemente

Facsimile No.: (703) 760-1520 

With a copy to:

Joseph
E. Bankert, Esq.

Bankert & Associates, P.C.

3025 Hamaker Court, Suite 501

Fairfax, Virginia 22031

Attn: Jeb Bankert

Facsimile: (703) 876-4628 

        (b)    Receipt of Notices.    All Notices sent by Seller or Purchaser (or their respective counsel pursuant to
Section 14.1) under this Agreement shall be deemed to have been received by the Party to whom such Notice is sent upon (i) delivery to the address or facsimile number of the recipient
Party, provided that such delivery is made prior to 5:00 p.m. (local time for the recipient Party) on a Business Day, otherwise the following Business Day, or (ii) the attempted delivery
of such Notice if (A) such recipient Party refuses delivery of such Notice, or (B) such recipient Party is no longer at such address or facsimile number, and such recipient Party failed
to provide the sending Party with its current address or facsimile number pursuant to Section 14.1(c). 

        (c)    Change of Address.    Seller and Purchaser and their respective counsel shall have the right to change their
respective address and/or facsimile number for the purposes of this Section 14.1 by providing a Notice of such change in address and/or facsimile as required under this Section 14.1. 

19

 

        14.2    Time of Essence.    Time is of the essence of this Agreement; provided, however, that notwithstanding anything
to the contrary in this Agreement, if the time period for the performance of any covenant or obligation, satisfaction of any condition or delivery of any notice or item required under this Agreement
shall expire on a day other than a Business Day, such time period shall be extended automatically to the next Business Day. 

        14.3    Assignment.    Except to consummate a permitted Like-Kind Exchange, Purchaser shall not assign
this Agreement or any interest therein to any Person, without the prior written consent of Seller, which consent may be withheld in Seller's sole discretion. Notwithstanding the foregoing, Purchaser
shall have the right to designate any Affiliate as its nominee to receive title to the Property, or assign all of its right, title and interest in (but not its liabilities or obligations under) this
Agreement to any Affiliate, by providing written notice to Seller no later than ten (10) days prior to the Closing;
provided, however, that Purchaser shall not be released from any of its liabilities and obligations under this Agreement by reason of such designation or assignment, and such designation or assignment
shall not be effective until Purchaser has provided Seller with a fully executed copy of such designation or assignment and assumption instrument, which shall (i) provide that such designee or
assignee shall be jointly and severally liable for all liabilities and obligations of Purchaser under this Agreement, (ii) provide that Purchaser and its designee or assignee agree to pay any
additional transfer tax as a result of such designation or assignment, (iii) include a representation and warranty in favor of Seller that all representations and warranties made by Purchaser
in this Agreement are true and correct with respect to such designee or assignee as of the date of such designation or assignment, and will be true and correct as of the Closing, and
(iv) otherwise be in form and substance reasonably satisfactory to Seller. 

        14.4    Successors and Assigns.    This Agreement shall be binding upon and inure to the benefit of Seller and
Purchaser and their respective successors and permitted assigns. 

        14.5    Third-Party Beneficiaries.    This Agreement shall not confer any rights or remedies on any Person other than
(i) the Parties and their respective successors and permitted assigns, and (ii) any Indemnitee to the extent such Indernnitee is expressly granted certain rights of defense and
indemnification in this Agreement. 

        14.6    Governing Law.    This Agreement shall be governed by the laws of the Commonwealth of Virginia, without giving
effect to any principles regarding conflict of laws. 

        14.7    Rules of Construction.    The following rules shall apply to the construction and interpretation of this
Agreement: 

        (a)    Singular and Plural.    Singular words shall connote the plural as well as the singular, and plural words shall
connote the singular as well as the plural, and the masculine shall include the feminine and the neuter. 

        (b)    Section References.    All references in this Agreement to particular articles, sections, subsections or
clauses (whether in upper or lower case) are references to articles, sections, subsections or clauses of this Agreement. All references in this Agreement to particular exhibits or schedules (whether
in upper or lower case) are references to the exhibits and schedules attached to this Agreement, unless otherwise expressly stated or clearly apparent from the context of such reference. 

        (c)    Headings.    The headings contained herein are solely for convenience of reference and shall not constitute a
part of this Agreement nor shall they affect its meaning, construction or effect. 

        (d)    Specific Terms.    

          (i)  The
terms hereby, hereof, hereto, herein, hereunder and any similar terms shall refer to this Agreement, and not solely
to the provision in which such term is used. 

20

 

         (ii)  The
terms include, including and similar terms shall be construed as if followed by the phrase  without limitation. 

        (iii)  The
term sole discretion with respect to any determination to be made by a Party under this Agreement shall mean the
sole and absolute discretion of such Party, without regard to any standard of reasonableness or other standard by which the determination of such Party might be challenged. 

        14.8    Severability.    If any term or provision of this Agreement is held to be or rendered invalid or unenforceable
at any time in any jurisdiction, such term or provision shall not affect the validity or enforceability of any other terms or provisions of this Agreement, or the validity or enforceability of such
affected terms or provisions at any other time or in any other jurisdiction. 

        14.9    Jurisdiction; Venue.    Any litigation or other court proceeding with respect to any matter arising from or in
connection with this Agreement shall be conducted in the courts of record in Arlington County, Virginia, or the United States District Court for the Eastern District of Virginia, and Seller and
Purchaser hereby submit to jurisdiction and consent to venue in such courts. 

        14.10    Waiver of Trial by Jury.    Seller and Purchaser hereby waive their right to a trial by jury in any
litigation or other court proceeding by either party against the other party with respect to any matter arising from or in connection with this Agreement. 

        14.11    Prevailing Party.    If any litigation or other court action, arbitration or similar adjudicatory proceeding
is sought, taken, instituted or brought by Seller or Purchaser to enforce its rights under this Agreement, all fees, costs and expenses, including, without limitation, reasonable attorneys fees and
court costs, of the prevailing Party in such action, suit or proceeding shall be borne by the Party against whose interest the judgment or decision is rendered. 

        14.12    Exhibits and Schedules.    All exhibits and schedules (as amended and supplemented from time to time pursuant
to Section 5.3) referred to in this Agreement are incorporated herein by such reference and made a part of this Agreement. Any matter disclosed in any schedule to this Agreement shall be deemed
to be incorporated in all other schedules to this Agreement. 

        14.13    Entire Agreement.    This Agreement sets forth the entire understanding and agreement of the Parties hereto
and shall supersede any other agreements and understandings (written or oral) between Seller and Purchaser on or prior to the date of this Agreement with respect to the transaction contemplated in
this Agreement. 

        14.14    Amendments to Agreement.    No amendment, supplement or other modification to any terms of this Agreement
(other than amendments, supplements and other modifications to the schedules made by Seller pursuant to Section 5.3), or termination of this Agreement shall be valid unless in writing and
executed and delivered by Seller and Purchaser, other than a termination that is expressly permitted to be effected by a Party in this Agreement which shall be executed and delivered only by the Party
who has the right to terminate this Agreement. 

        14.15    Facsimile; Counterparts.    Seller and Purchaser may deliver executed signature pages to this Agreement by
facsimile transmission to the other Party, which facsimile copy shall be deemed to be an original executed signature page; provided, however, that such Party shall deliver an original signature page
to the other Party promptly thereafter. This Agreement may be executed in any number of counterparts, each of which shall be deemed an original and all of which counterparts together shall constitute
one agreement with the same effect as if the Parties had signed the same signature page. 

[Signatures begin on following page] 

21

 

        IN
WITNESS WHEREOF, the parties have executed this Agreement as of the date first above written. 

	 	 	SELLER
	

 	
 	

CRESCENT POTOMAC YARD

DEVELOPMENT, LLC, a Delaware limited

liability company
	

 	
 	

By:	
 	

/s/  DANIEL B. KOHLHEPP      
 Daniel B. Kohlhepp

President
	

 	
 	

PURCHASER
	

 	
 	

COMSTOCK POTOMAC YARD, L.C.
	

 	
 	

By:	
 	

COMSTOCK HOLDING COMPANY, INC.,

Manager
	

 	
 	

 	
 	

By:	
 	

/s/  CHRISTOPHER CLEMENTE      

	 	 	 	 	 	 	Name:	 	Christopher Clemente
	 	 	 	 	 	 	Title:	 	Chief Executive Officer

22

ANNEX A  

        "4.1 Site Plan" has the meaning set forth in Section 7.2. 

        "Additional Deposit" has the meaning set forth in Section 3.2(b). 

        "Affiliate" means, with respect to the Person in question, any other Person that, directly or indirectly, controls, is controlled by or is
under common control with, such Person. For the purposes of this definition, the term "control" and its derivations means the possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of the Person in question, whether by the ownership of voting securities, contract or otherwise. Persons who are investors in an entity who may own more than
fifty percent (50%) of the equity interests in such entity, but are not employees, agents, or entities which control or under common control with such entity, shall not be deemed to be Affiliates of
such entity for purposes of this Agreement. 

        "Arlington" means Arlington County, Virginia, acting through its Board of Commissioners or its designated officials, as applicable. 

        "Applicable Law" means all statutes, laws, common law, rules, regulations, ordinances, codes or other legal requirements of any
Governmental Authority, Board of Fire Underwriters and similar quasi-governmental agencies or entities, and any judgment, injunction, order, directive, decree or other judicial or regulatory
requirement of any court or Governmental Authority of competent jurisdiction affecting or relating to the Person or property in question. 

        "Assumed Liabilities" has the meaning set forth in Section 2.2. 

        "Business Day" means any day other than Saturday, Sunday, any federal legal holiday, or any day on which banking institutions in Arlington
County, Virginia, are obligated or authorized by law to close for the normal conduct of banking business. 

        "Closing" has the meaning set forth in Section 9.1. 

        "Closing Date" has the meaning set forth in Section 9.1. 

        "Closing Documents" has the meaning set forth in Section 9.2. 

        "Closing Escrow" has the meaning set forth in Section 9.2. 

        "Closing Escrow Agreement" has the meaning set forth in Section 9.2. 

        "Code" means the Internal Revenue Code of 1986, as amended from time to time, and any regulations, rulings and guidance issued by the
Internal Revenue Service. 

        "Condemnation" has the meaning set forth in Section 12.1. 

        "Cut-Off Time" has the meaning set forth in Section 10.1. 

        "Declaration of Restriction" has the meaning set forth in Section 9.3(f). 

        "Deed" has the meaning set forth in Section 9.3(a). 

        "Deed of Easement" has the meaning set forth in Section 9.3(b). 

        "Development Agreement" means the agreement described in Section 9.3(c) which is to be executed and delivered at Closing by Seller
and Purchaser, in the form attached as Exhibit C. 

        "Due Diligence Period" has the meaning set forth in Section 4.1. 

        "Earnest Money" means, at the time in question, the amounts then deposited with Escrow Agent in respect of the Initial Deposit and the
Additional Deposit, together with all interest and any other amounts earned thereon. 

        "Earnest Money Escrow Agreement" has the meaning set forth in Section 3.2(a). 

 

        "Effective Date" means the date on which this Agreement has been executed and delivered by both Parties, which date shall be inserted in
the introduction to this Agreement. 

        "Entitlements" means the entitlements, permitted land uses, and development rights and obligations arising under the documentation for the
"South Tract" of Potomac Yard, as created, adopted, approved or amended by the County Board of Arlington on October 21, 2000, consisting of: (i) the General Land Use Plan, as amended by
Amendments GP-269-00-1, (ii) the Phased Development Site Plan (PDSP) pursuant to Application SP #346, (iii) the PDSP Conditions, (iv) the
Potomac Yard Design Guidelines dated and submitted October 3, 2000, as revised November 14, 2001 (the Design Guidelines), (v) the Master Transportation
Plan—Part 1, (vi) the Arlington Bicycle Transportation Plan, (vii) the Arlington County Pedestrian Transportation Plan, (viii) the Master Transit Plan,
(ix) the Arlington Zoning Ordinance, as amended pursuant to Zoning Application Z-2472-00-1, (x) the Transportation and Land Use Plan dated
September 1, 2000, and (xi) the Chesapeake Bay Preservation Ordinance. 

        "Environmental Claims" means all claims for remediation, reimbursement, contribution, personal injury, property damage or damage to
natural resources made by any Governmental Authority or other Person arising from or in connection with the presence or release of any Hazardous Substances over, on, in, under or from the Property, or
the violation of any Environmental Laws with respect to the Property. 

        "Environmental Laws" means any Applicable Laws which regulate (i) Hazardous Substances, pollution, contamination, radiation, water,
soil, sediment, air or other environmental media, or (ii) an actual or potential spill, leak, emission, discharge, release or disposal of any Hazardous Substances or other hazardous materials
or substances or waste into water, soil, sediment, air or any other environmental media, including, without limitation, (i) the Comprehensive Environmental Response, Compensation and Liability
Act, 42 U.S.C. §9601 et seq. ("CERCLA" ), (ii) the Resource Conservation and Recovery Act, 42 U.S.C. § 6901 et
seq. ("RCRA"), (iii) the Federal Water Pollution Control Act, 33 U.S.C. § 2601 et seq., (iv) the Toxic Substances
Control Act, 15 U.S.C. § 2601 et seq., (v) the Clean Water Act, 33 U.S.C. § 1251 et seq., (vi) the Clean Air Act, 42 U.S.C.
§ 7401 et seq., (vii) the Hazardous Materials Transportation Act, 49 U.S.C. § 1801 et seq., and similar state and local Applicable Law, as amended from
time to time, and all regulations, rules and guidance issued pursuant thereto. 

        "Environmental Liabilities" means all Liabilities imposed on the Person in question pursuant to any Environmental Laws, including, without
limitation, any (i) obligations to manage, control, contain, remove, remediate, respond to, clean up or abate any actual or potential release of Hazardous Substances into any water, soil,
sediment, air or other environmental media, whether or not located on the Land and whether or not arising from the operations or activities with respect to the Property, and (ii) liabilities or
obligations with respect to the manufacture, generation, formulation, processing, use, treatment, handling, storage, disposal, distribution or transportation of any Hazardous Substances. 

        "Escrow Agent" means Chicago Title Insurance Company, a Missouri corporation, through its national underwriting office at 830 East Main
Street, 16th Floor, Richmond, Virginia 23219. 

        "Final Site Plan" means the final unappealable approval of a final site plan or 4.1 Site Plan by the County Board of Arlington as either
of those terms is used in the PDSP Conditions and the Arlington Zoning Ordinance. 

        "Governmental Authority" means any federal, state or local government or political subdivision thereof, including, without limitation, any
agency or entity exercising executive, legislative, judicial, regulatory or administrative governmental powers or functions, in each case to the extent the same has jurisdiction over the Person or
property in question. 

2

 

        "Hazardous Substances" means any hazardous or toxic substances, materials or waste, whether solid, semisolid, liquid or gaseous,
including, without limitation, asbestos, polychlorinated biphenyls, petroleum or petroleum by-products and any other material or substance which is defined as a "hazardous substance",
"hazardous waste", "toxic waste" or "toxic substance" under any Environmental Laws. 

        "Indemnification Cap Amount" has the meaning set forth in Section 13.3(b). 

        "Indemnification Claim" has the meaning set forth in Section 13.4(a). 

        "Indemnitee" has the meaning set forth in Section 13.4(a). 

        "Indemnitor" has the meaning set forth in Section 13.4(a). 

        "Infrastructure Escrow Agreement" has the meaning set forth in Section 9.3(e). 

        "Infrastructure Plan" means the infrastructure plan captioned "                        " prepared
by christopher consultants, ltd., dated
                        , 2003, as the same may be revised to obtain necessary approvals from Arlington and other Governmental
Authorities. 

        "Initial Deposit" has the meaning set forth in Section 3.2(a). 

        "Inspections" has the meaning set forth in Section 4.2(a). 

        "Knowledge" means (i) with respect to Seller, (A) the actual knowledge of Daniel B. Kohlhepp, Loran M. Adams, Arthur W.
Fields, Fred A. Byers and Henry C. Lomax, Jr., and expressly excluding the knowledge of any other member, director, officer, manager, employee, agent or representative of Seller or any of its
Affiliates, (B) any matter disclosed in any exhibits or schedules to this Agreement, (C) any matter disclosed in any Seller Due Diligence Materials, and (ii) with respect to
Purchaser, (A) the actual knowledge of Christopher Clemente and William P. Bensten, and expressly excluding the knowledge of any other member, director, officer, manager, employee, agent or
representative of Purchaser, its members, or any of Affiliates of Purchaser or its members, (B) any matter disclosed in any exhibits or schedules to this Agreement, (C) any matter
disclosed in any Seller Due Diligence Materials or in any other documents or materials provided by Seller to Purchaser prior to the expiration of the Due Diligence Period, and (D) any matter
disclosed in the Purchaser Due Diligence Reports or by the Inspections. 

        "Land" has the meaning set forth in Section 2.1(a). 

        "Land Bay F" means the tract of land described as such in Exhibit A and designated
as "Landbay F Residential" on the survey exhibit dated January 24, 2003, prepared by christopher consultants, ltd., containing approximately 4.8309 acres. 

        "Liabilities" means, with respect to the Person in question, any liability, obligation, damage, loss, diminution in value, cost or expense
of any kind or nature whatsoever, whether known or unknown, foreseen or unforeseen, actual or contingent, which is incurred by such Person. 

        "Like-Kind Exchange" means a transaction which is intended to qualify as a tax-deferred exchange under
Section 1031 of the Code. 

        "Losses" means, with respect to the Person in question, any actual liability, damage (but expressly excluding any consequential and
punitive damages), loss, cost or expense, including, without limitation, reasonable attorneys fees and expenses and court costs, incurred by such Person, as a result of the act, omission or occurrence
in question. 

        "Mandatory Cure Items" has the meaning set forth in Section 4.6(c). 

        "Master Declaration" has the meaning set forth in Section 4.6(f). 

3

 

        "Material Condemnation" has the meaning set forth in Section 12.1. 

        "Mutual Closing Condition" has the meaning set forth in Section 8.1. 

        "Mutual Closing Condition Failure" means the failure for any reason of one or more of the Mutual Closing Conditions to have been satisfied
at Closing. 

        "New Title Matter" has the meaning set forth in Section 4.6(d). 

        "Notice" has the meaning set forth in Section 14.1(a). 

        "Notice of Title Objections" has the meaning set forth in Section 4.6(c). 

        "Outside Closing Date" has the meaning set forth in Section 9.1. 

        "PDSF" means the phased development site plan for the "South Tract" of Potomac Yard in Arlington, Virginia, forming a part of the
Entitlements. 

        "PDSP Conditions" means the conditions imposed by Arlington as part of the PDSP forming a part of the Entitlements. 

        "Permitted Exceptions" has the meaning set forth in Section 4.6(d). 

        "Planning Meetings" has the meaning set forth in Section 4.2(b). 

        "Person" means any natural person, corporation, general or limited partnership, limited liability company, association, joint venture,
trust, estate, Governmental Authority or other legal entity, in each case whether in its own or a representative capacity. 

        "Property" has the meaning set forth in Section 2.1. 

        "Prorations" has the meaning set forth in Section 10.1. 

        "Purchase Price" has the meaning set forth in Section 3.1. 

        "Purchaser Closing Condition Failure" means the failure for any reason of one or more of the Purchaser Closing Conditions to have been
satisfied at Closing. 

        "Purchaser Closing Conditions" has the meaning set forth in Section 8.2. 

        "Purchaser Cure Period" has the meaning set forth in Section 11.1. 

        "Purchaser Default" has the meaning set forth in Section 11.1. 

        "Purchaser Due Diligence Reports" has the meaning set forth in Section 4.4. 

        "Purchaser Indemnitees" means Purchaser and its Affiliates, and each of their respective shareholders, managers, members, partners,
trustees, beneficiaries, directors, officers, employees, attorneys, accountants, consultants, and agents, and the successors, assigns, legal representatives, heirs, devisees and donees of each of the
foregoing. 

        "Purchaser's Inspectors" has the meaning set forth in Section 4.2. 

        "Reproration Statement" has the meaning set forth in Section 10.1(a). 

        "Seller Closing Conditions" has the meaning set forth in Section 8.3. 

        "Seller Closing Condition Failure" means the failure for any reason of one or more of the Seller Closing Conditions to have been satisfied
at Closing. 

        "Seller Cure Period" has the meaning set forth in Section 11.2. 

        "Seller Default" has the meaning set forth in Section 11.2. 

4

 

        "Seller Due Diligence Materials" has the meaning set forth in Section 4.3. 

        "Seller Indemnitees" means Seller and its Affiliates, and each of their respective shareholders, managers, members, partners, trustees,
beneficiaries, directors, officers, employees, attorneys, accountants, consultants and agents, and the successors, assigns, legal representatives, heirs, devisees and donees of each of the foregoing. 

        "Seller's Title Response" has the meaning set forth in Section 4.6(c). 

        "Settlement Statement" has the meaning set forth in Section 10.2. 

        "South Park A Improvements" means the promenade, retaining wall, stairs and other permanent improvements required within the South Park A
Easement Area pursuant to and in accordance with the Entitlements, including Condition 22(c) of the PDSP Conditions. 

        "South Park A Easement" has the meaning set forth in Section 2.1(b). 

        "South Park A Easement Area" means the tract of land described as such in  Exhibit A. 

        "Survey" has the meaning set forth in Section 4.6(b). 

        "Survey Defects" has the meaning set forth in Section 4.6(c). 

        "Survival Period" has the meaning set forth in Section 13.5(a). 

        "Taxes" means any federal, state, local or foreign, real property, personal property, sales, use, vault, ad valorem, assessments, value
added or other tax, assessments, levies, charges or fees of any kind whatsoever imposed on Seller with respect to the Property or any portion thereof by any Governmental Authority, including, without
limitation, any interest, penalty, or addition thereto, but expressly excluding any (i) federal, state, local or foreign income, capital gain, gross receipts, capital stock, franchise, profits,
estate, gift or generation skipping tax, or (ii) transfer or similar taxes incurred with respect to the transaction contemplated in this Agreement. 

        "Third-Party Claim" means, with respect to the Person in question, any claim, demand, lawsuit, arbitration or other legal or
administrative action or proceeding against such Person by any other Person which is not an Affiliate of such Person. 

        "Title Commitment" has the meaning set forth in Section 4.6(a). 

        "Title Company" means Chicago Title Insurance Company, a Missouri corporation, through its national underwriting office at 830 East Main
Street, 16th Floor, Richmond, Virginia 23219. 

        "Title Exceptions" has the meaning set forth in Section 4.6(c). 

        "Title Policy" has the meaning set forth in Section 8.2(c). 

        "Unpermitted Exceptions" has the meaning set forth in Section 4.6(d). 

5

  

 
 

FIRST AMENDMENT TO PURCHASE AND SALE AGREEMENT    
    

        THIS FIRST AMENDMENT TO PURCHASE AND SALE AGREEMENT (the "First Amendment") is made this    day of June, 2003, by and between CRESCENT POTOMAC YARD
DEVELOPMENT, LLC, a Delaware limited liability company, hereinafter referred to as "Seller", and COMSTOCK POTOMAC YARD, L.C., a Virginia limited liability company, hereinafter referred to as
"Purchaser". 

        WHEREAS,
Seller and Purchaser entered into a purchase and sale agreement with an effective date of April 25, 2003 (the "Agreement") for the purchase and sale of certain property
known as Land Bay F located within a site commonly known as Potomac Yard, located in Arlington County, Virginia, as more particularly described in the Agreement; and 

        WHEREAS,
Seller and Purchaser desire to amend certain terms and conditions of the Agreement. 

        NOW
THEREFORE, for and in consideration of the mutual promises of the parties herein contained, the premises and other good and valuable consideration, the receipt and sufficiency of
which is hereby acknowledged, the parties hereto agree to amend the Agreement as follows: 

	1.
	The
expiration date of the Due Diligence Period referenced in Section 4.1 of the Agreement is hereby extended to 5:00 p.m. Eastern Time,  August 8, 2003.

	2.
	All
other terms and conditions of the Agreement remain in full force and effect unless otherwise modified by this First Amendment.

	3.
	Unless
otherwise stated herein, all terms defined in the Agreement shall have the same meaning when used in this First Amendment.

	4.
	In
the event that any of the terms and/or conditions of this Amendment are inconsistent with the Agreement, the terms and/or conditions of this Amendment shall control
but only to the extent of the inconsistency.

	5.
	This
First Amendment may be executed in counterparts all of which when taken together shall constitute an amendment binding on all parties, signatories of the original or
any counterpart. Facsimile signatures shall be binding.

	6.
	The
date on which this First Amendment is accepted by the last party to accept and sign the First Amendment shall be inserted as the effective date of the First Amendment
under the first paragraph hereof. 

        IN
WITNESS WHEREOF, and intending to be legally bound, the parties have executed this Agreement under seal as of the dates indicated below. 

[SIGNATURES FOLLOW]

1

 

	 	 	SELLER:
	

 	
 	

CRESCENT POTOMAC YARD DEVELOPMENT, LLC, a Delaware limited liability company
	

Date: 6/18/03	
 	

By:	
 	

/s/  DANIEL B. KOHLHEPP      
	
 	

 
	 	 	Name:	 	Daniel B. Kohlhepp	 	 
	 	 	Title:	 	President	 	 
	

 	
 	

PURCHASER:
	

 	
 	

COMSTOCK POTOMAC YARD, L.C., a Virginia limited liability company
	

 	
 	

By:	
 	

Comstock Holding Company, Inc. a Virginia corporation

Manager
	

Date: 6/17/03	
 	

By:	
 	

/s/  CHRISTOPHER CLEMENTE      
 Christopher Clemente	
 	

(SEAL)
	 	 	Title:	 	Chief Executive Officer	 	 

2

  

 
 

SECOND AMENDMENT TO PURCHASE AND SALE AGREEMENT    
    

        THIS SECOND AMENDMENT TO PURCHASE AND SALE AGREEMENT (the "Second Amendment") is made this 20 day of June, 2003, by and between CRESCENT POTOMAC YARD DEVELOPMENT,
LLC, a Delaware limited liability company, hereinafter referred to as "Seller", and COMSTOCK POTOMAC YARD, L.C., a Virginia limited liability company, hereinafter referred to as "Purchaser". 

        WHEREAS,
Seller and Purchaser entered into a purchase and sale agreement with an effective date of April 25, 2003 (the "Agreement") for the purchase and sale of certain property
known as Land Bay F located within a site commonly known as Potomac Yard, located in Arlington County, Virginia, as more particularly described in the Agreement; and 

        WHEREAS,
Seller and Purchaser desire to amend certain terms and conditions of the Agreement. 

        NOW
THEREFORE, for and in consideration of the mutual promises of the parties herein contained, the premises and other good and valuable consideration, the receipt and sufficiency of
which is hereby acknowledged, the parties hereto agree to amend the Agreement as follows: 

	1.
	The
date on which the Additional Deposit shall be required to be posted pursuant to Section 2.2(b) of the Agreement is hereby extended to 5:00 p.m. Eastern
Time, August 8, 2003.

	2.
	All
other terms and conditions of the Agreement remain in full force and effect unless otherwise modified by this Second Amendment.

	3.
	Unless
otherwise stated herein, all terms defined in the Agreement shall have the same meaning when used in this Second Amendment.

	4.
	In
the event that any of the terms and/or conditions of this Amendment are inconsistent with the Agreement, the terms and/or conditions of this Amendment shall control
but only to the extent of the inconsistency.

	5.
	This
Second Amendment may be executed in counterparts all of which when taken together shall constitute an amendment binding on all parties, signatories of the original
or any counterpart. Facsimile signatures shall be binding.

	6.
	The
date on which this Second Amendment is accepted by the last party to accept and sign the Second Amendment shall be inserted as the effective date of the Second
Amendment under the first paragraph hereof. 

        IN
WITNESS WHEREOF, and intending to be legally bound, the parties have executed this Agreement under seal as of the dates indicated below. 

[SIGNATURES FOLLOW]

1

 

	 	 	SELLER:
	

 	
 	

CRESCENT POTOMAC YARD DEVELOPMENT, LLC, a Delaware limited liability company
	

Date: 6/20/03	
 	

By:	
 	

/s/  DANIEL B. KOHLHEPP      
	
 	

 
	 	 	Name:	 	Daniel B. Kohlhepp	 	 
	 	 	Title:	 	President	 	 
	

 	
 	

PURCHASER:
	

 	
 	

COMSTOCK POTOMAC YARD, L.C., a Virginia limited liability company
	

 	
 	

By:	
 	

Comstock Holding Company, Inc. a Virginia corporation

Manager	
 	

 
	

Date: 6/20/03	
 	

By:	
 	

/s/  CHRISTOPHER CLEMENTE      
 Christopher Clemente	
 	

(SEAL)
	 	 	Title:	 	Chief Executive Officer	 	 

2

  

 
 

THIRD AMENDMENT TO PURCHASE AND SALE AGREEMENT    
    

        THIS THIRD AMENDMENT TO PURCHASE AND SALE AGREEMENT (the "Third Amendment") is made this    day of July, 2003, by and between CRESCENT POTOMAC YARD
DEVELOPMENT, LLC, a Delaware limited liability company, hereinafter referred to as "Seller", and COMSTOCK POTOMAC YARD, L.C., a Virginia limited liability company, hereinafter referred to as
"Purchaser". 

        WHEREAS,
Seller and Purchaser entered into a purchase and sale agreement with an effective date of April 25, 2003, as amended by that First Amendment dated June 18, 2003
and further amended by that Second Amendment dated June 20, 2003, (the "Agreement") for the purchase and sale of certain property known as Land Bay F located within a site commonly known as
Potomac Yard, located in Arlington County, Virginia, as more particularly described in the Agreement; and 

        WHEREAS,
Seller and Purchaser desire to amend certain terms and conditions of the Agreement. 

        NOW
THEREFORE, for and in consideration of the mutual promises of the parties herein contained, the premises and other good and valuable consideration, the receipt and sufficiency of
which is hereby acknowledged, the parties hereto agree to amend the Agreement as follows: 

	1.
	The
date on which the Additional Deposit shall be required to be posted pursuant to Section 2.2(b) of the Agreement and expiration date of the Due Diligence Period
referenced in Section 4.1 of the Agreement are hereby extended to 5:00 p.m. Eastern Time, August 28, 2003.

	2.
	All
other terms and conditions of the Agreement remain in full force and effect unless otherwise modified by this Third Amendment.

	3.
	Unless
otherwise stated herein, all terms defined in the Agreement shall have the same meaning when used in this Third Amendment.

	4.
	In
the event that any of the terms and/or conditions of this Amendment are inconsistent with the Agreement, the terms and/or conditions of this Amendment shall control
but only to the extent of the inconsistency.

	5.
	This
Third Amendment may be executed in counterparts all of which when taken together shall constitute an amendment binding on all parties, signatories of the original or
any counterpart. Facsimile signatures shall be binding.

	6.
	The
date on which this Third Amendment is accepted by the last party to accept and sign the Third Amendment shall be inserted as the effective date of the Third Amendment
under the first paragraph hereof. 

        IN
WITNESS WHEREOF, and intending to be legally bound, the parties have executed this Agreement under seal as of the dates indicated below. 

[SIGNATURES FOLLOW]

1

 

	 	 	SELLER:	 	 
	

 	
 	

CRESCENT POTOMAC YARD DEVELOPMENT, LLC, a Delaware limited liability company
	

Date: 7/17/03	
 	

By:	
 	

/s/  DANIEL B. KOHLHEPP      
	
 	

 
	 	 	Name:	 	Daniel B. Kohlhepp	 	 
	 	 	Title:	 	President	 	 
	

 	
 	

PURCHASER:
	

 	
 	

COMSTOCK POTOMAC YARD, L.C., a Virginia limited liability company
	

 	
 	

By:	
 	

Comstock Holding Company, Inc. a Virginia corporation

Manager	
 	

 
	

Date: 7/17/03	
 	

By:	
 	

/s/  CHRISTOPHER CLEMENTE      
 Christopher Clemente	
 	

(SEAL)
	 	 	Title:	 	Chief Executive Officer	 	 

2

  

 
 

FOURTH AMENDMENT TO PURCHASE AND SALE AGREEMENT    
    

        THIS FOURTH AMENDMENT TO PURCHASE AND SALE AGREEMENT (the "Fourth Amendment") is made this 22 day of August, 2003, by and between CRESCENT POTOMAC YARD
DEVELOPMENT, LLC, a Delaware limited liability company, hereinafter referred to as "Seller", and COMSTOCK POTOMAC YARD, L.C., a Virginia limited liability company, hereinafter referred to as
"Purchaser". 

        WHEREAS,
Seller and Purchaser entered into a purchase and sale agreement with an effective date of April 25, 2003, as amended by that First Amendment dated June 18, 2003,
further amended by that Second Amendment dated June 20, 2003, and as further amended by that Third Amendment dated July 17, 2003 (the "Agreement") for the purchase and sale of certain
property known as Land Bay F located within a site commonly known as Potomac Yard, located in Arlington County, Virginia, as more particularly described in the Agreement; and 

        WHEREAS,
Seller and Purchaser desire to amend certain terms and conditions of the Agreement. 

        NOW
THEREFORE, for and in consideration of the mutual promises of the parties herein contained, the premises and other good and valuable consideration, the receipt and sufficiency of
which is hereby acknowledged, the parties hereto agree to amend the Agreement as follows: 

	1.
	The
date on which the Additional Deposit shall be required to be posted pursuant to Section 2.2(b) of the Agreement and the expiration date of the Due Diligence
Period referenced in Section 4.1 of the Agreement are hereby extended to 5:00 p.m. Eastern Time, September 12, 2003.

	2.
	All
other terms and conditions of the Agreement remain in full force and effect unless otherwise modified by this Fourth Amendment.

	3.
	Unless
otherwise stated herein, all terms defined in the Agreement shall have the same meaning when used in this Fourth Amendment.

	4.
	In
the event that any of the terms and/or conditions of this Amendment are inconsistent with the Agreement, the terms and/or conditions of this Amendment shall control
but only to the extent of the inconsistency.

	5.
	This
Fourth Amendment may be executed in counterparts all of which when taken together shall constitute an amendment binding on all parties, signatories of the original
or any counterpart. Facsimile signatures shall be binding.

	6.
	The
date on which this Fourth Amendment is accepted by the last party to accept and sign the Fourth Amendment shall be inserted as the effective date of the Fourth
Amendment under the first paragraph hereof. 

        IN
WITNESS WHEREOF, and intending to be legally bound, the parties have executed this Agreement under seal as of the dates indicated below. 

[SIGNATURES FOLLOW]

1

 

	 	 	SELLER:
	

 	
 	

CRESCENT POTOMAC YARD DEVELOPMENT, LLC, a Delaware limited liability company
	

Date: 8/22/03	
 	

By:	
 	

/s/  DANIEL B. KOHLHEPP      
	
 	

 
	 	 	Name:	 	Daniel B. Kohlhepp	 	 
	 	 	Title:	 	President	 	 
	

 	
 	

PURCHASER:
	

 	
 	

COMSTOCK POTOMAC YARD, L.C., a Virginia limited liability company
	

 	
 	

By:	
 	

Comstock Holding Company, Inc. a Virginia corporation

Manager	
 	

 
	

Date: 8.22.03	
 	

By:	
 	

/s/  CHRISTOPHER CLEMENTE      
 Christopher Clemente	
 	

(SEAL)
	 	 	Title:	 	Chief Executive Officer	 	 

2

  

 
 

FIFTH AMENDMENT TO PURCHASE AND SALE AGREEMENT    
    

        THIS FIFTH AMENDMENT TO PURCHASE AND SALE AGREEMENT (the "Fifth Amendment") is made this 12th day of September, 2003, by and between CRESCENT POTOMAC YARD
DEVELOPMENT, LLC, a Delaware limited liability company, hereinafter referred to as "Seller", and COMSTOCK POTOMAC YARD, L.C., a Virginia limited liability company, hereinafter referred to as
"Purchaser". 

        WHEREAS,
Seller and Purchaser entered into a purchase and sale agreement with an effective date of April 25, 2003, as amended by that First Amendment dated June 18, 2003,
further amended by that Second Amendment dated June 20, 2003 as further amended by that Third Amendment dated July 17, 2003, and further amended by that Fourth Amendment dated
August 22, 2003 (the "Agreement") for the purchase and sale of certain property known as Land Bay F located within a site commonly known as Potomac Yard, located in Arlington County, Virginia,
as more particularly described in the Agreement; and 

        WHEREAS,
Seller and Purchaser desire to amend certain terms and conditions of the Agreement. 

        NOW
THEREFORE, for and in consideration of the mutual promises of the parties herein contained, the premises and other good and valuable consideration, the receipt and sufficiency of
which is hereby acknowledged, the parties hereto agree to amend the Agreement as follows: 

	1.
	The
date on which the Additional Deposit shall be required to be posted pursuant to Section 2.2(b) of the Agreement and the expiration date of the Due Diligence
Period referenced in Section 4.1 of the Agreement are hereby extended to 5:00 p.m. Eastern Time, September 19, 2003.

	2.
	All
other terms and conditions of the Agreement remain in full force and effect unless otherwise modified by this Fifth Amendment.

	3.
	Unless
otherwise stated herein, all terms defined in the Agreement shall have the same meaning when used in this Fifth Amendment.

	4.
	In
the event that any of the terms and/or conditions of this Amendment are inconsistent with the Agreement, the terms and/or conditions of this Amendment shall control
but only to the extent of the inconsistency.

	5.
	This
Fifth Amendment may be executed in counterparts all of which when taken together shall constitute an amendment binding on all parties, signatories of the original or
any counterpart. Facsimile signatures shall be binding.

	6.
	The
date on which this Fifth Amendment is accepted by the last party to accept and sign the Fifth Amendment shall be inserted as the effective date of the Fifth Amendment
under the first paragraph hereof. 

        IN
WITNESS WHEREOF, and intending to be legally bound, the parties have executed this Agreement under seal as of the dates indicated below. 

[SIGNATURES FOLLOW]

1

 

	 	 	SELLER:	 	 
	

 	
 	

CRESCENT POTOMAC YARD DEVELOPMENT, LLC, a Delaware limited liability company
	

Date: 9/12/03	
 	

By:	
 	

/s/  DANIEL B. KOHLHEPP      
	
 	

 
	 	 	Name:	 	Daniel B. Kohlhepp	 	 
	 	 	Title:	 	President	 	 
	

 	
 	

PURCHASER:
	

 	
 	

COMSTOCK POTOMAC YARD, L.C., a Virginia limited liability company
	

 	
 	

By:	
 	

Comstock Holding Company, Inc. a Virginia corporation

Manager
	

Date: 9/12/03	
 	

By:	
 	

/s/  CHRISTOPHER CLEMENTE      
 Christopher Clemente	
 	

(SEAL)
	 	 	Title:	 	Chief Executive Officer	 	 

2

  

 
 

SIXTH AMENDMENT TO PURCHASE AND SALE AGREEMENT    
    

        THIS SIXTH AMENDMENT TO PURCHASE AND SALE AGREEMENT (the "Sixth Amendment") is made this 19th day of September, 2003, by and between CRESCENT POTOMAC YARD
DEVELOPMENT, LLC, a Delaware limited liability company, hereinafter referred to as "Seller", and COMSTOCK POTOMAC YARD, L.C., a Virginia limited liability company, hereinafter referred to as
"Purchaser". 

        WHEREAS,
Seller and Purchaser entered into a purchase and sale agreement with an effective date of April 25, 2003, as amended by that First Amendment dated June 18, 2003,
further amended by that Second Amendment dated June 20, 2003 as further amended by that Third Amendment dated July 17, 2003, as further amended by that Fourth Amendment dated
August 22, 2003, as further amended by that Fifth Amendment dated September 12, 2003, (the "Agreement") for the purchase and sale of certain property known as Land Bay F located within a
site commonly known as Potomac Yard, located in Arlington County, Virginia, as more particularly described in the Agreement; and 

        WHEREAS,
Seller and Purchaser desire to amend certain terms and conditions of the Agreement. 

        NOW
THEREFORE, for and in consideration of the mutual promises of the parties herein contained, the premises and other good and valuable consideration, the receipt and sufficiency of
which is hereby acknowledged, the parties hereto agree to amend the Agreement as follows: 

	1.
	The
date on which the Additional Deposit shall be required to be posted pursuant to Section 2.2(b) of the Agreement and the expiration date of the Due Diligence
Period referenced in Section 4.1 of the Agreement are hereby extended to 5:00 p.m. Eastern Time, October 3, 2003.

	2.
	All
other terms and conditions of the Agreement remain in full force and effect unless otherwise modified by this Sixth Amendment.

	3.
	Unless
otherwise stated herein, all terms defined in the Agreement shall have the same meaning when used in this Sixth Amendment.

	4.
	In
the event that any of the terms and/or conditions of this Amendment are inconsistent with the Agreement, the terms and/or conditions of this Amendment shall control
but only to the extent of the inconsistency.

	5.
	This
Sixth Amendment may be executed in counterparts all of which when taken together shall constitute an amendment binding on all parties, signatories of the original or
any counterpart. Facsimile signatures shall be binding.

	6.
	The
date on which this Sixth Amendment is accepted by the last party to accept and sign the Sixth Amendment shall be inserted as the effective date of the Sixth Amendment
under the first paragraph hereof. 

1

 

        IN
WITNESS WHEREOF, and intending to be legally bound, the parties have executed this Agreement under seal as of the dates indicated below. 

	 	 	SELLER:	 	 
	

 	
 	

CRESCENT POTOMAC YARD DEVELOPMENT, LLC, a Delaware limited liability company
	

Date: 9/19/03	
 	

By:	
 	

/s/  DANIEL B. KOHLHEPP      
	
 	

 
	 	 	Name:	 	Daniel B. Kohlhepp	 	 
	 	 	Title:	 	President	 	 
	

 	
 	

PURCHASER:
	

 	
 	

COMSTOCK POTOMAC YARD, L.C., a Virginia limited liability company
	

 	
 	

By:	
 	

Comstock Holding Company, Inc. a Virginia corporation

Manager	
 	

 
	

Date: 9.18.03	
 	

By:	
 	

/s/  CHRISTOPHER CLEMENTE      
 Christopher Clemente	
 	

(SEAL)
	 	 	Title:	 	Chief Executive Officer	 	 

2

  

 
 

SEVENTH AMENDMENT TO PURCHASE AND SALE AGREEMENT    
    

        THIS SEVENTH AMENDMENT TO PURCHASE AND SALE AGREEMENT (the "Seventh Amendment") is made this 3rd day of October,
2003, by and between CRESCENT POTOMAC YARD DEVELOPMENT, LLC, a Delaware limited liability company ("Seller"), and COMSTOCK POTOMAC YARD, L.C., a
Virginia limited liability company ("Purchaser"). 

Recitals  

        R-1  Seller
and Purchaser are parties to a Purchase and Sale Agreement with an effective date of April 25, 2003, which has been amended by (a) First
Amendment dated June 18, 2003, (b) Second Amendment dated June 20, 2003, (c) Third Amendment dated July 17, 2003, (d) Fourth Amendment dated August 22,
2003; (e) Fifth Amendment dated September 12, 2003; and (f) Sixth Amendment dated September 19, 2003 (the "Agreement"). 

        R-2  Seller
and Purchaser desire to amend further the terms and conditions of the Agreement. 

        NOW,
THEREFORE, for and in consideration of the mutual promises of the parties herein contained, the premises and other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereto agree that the Agreement is hereby amended as follows: 

        1.     Section 3.3
is hereby amended to read in its entirety, as follows: 

        3.3    Payment of Purchase Price.    

        (a)   Purchaser
shall deliver to Escrow Agent at the Closing, for disbursement to Seller, by wire transfer of immediately available U.S. Federal funds, Five Million, One
Hundred Fifty Thousand and 00/100 Dollars ($5,150,000.00). The foregoing payment shall be adjusted for the Prorations pursuant to Section 10.1. 

        (b)   The
balance of the Purchase Price ($16,000,000.00) shall be payable at the Closing by a nonrecourse, unsubordinated purchase money promissory note in the form attached
as Exhibit J (the "Note") from Buyer to Seller at the Closing, to be secured by a first priority
purchase money deed of trust and security agreement in the form attached as Exhibit K (the "Deed of
Trust"). 

        2.     All
references in the Agreement to an "Infrastructure Escrow Agreement," the form of which was to be negotiated and attached as  Exhibit G to the Agreement, are hereby deleted. No Infrastructure Escrow
Agreement shall be required as a Closing Document or condition of
Closing. 

        3.     Seller
hereby authorizes Purchaser to communicate with Chubb Group of Insurance Companies, and its agent, for the purpose of seeking an endorsement to the environmental
site liability insurance policy referred to in Section 8.2 of the Agreement, confirming that construction delays occasioned by a pollution incident or the remediation of a pollution incident
would be covered under the policy. Seller agrees to make the appropriate introductions and to facilitate Purchaser's communications with the insurer and its agent; however, obtaining such an
endorsement shall not be an obligation of Seller or a condition of Closing. 

        4.     Purchaser
shall be entitled, without an increase in the Purchase Price, to design, construct, market and lease or sell up to eighty thousand (80,000) square feet of GFA
as retail space on the Property, provided that such use is approved by the applicable Governmental Authorities as bonus density so as not to decrease the retail density allocated to the remainder of
the Potomac Yard site or require as offsetting increase in residential density on the remainder of the Potomac Yard site. 

1

 

        5.     With
respect to the Seller Closing Conditions, Seller has no knowledge, as of the date of this Seventh Amendment, that any facts or circumstances exist which would cause
the conditions set forth in Section 8.1 or 8.3 of the Agreement not to be satisfied by the Outside Closing Date. 

        6.     With
respect to the Purchases Closing Conditions, Purchaser has no knowledge, as of the date of this Seventh Amendment, that any facts or circumstances exist which would
cause the conditions set forth in Section 8.1 or 8.2 of the Agreement not to be satisfied by the Outside Closing Date. 

        7.     The
form of the documents to be negotiated during the Due Diligence Period and added as Exhibit C (Development
Agreement), Exhibit E (Master Declaration), Exhibit F (Deed of Easement) and  Exhibit H
(Declaration of Restriction) pursuant to Section 8.1(c) have been agreed upon. 

        8.     All
other terms and conditions of the Agreement remain in full force and effect unless otherwise modified by this Seventh Amendment. 

        9.     Unless
otherwise stated herein, all terms defined in the Agreement shall have the same meaning when used in this Seventh Amendment. 

        10.   In
the event that any of the terms and/or conditions of this Seventh Amendment, the terms and/or conditions of this Amendment shall control, but only to the extent of
the inconsistency. 

        11.   This
Seventh Amendment may be executed in counterparts all of which when taken together shall constitute an amendment binding on all parties, signatories of the original
or any counterpart. Facsimile signatures shall be binding. 

        12.   The
date on which this Seventh Amendment is accepted by the last party to accept and sign the Seventh Amendment shall be inserted as the effective date of the Seventh
Amendment under the first paragraph hereof. 

        IN
WITNESS WHEREOF, and intending to be legally bound, the parties have executed this Seventh Amendment as of the dates indicated below. 

	

 	
 	

SELLER:
	

 	
 	

CRESCENT POTOMAC YARD DEVELOPMENT, LLC
	

Date: October 3, 2003	
 	

By:	
 	

/s/  DANIEL B. KOHLHEPP      
 Daniel B. Kohlhepp, President
	

 	
 	

PURCHASER:
	

 	
 	

COMSTOCK POTOMAC YARD, L.C.
	

Date: October 3, 2003	
 	

By:	
 	

Comstock Holding Company, Inc.

Manager
	

 	
 	

By:	
 	

/s/  CHRISTOPHER CLEMENTE      
 Christopher Clemente, Chief Executive Officer

2

QuickLinks

PURCHASE AND SALE AGREEMENT

FIRST AMENDMENT TO PURCHASE AND SALE AGREEMENT

SECOND AMENDMENT TO PURCHASE AND SALE AGREEMENT

THIRD AMENDMENT TO PURCHASE AND SALE AGREEMENT

FOURTH AMENDMENT TO PURCHASE AND SALE AGREEMENT

FIFTH AMENDMENT TO PURCHASE AND SALE AGREEMENT

SIXTH AMENDMENT TO PURCHASE AND SALE AGREEMENT

SEVENTH AMENDMENT TO PURCHASE AND SALE AGREEMENT

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