Exhibit 10.70

CONSENSUAL FORECLOSURE AND SETTLEMENT AGREEMENT

This CONSENSUAL FORECLOSURE AND SETTLEMENT AGREEMENT (“Agreement”) is made and
entered into as of August         , 2009 (the “Effective Date”) by and among
COMSTOCK HOMEBUILDING COMPANIES, INC., a Delaware corporation (“Borrower”);
COMSTOCK MASSEY PRESERVE, L.L.C., a Virginia limited liability company
(“Comstock Massey”); COMSTOCK HOMES OF RALEIGH, L.L.C., a North Carolina limited
liability company (“Comstock Raleigh”); COMSTOCK HOLLAND ROAD, L.L.C., a
Virginia limited liability company (“Comstock Holland”); COMSTOCK HOMES OF
ATLANTA, LLC, a Georgia limited liability company (“Comstock Atlanta”); COMSTOCK
JAMES ROAD, LLC, a Georgia limited liability company (“Comstock James Road”);
TRIBBLE ROAD DEVELOPMENT, LLC, a Georgia limited liability company (“Tribble
Road Development”); COMSTOCK SUMMERLAND, L.C., a Virginia limited liability
company (“Comstock Summerland”); COMSTOCK LANDING, LLC, a Virginia limited
liability company (“Comstock Landing”); COMSTOCK WAKEFIELD, LLC, a Virginia
limited liability company (“Comstock Wakefield”); COMSTOCK WAKEFIELD II, LLC, a
Virginia limited liability company (“Comstock Wakefield II”); and WACHOVIA BANK,
NATIONAL ASSOCIATION, a national banking association (“Wachovia” or “Lender”)
(Comstock Massey, Comstock Raleigh, Comstock Holland, Comstock Atlanta, Comstock
James Road, Tribble Road Development, Comstock Summerland, Comstock Wakefield,
and Comstock Wakefield II are collectively referred to as “Guarantors”; Borrower
and Guarantors are collectively referred to as “Obligors” and each,
individually, as an “Obligor”; Wachovia and the Obligors are collectively
referred to as the “Parties” and each, individually, as a “Party”). Capitalized
terms used but not defined in this Agreement shall have their meaning in the
“Existing Loan Documents” defined below.

RECITALS

A. Comstock was originally indebted to Lender under a Revolving Promissory Note
dated May 26, 2006 in the principal amount of $40,000,000.00 (as modified and
amended, if applicable, the “Original Note”).

B. In connection with the Original Note, the Obligors, as applicable, executed
the following documents and agreements:

1. Credit Agreement (the “Credit Agreement”) dated May 26, 2006 between Lender
and Comstock, joined into by Comstock Raleigh (formerly Capitol Homes, Inc.) and
Comstock Massey (formerly Comstock Wesel, L.L.C.), as modified and amended;

2. Deed of Trust, Security Agreement and Financing Statement dated May 26, 2006
from Comstock Massey (formerly Comstock Wesel, L.L.C.) to TRSTE, Inc., a
Virginia corporation (“TRSTE”) and recorded in the Wake County Register of Deeds
in Book 11976, Page 1996;

3. Deed of Trust, Security Agreement and Financing Statement dated May 26, 2006
from Comstock Raleigh (formerly Capitol Homes, Inc.) to TRSTE and recorded in
the Durham County Register of Deeds in Book 5222, Page 995;

 

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4. Deed of Trust, Security Agreement and Financing Statement dated May 26, 2006
from Comstock Raleigh (formerly Capitol Homes, Inc.) to TRSTE and recorded in
the Johnston County Register of Deeds in Book 3128, Page 783;

5. Deed of Trust, Security Agreement and Financing Statement dated May 26, 2006
from Comstock Raleigh (formerly Capitol Homes, Inc.) to TRSTE and recorded in
the Wake County Register of Deeds in Book 11976, Page 1982;

6. Supplemental Deed of Trust, Security Agreement and Financing Statement dated
June 26, 2006 from Comstock Raleigh (formerly Capitol Homes, Inc.) to TRSTE and
recorded in the Wake County Register of Deeds in Book 12031, Page 441;

7. Supplemental Deed of Trust, Security Agreement and Financing Statement dated
July 21, 2006 from Comstock Raleigh (formerly Capitol Homes, Inc.) to TRSTE and
recorded in the Johnston County Register of Deeds in Book 3165, Page 476;

8. Supplemental Deed of Trust, Security Agreement and Financing Statement dated
July 25, 2006 from Comstock Raleigh (formerly Capitol Homes, Inc.) to TRSTE and
recorded in the Wake County Register of Deeds in Book 12079, Page 404;

9. Deed of Trust, Security Agreement and Financing Statement dated July 21, 2006
from Comstock Landing, LLC to TRSTE and recorded in the Wake County Register of
Deeds in Book 12080, Page 830;

10. Supplemental Deed of Trust, Security Agreement and Financing Statement dated
July 27, 2006 from Comstock Wakefield and Comstock Wakefield II to TRSTE and
recorded in the Wake County Register of Deeds in Book 12094, Page 1730;

11. Deed to Secure Debt, Security Agreement and Financing Statement dated
August 29, 2006 from Comstock Atlanta to Lender and recorded with Cherokee
County Clerk of Superior Court in Book 9018, Page 173;

12. Deed to Secure Debt, Security Agreement and Financing Statement dated
August 29, 2006 from Comstock Atlanta to Lender and recorded with Forsyth County
Clerk of Superior Court in Book 4428, Page 387;

13. Deed to Secure Debt, Security Agreement and Financing Statement dated
August 29, 2006 from Comstock Atlanta to Lender and recorded with Jackson County
Clerk of Superior Court in Book 45I, Page 458;

14. Deed to Secure Debt, Security Agreement and Financing Statement dated
September 14, 2006 from Comstock James Road to Lender and recorded with Forsyth
County Clerk of Superior Court in Book 4450, Page 620;

15. Deed to Secure Debt, Security Agreement and Financing Statement dated
September 27, 2006 from Tribble Road Development to Lender and recorded with
Forsyth County Clerk of Superior Court on in Book 4469, Page 410;

 

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16. Supplemental Deed of Trust, Security Agreement and Financing Statement dated
October 18, 2006 from Comstock Raleigh to TRSTE and recorded in the Wake County
Register of Deeds in Book 12223, Page 2235;

17. Supplemental Deed of Trust, Security Agreement and Financing Statement dated
November 9, 2006 from Comstock Raleigh to TRSTE and recorded in the Wake County
Register of Deeds in Book 12261, Page 489;

18. Deed of Trust, Security Agreement and Financing Statement dated November 13,
2006 from Comstock Summerland to TRSTE and recorded in the Prince William County
Register of Deeds as instrument number 200611170162991;

19. Supplemental Deed of Trust, Security Agreement and Financing Statement dated
December 13, 2006 from Comstock Raleigh to TRSTE and recorded in the Wake County
Register of Deeds in Book 12308, Page 2241;

20. Unconditional Guaranty dated May 26, 2006 by Comstock Raleigh (formerly
Capitol Homes, Inc.) in favor of Lender;

21. Unconditional Guaranty dated May 26, 2006 by Comstock Massey (formerly
Comstock Wesel, L.L.C.) in favor of Lender;

22. Unconditional Guaranty dated July 17, 2006 by Comstock Holland in favor of
Lender;

23. Unconditional Guaranty dated July 21, 2006 by Comstock Landing in favor of
Lender;

24. Unconditional Guaranty dated August 1, 2006 by Comstock Wakefield in favor
of Lender;

25. Unconditional Guaranty dated August 1, 2006 by Comstock Wakefield II in
favor of Lender;

26. Unconditional Guaranties dated August 29, 2006 by Comstock Atlanta in favor
of Lender;

27. Unconditional Guaranty dated September 14, 2006 by Comstock James Road in
favor of Lender;

28. Unconditional Guaranty dated September 27, 2006 by Tribble Road Development
in favor of Lender;

29. Unconditional Guaranty dated October 18, 2006 by Comstock Raleigh in favor
of Lender; and

30. Unconditional Guaranty dated November 13, 2006 by Comstock Summerland in
favor of Lender.

 

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C. Thereafter, the Parties entered into that certain Forbearance Agreement made
effective February 21, 2007, as modified and amended by letter agreements dated
January 15, 2008, March 3, 2008, and April 14, 2008 (the “Original Forbearance
Agreement”).

D. Thereafter, the Parties entered into that certain Loan Modification and
Forbearance Agreement made effective December 10, 2008 (the “Second Forbearance
Agreement”). In conjunction with the Second Forbearance Agreement, the Original
Note was amended and split into three separate notes: (1) a term note in the
principal amount of $11,608,484.00 (the “Term Note”); (2) a revolving note in
the principal amount of $8,000,000.00 (the “Revolver”); and (3) a term note in
the principal amount of $3,000,000.00 (the “Tribble Road Note”). The Term Note,
the Revolver, and the Tribble Road Note are collectively referred to as the
“Amended Notes”.

E. The documents described in Paragraphs A through D, all financing statements
filed in conjunction therewith, and all other documents executed or authorized
by Obligors in connection with the Original Note, the Credit Agreement, the
Original Forbearance Agreement, the Second Forbearance Agreement, and the
Amended Notes are collectively referred to as the “Existing Loan Documents”. The
Existing Loan Documents, together with this Agreement and any documents executed
pursuant to this Agreement, are collectively referred to as the “Loan
Documents”. All indebtedness whether now existing or hereafter arising that is
due and owing by Obligors to Lender under the Loan Documents is collectively
referred to as the “Obligations”. All real and personal property and fixtures
pledged as collateral for the Obligations is collectively referred to as the
“Property”.

F. Obligors acknowledge that (1) the Forbearance Period has terminated; (2) as
of the Effective Date, Borrower is in default under the Existing Loan Documents;
and (3) as a result of the default, all Obligations are immediately due and
payable in full and Lender is presently entitled to exercise all rights and
remedies available to it under the Existing Loan Documents and under applicable
law.

G. Subject to the terms and conditions of this Agreement (1) Obligors have given
their consent to, and have agreed to cooperate with Lender in, the foreclosure
of the Collateral (hereafter defined), and (2) Lender has agreed to accept a
promissory note in the amount of $1,805,243.00 in full satisfaction of any and
all claims Lender has or may have against Obligors, including but not limited to
any deficiency following completion of the foreclosures, with the exception of
any claim for a breach of the representations and warranties contained in this
Agreement.

NOW, THEREFORE, in consideration of the premises and the mutual covenants
hereinafter contained, the Parties due hereby stipulate, covenant and agree as
follows:

1. Representations, Warranties and Acknowledgements. Obligors, jointly and
severally, hereby represent, warrant and acknowledge to Lender, upon which
Lender is relying, that:

1.1 The foregoing recitals are true and correct.

 

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1.2 Each is authorized under applicable law to execute, deliver and perform this
Agreement and all documents, instruments and agreements executed in connection
herewith and neither the execution and delivery of this Agreement nor the
fulfillment of or compliance with any of the terms and conditions of this
Agreement will, to the best of each Obligor’s knowledge, conflict with or result
in a breach of the terms, conditions or provisions of or constitute a violation
or default under any contract, agreement, applicable law, regulation, judgment,
writ, order or decree to which any of Obligors, or their respective properties
are subject.

1.3 The Existing Loan Documents are legal, valid and binding obligations of
Obligors in accordance with their respective terms. The liens, security
interests and other encumbrances in favor of Lender granted under the Existing
Loan Documents are duly perfected and are not subject to avoidance or
invalidation for any reason.

1.4 There are no pending, nor to the best knowledge of Obligors, threatened
actions, litigation, disputes, alleged defaults for breaches, suits or
proceedings against or in any way relating adversely to any Obligor or its
properties before any court, arbitrator or governmental or administrative body
or agency, except as described in Schedule 1.4 attached hereto.

1.5 Obligors have received no notice of default in the performance, observance
or fulfillment of any of the obligations, covenants or conditions contained in
any agreement or instrument to which any of them is a party or by which their
properties are bound except as described in this Agreement or set forth in
Schedule 1.5 attached hereto.

1.6 Neither this Agreement nor any report, schedule, certificate, agreement or
any instrument heretofore or contemporaneously herewith provided to Lender by
Obligors contain any misrepresentation or untrue statement of facts or omits to
state any material facts.

1.7 Neither the execution and delivery of this Agreement nor the performance of
any actions required by this Agreement is being consummated by any party to
hinder, delay or defraud any entity to which any Obligors were or are now or
will hereafter become indebted.

1.8 As of the Effective Date, the balances due under the Amended Notes,
excluding Lender’s attorneys’ fees and costs, were as follows:

 

Term Note

    

Principal

   $         

Accrued Interest

   $  

Total

   $  

Revolver

    

Principal

   $  

Accrued Interest

   $  

Total

   $  

 

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Tribble Road Note

    

Principal

   $         

Accrued Interest

   $  

Total

   $  

2. Foreclosure of Collateral. Obligors acknowledge that Lender intends to
commence proceedings to foreclose its security title, liens, and security
interests in and to all Property securing the Obligations, as described in the
Loan Documents (collectively, the “Collateral”), in accordance with the
provisions of the Loan Documents and applicable law (the “Foreclosure
Proceedings”). Obligors jointly and severally (i) ratify and affirm Lender’s
security title, liens, and security interests in and to the Collateral,
(ii) acknowledge and agree that Obligors have received commercially reasonable,
timely, and accurate notice of Lender’s intention to foreclose its security
title, liens, and security interests in the Collateral and that Lender has
satisfied all requirements set forth in the Loan Documents relating to
commencement of the Foreclosure Proceedings, (iii) covenant and agree to use
commercially reasonable efforts to cooperate with Lender in connection with the
Foreclosure Proceedings, (iv) covenant and agree that none of Obligors, or any
person claiming by or through any of Obligors, shall contest, oppose, delay, or
otherwise interfere with the commencement and prosecution of the Foreclosure
Proceedings (or any foreclosure sale arising from the Foreclosure Proceedings),
and (v) covenant and agree not to file any voluntary bankruptcy petition (or
solicit the filing of an involuntary bankruptcy petition) with respect to any
owner of Collateral other than Comstock Atlanta before the earlier of
(a) completion of the foreclosure of Lender’s liens and security interests in
that Collateral, or (b) the 181st day following the Effective Date. Lender
agrees to reimburse Obligors for any out-of-pocket expenses incurred by Obligors
in connection with Obligors’ assistance with the Foreclosure Proceedings, but
only to the extent such expenses have been approved by Lender in writing.

3. Foreclosure Waivers. To facilitate the expeditious conduct of the foreclosure
proceedings, Obligors, as applicable, shall execute and deliver to Lender such
documents as may be permitted under the laws of Virginia, North Carolina, and
Georgia in order to expedite the foreclosure process, including, without
limitation, a “Waiver of Right to Notice of Hearing and Right to Hearing” in the
form attached hereto as Exhibit A for each of the deeds of trust on record in
North Carolina (collectively, the “Waivers”). Obligors authorize Lender to
change the first page of each of the Waivers to reflect the proper caption of
the foreclosure proceedings in North Carolina.

4. Deliveries by Obligors. Obligors covenant to Lender that within five
(5) business days after each written request therefor (to the extent that any of
such items are in the possession or direct control of Obligors), Obligors will
deliver or cause the following items relating to the Collateral to be delivered
to Lender whether such request is made prior or subsequent to the date of this
Agreement or the foreclosure of any of the Collateral: (i) any warranties,
guaranties, and assurances given by third parties; (ii) any certificates of
occupancy, licenses, and other governmental permits or notices; (iii) any
surveys, plats, drawings, engineering reports, environmental reports, appraisal
reports, maps, plans and specifications, and other similar matters; (iv) any
service contracts, supply contracts, management agreements, employment
agreements, maintenance agreements, or other similar agreements; (v) any tax
assessments, notices, bills and/or statements; and (vi) any keys necessary to
obtain full access to the Collateral.

 

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5. Contracts. Obligors represent and warrant to Lender that, as of the date of
this Agreement and to the actual knowledge of Obligors after due inquiry and
investigation, attached hereto as Schedule 5 is a true, complete, and correct
listing of all material commitments, rental agreements, equipment leases,
guaranties, leases, or contracts entered into by any Obligor that could affect
Lender’s rights with respect to the Collateral.

6. Payables. Obligors represent and warrant to Lender that, as of the date of
this Agreement and to the actual knowledge of Obligors after due inquiry and
investigation, attached hereto as Schedule 6 is a true and correct listing of
all known payables owing in connection with the Collateral, including trade
payables, mechanics’ liens, real and personal property taxes, utility charges,
lease payments, and license and permit fees (hereafter collectively called the
“Payables”).

7. Bonds. Obligors represent and warrant to Lender that Schedule 7, attached
hereto, contains a complete list of all bonds, letters of credit and cash
escrows (the “Bonds”) posted by any Obligor with the local governmental
authorities (each an “Authority” and, together, the “Authorities”) having
jurisdiction over the Collateral as of the date of this Agreement. Each of the
Bonds shall remain the obligation of the Obligor posting the applicable Bond,
and Lender agrees that Obligors shall be authorized to communicate with the
Authorities with respect to extensions, renewals or reductions of the Bonds and,
if required by the Authority, shall execute such standard authorization forms as
any Authority may require for an Obligor to transact with the Authority with
respect to the Bonds. Lender shall allow Obligors reasonable access to the
Collateral for the purpose of performing any work which may be required in order
to obtain a reduction or release of the Bonds, and Obligors agree to indemnify
and save Lender harmless from any claim that may arise against Lender by virtue
of any Obligor, its agents or employees entering on the Collateral. Prior to
entry on the Collateral, the applicable Obligor shall deliver to Lender a
certificate of insurance evidencing commercial general liability insurance in
the amount of One Million Dollars ($1,000,000) per occurrence and in the
aggregate (which limits shall apply for single limit bodily injury, property
damage and products-completed operations), listing the Lender as an additional
insured. Lender and Obligors shall designate individuals responsible for
receiving and sharing correspondence related to the Bonds, and each shall
forward all such correspondence or other information related to the Bonds to the
other party within fifteen (15) days of its receipt thereof. Lender’s and
Obligors’ designated Bond contacts are as follows:

 

 

 

 

Lender:    Phone:    E-mail:    Obligor:    Kelly Wyche Phone:    (703) 230-1112
E-mail:    kwyche@comstockhomebuilding.com

 

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8. Closing of Units. Obligors shall use commercially reasonable efforts to close
the sale of the following units on or before September 30, 2009 (subject to
Lender’s written approval of the HUD-1 settlement statement in each instance):

 

Obligation Number

   Market    Community    Bldg    Lot 000-26-8356-3    VA    Summerland    13   
2B 000-26-8353-0    VA    Summerland    13    3A 000-26-8358-9    VA   
Summerland    13    5B 000-26-8359-7    VA    Summerland    14    3A
000-26-8368-8    VA    Summerland    14    5B 000-26-8369-6    VA    Summerland
   14    2B

9. Subordinate Deficiency Note. In consideration of Lender’s entering into this
Agreement and in full settlement of all any all claims Lender has or may have
against Obligors under the Existing Loan Documents, including but not limited to
any deficiency claims of Lender against the Obligors arising out of the
Foreclosure Proceedings, Borrower will execute and deliver to Lender at Closing
a promissory note in the principal amount of $1,805,243.00 substantially in the
form of Exhibit B attached hereto (the “Subordinate Deficiency Note”). The
Subordinate Deficiency Note shall be due and payable in full on the third
anniversary of the Subordinate Deficiency Note. The Subordinate Deficiency Note
shall be non-interest bearing unless there is a default, in which event interest
shall accrue on the unpaid principal balance of the Subordinate Deficiency Note
at the rate of 3% per annum from and after the date of the default. Borrower
shall be entitled to a dollar-for-dollar credit against the unpaid principal
amount of the Subordinate Deficiency Note for any proceeds paid to Lender from
the closing of any completed units, including but not limited to the units
described in paragraph 8 above, subject to (a) Lender’s written approval of the
HUD-1 settlement statement in each instance , and (b) such payment being
received by Lender on or before September 30, 2009. Any credits to which
Borrower becomes entitled under this section shall be reflected in an Amended
and Restated Subordinate Deficiency Note, which shall be issued by Lender on or
before October 14, 2009.

10. Release of Liability under the Loan Documents. Notwithstanding any provision
in this Agreement to the contrary, in consideration of Obligors’ agreement to
cooperate with the foreclosure of Lender’s liens and security interests and
Obligors’ execution of the Subordinate Deficiency Note, Lender hereby releases
Obligors from any liability under the Loan Documents except for the liability
evidenced by the Subordinate Deficiency Note (as amended, if applicable) and any
liability associated with a breach of the representations and warranties
contained in this Agreement (provided, however, that the Amended Notes shall
remain in full force and effect and shall continue to be enforceable against the
Collateral for purposes of the Foreclosure Proceedings).

11. Cash Collateral. Obligors acknowledge and agree that (a) Lender has lawfully
enforced its security interest in the accrued interest on Borrower’s Certificate
of Deposit #514291620837144 (the “Cash Collateral”), such that Borrower no
longer has any right, title or interest in the Cash Collateral, and (b) Lender
has the right to apply the Cash Collateral to the Obligations in any manner in
Lender’s discretion.

 

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12. Reaffirmation of Obligations. Except as expressly stated in this Agreement,
no action of Lender under this Agreement or otherwise shall act to release
Obligors from the Obligations, all of which are hereby ratified and affirmed the
same as if repeated on this date, and Obligors acknowledge that none of them has
any legal or equitable defenses or offsets with respect to the Obligations
except to the extent of the release contained in Section 10 above. Obligors
ratify and confirm all terms and conditions of the Obligations and the Loan
Documents, and acknowledge that the same are in full force and effect and
constitute the legal, valid and binding obligations of Obligors enforceable
against Obligors in accordance with their terms.

13. No Novation. Obligors stipulate and agree that:

13.1 This Agreement is not a novation and, except as otherwise modified hereby,
the terms and provisions of the Existing Loan Documents shall remain in full
force and effect. In the event of any conflict between the terms of this
Agreement and the terms of the Existing Loan Documents, the terms of this
Agreement shall control.

13.2 The liens and security interests granted under the Existing Loan Documents
will continue to secure payment of the Obligations (including the Amended Notes)
in accordance with their original priorities.

14. Affirmative Covenants. Obligors covenant and agree that from the date hereof
and until payment in full of the Subordinate Deficiency Note, unless Lender
shall otherwise consent in writing:

14.1 Obligors shall execute such other and further documents, instruments and
agreements as Lender may reasonably request to effect the express provisions of
this Agreement; and

14.2 Obligors shall allow Lender and its agents, during normal business hours,
to have access to the Property and all books, records and such other documents
of Obligors as Lender shall reasonably require, and allow Lender to make copies
thereof; and deliver promptly such other information regarding the operation,
business affairs, and financial condition of Obligors which Lender may
reasonably request.

15. Additional Representations and Warranties. As of the effective date of this
Agreement, Obligors make the following representations and warranties with
respect to all of the Property except the Tribble Road Property, as that term is
defined in the Second Forbearance Agreement (the “Non-Tribble Property”):

15.1 the following projects have adequate legal vehicular and pedestrian access
to public roads:

 

  (i)             ,

 

  (ii)             ,

 

  (iii)              and

 

  (iv)             ;

 

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15.2 to the best of Obligors’ knowledge, sewer, water and all other appropriate
utilities are available at ordinary costs at the Non-Tribble Property through
public or unencumbered private easements, and in sufficient quantities to serve
the Non-Tribble Property;

15.3 if applicable, required written approvals of septic tanks or wells have
been issued by all appropriate governmental authorities in respect of the
Non-Tribble Property;

15.4 the Plans and Specifications and the anticipated use of the Non-Tribble
Property materially comply with all applicable restrictive covenants, zoning
ordinances, building laws and codes, and other applicable laws, regulations and
requirements (including without limitation, the Americans with Disabilities Act,
as amended);

15.5 the current zoning classification of the Non-Tribble Property and any
covenants and restrictions affecting the Non-Tribble Property permit
construction of the planned improvements on the Non-Tribble Property;

15.6 Borrower has obtained, or has the present ability to obtain, all permits
and approvals of any type required to complete the improvements on the
Non-Tribble Property (subject to any moratoria which may be imposed by the
applicable governmental authorities after the Effective Date, although Obligors
warrant that they are unaware of any impending or threatened moratoria),
provided however, Lender acknowledges permits may become unavailable should the
previously approved development plans for the Non-Tribble Property expire;

15.7 all public improvements appurtenant to the Non-Tribble Property have been
fully authorized by appropriate ordinance or municipal action;

15.8 as of the Effective Date, Borrower has satisfied all conditions imposed by
any governmental authority in connection with any grant of subdivision or land
development approval;

15.9 no notice of taking by eminent domain or condemnation of any part of the
Non-Tribble Property has been received, and Borrower has no knowledge that any
such proceeding is contemplated;

15.10 to the best of Obligors’ knowledge, no part of the Non-Tribble Property
has been damaged as a result of any fire, explosion, accident, flood or other
casualty which is not now fully restored; and

15.11 to the best of Obligors’ knowledge, there are presently no environmental
conditions on the Non-Tribble Property that may require remedial action in the
future.

16. Release of Claims and Covenant Not to Sue. As a material inducement to
Lender to enter into this Agreement and to grant the additional concessions to
Obligors reflected herein, all in accordance with and subject to the terms and
conditions of this Agreement, and all of which are to their direct advantage and
benefit, Obligors, jointly and

 

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severally, do hereby: (a) remise, release, acquit, satisfy and forever discharge
Lender, and all of the past, present and future officers, directors, employees,
agents, attorneys, representatives, participants, successors and assigns of
Lender, from any and all manner of debts, accountings, bonds, warranties,
representations, covenants, promises, contracts, controversies, agreements,
liabilities, obligations, expenses, damages, judgments, executions, actions,
claims, demands and causes of action of any nature whatsoever, whether at law or
in equity, either now accrued or hereafter maturing and whether known or
unknown, which any Obligor now has or hereafter can, shall or may have by reason
of any matter, cause or thing, from the beginning of the world to and including
the date of this Agreement, including specifically, but without limitation,
matters arising out of, in connection with or relating to (i) the Obligations,
(ii) the Loan Documents or the obligations evidenced thereby, including, the
administration or funding thereof, and (iii) any other relationship, agreement
or transaction between any Obligor and Lender or any of their respective
subsidiaries or affiliates; and (b) covenant and agree never to institute or
cause to be instituted or continue prosecution of any suit or other form of
action or proceeding of any kind or nature whatsoever against Lender or any
subsidiaries or affiliates of Lender, or any of its past, present or future
officers, directors, employees, agents, attorneys, representatives,
participants, successors or assigns, by reason of or in connection with any of
the foregoing matters, claims or causes of action, provided, however, that the
foregoing release and covenant not to sue shall not apply to any claims arising
out of the performance of this Agreement with respect to acts, occurrences or
events transpiring after the date of this Agreement.

17. Waiver of Automatic Stay; Supplemental Stay. Obligors acknowledge and agree
that in the event of the filing of any petition for bankruptcy relief filed by
or against any Obligor:

17.1 Obligors consent to the entry of an order granting Lender relief from the
automatic stay of section 362 of the Bankruptcy Code and shall not assert or
request any other party to assert that the automatic stay provided by section
362 of the Bankruptcy Code shall operate or be interpreted to stay, interdict,
condition, reduce or inhibit the ability of Lender to enforce any rights it has
under the Loan Documents or any other rights Lender has against any Obligor or
against any property owned by any Obligor; and

17.2 Obligors shall not seek or request any other party to seek a supplemental
stay or any other relief, whether injunctive or otherwise, pursuant to section
105 of the Bankruptcy Code or any other provision of the Bankruptcy Code, to
stay, interdict, condition, reduce or inhibit the ability of Lender to enforce
any rights it has under the Loan Documents or any other rights Lender has
against any Obligor or against any property which it owns.

18. Miscellaneous.

18.1 Cumulative Rights. No right, power or remedy conferred upon or reserved to
Lender in the Loan Documents is exclusive of any other right, power or remedy
conferred upon the Lender thereunder or at law or in equity. Each remedy shall
be cumulative and may be exercised by Lender concurrently or consecutively in
its discretion.

 

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18.2 No Waiver. Lender may, in its discretion, from time to time waive or
forbear from enforcing any provision contained in this Agreement or the
Subordinate Deficiency Note, and no such waiver or forbearance shall be deemed a
waiver by Lender of any other right or remedy provided herein or by law or be
deemed a waiver of the right at any later time to enforce strictly all
provisions contained in this Agreement or the Subordinate Deficiency Note and to
exercise any and all remedies provided herein and by law.

18.3 Headings. The headings of the articles, sections and subsections of this
Agreement are for the convenience of reference only, are not to be considered a
part hereof, and shall not limit or otherwise affect any of the terms hereof or
thereof.

18.4 Admissions. Obligors expressly acknowledge and agree that the waivers,
estoppels and releases contained in this Agreement shall not be construed as an
admission of wrongdoing, liability or culpability on the part of Lender or an
admission by Lender of the existence of any claims of any Obligor against
Lender.

18.5 Construction of Agreement. Each party acknowledges that it has participated
in the negotiation of this Agreement, and no provision of this Agreement shall
be construed against or interpreted to the disadvantage of any party hereto by
any court or other governmental or judicial authority by reason of such party
having or being deemed to have structured, dictated or drafted such provision.
Obligors acknowledge that at all times they have been represented by an attorney
in the negotiation of the terms of and in the preparation and execution of this
Agreement, and have had the opportunity to review and analyze this Agreement for
a sufficient period of time prior to the execution and delivery thereof. No
representations or warranties have been made by or on behalf of Lender, or
relied upon by any Obligor, pertaining to the subject matter of this Agreement,
other than those set forth in this Agreement. This Agreement embodies the entire
agreement and understanding among the parties to the subject matter hereof and
supersede all prior proposals, negotiations, agreements and understanding
relating to such subject matter.

 

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18.6 Notices. Any notice required or permitted to be given under this Agreement
shall be in writing and shall be deemed given on the third day following the
date deposited in the United States mail, postage prepaid, sent by first class
mail and, alternatively, shall be deemed given on the next day following the
date such notice is delivered to a nationally recognized overnight delivery
service such as Federal Express and addressed as follows:

 

  Obligors: Comstock Homebuilding Companies, Inc.

    Attn: Christopher Clemente

    11465 Sunset Hills Road

    5th Floor

    Reston, VA 20190

 

  copy to: Jubal R. Thompson, Esq.

    General Counsel

    11465 Sunset Hills Road

    5th Floor

    Reston, VA 20190

 

  Lender: Wachovia Bank, National Association

    Attn: Ron J. Sanders

    1753 Pinnacle Drive

   

5th Floor, South Tower

    McLean, VA 22102

    Mail Code VA1927

 

  copy to: Kiah T. Ford IV, Esq.

    Parker Poe Adams & Bernstein LLP

    Three Wachovia Center, Suite 3000

    401 S. Tryon Street,

    Charlotte, NC 28202

Either party may, from time to time, designate a different notice address by
notice given as herein provided.

18.7 Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of North Carolina.

18.8 No Assignment by Obligors. The rights and obligations of Obligors hereunder
may not be assigned or transferred to any person or entity without the express
written consent of Lender.

18.9 No Modifications. The terms of the Loan Documents may not be changed,
modified, waived, discharged or terminated orally, but only by an instrument or
instruments in writing, signed by the party against whom the enforcement of the
change, modification, waiver, discharge or termination is asserted.

18.10 Invalid Provision to Affect No Others. If any provisions of this Agreement
shall be held invalid, then such provision only shall be deemed invalid, and the
remainder of this Agreement shall remain operative and in full force and effect.

18.11 Time of Essence. Time is of the essence in respect of this Agreement.

 

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18.12 Arbitration. Upon demand of any party hereto, whether made before or after
institution of any judicial proceeding, any dispute, claim or controversy
arising out of, connected with or relating to the Loan Documents (“Disputes”)
between or among parties to this Agreement shall be resolved by binding
arbitration as provided herein. Institution of a judicial proceeding by a party
does not waive the right of that party to demand arbitration hereunder. Disputes
may include, without limitation, tort claims, counterclaims, disputes as to
whether a matter is subject to arbitration, claims brought as class actions,
claims arising from Loan Documents executed in the future, or claims arising out
of or connected with the transaction reflected by this Agreement.

Arbitration shall be conducted under and governed by the Commercial Financial
Disputes Arbitration Rules (the “Arbitration Rules”) of the American Arbitration
Association (the “AAA”) and Title 9 of the U.S. Code. All arbitration hearings
shall be conducted in the city in which the office of Lender first stated above
is located. The expedited procedures set forth in Rule 51 et seq. of the
Arbitration Rules shall be applicable to claims of less than $1,000,000.00. All
applicable statutes of limitation shall apply to any Dispute. A judgment upon
the award may be entered in any court having jurisdiction. The panel from which
all arbitrators are selected shall be comprised of licensed attorneys. The
single arbitrator selected for expedited procedure shall be a retired judge from
the highest court of general jurisdiction, state or federal, of that state where
the hearing will be conducted or if such person is not available to serve, the
single arbitrator may be a licensed attorney. Not withstanding the foregoing,
this arbitration provision does not apply to disputes under or related to swap
agreements.

18.13 Preservation and Limitation of Remedies. Notwithstanding the preceding
arbitration provisions, Lender and Obligors agree to preserve, without
diminution, certain remedies that any party hereto may employ or exercise
freely, independently or in connection with an arbitration proceeding after any
arbitration action is brought. Lender and Obligors shall have the right to
proceed in any court of proper jurisdiction or by self-help to exercise or
prosecute the following remedies, as applicable: (i) all rights to foreclose
against any real or personal property or other security by exercising a power of
sale granted under Loan Documents or under applicable law or by judicial
foreclosure and sale, including a proceeding to confirm the sale; (ii) all
rights of self-help including peaceful occupation of real property and
collection of rents, set-off, and peaceful possession of personal property;
(iii) obtaining provisional or ancillary remedies including injunctive relief,
sequestration, garnishment, attachment, appointment of receiver and filing an
involuntary bankruptcy proceeding; and (iv) when applicable, a judgment by
confession of judgment. Preservation of these remedies does not limit the power
of an arbitrator to grant similar remedies that may be requested by a part in a
Dispute.

Obligors and Lender agree that no party shall not have a remedy of punitive or
exemplary damages against the other in any Dispute and hereby waive any right or
claim to punitive or exemplary damages they have now or which may arise in the
future in connection with any Dispute where the Dispute is resolved by
arbitration or judicially.

18.14 Counterparts; Facsimile Signatures. This Agreement may be executed in
multiple counterparts, each of which shall be deemed an original, and all
counterparts together shall constitute one and the same instrument. Facsimile
signatures are acceptable under this Agreement.

 

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18.15 Reaffirmation of Guaranties. Guarantors, jointly and severally, do hereby:

(i) acknowledge their consent and approval to the terms of this Agreement;

(ii) stipulate that the Guaranties remain in full force and effect, and are not
subject to offset, defense, reduction or counterclaim except to the extent of
the release contained in Section 10 above; and

(iii) reaffirm the Guaranties in all respects.

18.16 Closing. The closing of this Agreement must occur on or before August
        , 2009.

18.17 Conditions Precedent to Closing. The obligation of Lender to close this
Agreement is subject to Obligors, as applicable, delivering and/or satisfying
each of the following conditions precedent in a form and content satisfactory to
Lender:

(i) executed duplicate originals of this Agreement;

(ii) executed Subordinate Deficiency Note;

(iii) executed Waivers;

(iv) certified resolutions approving the execution and delivery of this
Agreement, the Subordinate Deficiency Note, and the Waivers by Obligors; and

(v) such other documents, instruments, agreements and information as Lender may
reasonably request.

“Closing” shall occur when Lender declares that the foregoing conditions have
been satisfied as evidenced by Lender’s execution of this Agreement.

IN WITNESS WHEREOF, the parties have executed and delivered this Agreement under
seal, pursuant to authority duly given as of the day and year first above
written.

 

BORROWER: COMSTOCK HOMEBUILDING COMPANIES, INC. By:       Christopher Clemente,
CEO

 

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GUARANTORS:

COMSTOCK MASSEY PRESERVE, L.L.C.

(formerly Comstock Wesel, L.L.C.)

By:  

Comstock Homebuilding Companies, Inc.

its Manager

  By:         Christopher Clemente, CEO

COMSTOCK HOMES OF RALEIGH, LLC

(formerly Capitol Homes Inc.)

By:  

Comstock Homebuilding Companies, Inc.

its Manager

  By:         Christopher Clemente, CEO COMSTOCK HOMES OF ATLANTA, LLC By:  

Comstock Homebuilding Companies, Inc.

its Manager

  By:         Christopher Clemente, CEO COMSTOCK JAMES ROAD, LLC By:  

Comstock Homebuilding Companies, Inc.

its Manager

  By:         Christopher Clemente, CEO TRIBBLE ROAD DEVELOPMENT, LLC By:  

Comstock Homebuilding Companies, Inc.

its Manager

  By:         Christopher Clemente, CEO

 

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COMSTOCK SUMMERLAND, L.C. By:  

Comstock Homebuilding Companies, Inc.

its Manager

  By:         Christopher Clemente, CEO COMSTOCK HOLLAND ROAD, LLC By:  

Comstock Homebuilding Companies, Inc.

its Manager

  By:         Christopher Clemente, CEO COMSTOCK LANDING, LLC By:  

Comstock Homebuilding Companies, Inc.

its Manager

  By:         Christopher Clemente, CEO COMSTOCK WAKEFIELD, LLC By:  

Comstock Homebuilding Companies, Inc.

its Manager

  By:         Christopher Clemente, CEO COMSTOCK WAKEFIELD II, LLC By:  

Comstock Homebuilding Companies, Inc.

its Manager

  By:         Christopher Clemente, CEO

 

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LENDER: WACHOVIA BANK, NATIONAL ASSOCIATION By:       Ron J. Sanders   Vice
President

 

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Schedule 1.4

Pending Litigation

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Schedule 1.5

Pending Default Notices

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Schedule 5

Contracts

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Schedule 6

Payables

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Schedule 7

Bonds

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Exhibit A

Waiver of Right to Notice of Hearing and Right to Hearing

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Exhibit B

Subordinated Deficiency Note