Exhibit 10.79

LOAN AGREEMENT

THIS LOAN AGREEMENT (as amended, modified or supplemented from time to time,
“Agreement”), dated as of the      day of March, 2013, by and between
(i) EAGLEBANK (the “Lender”), and (ii) COMSTOCK REDLAND ROAD, L.C., a Virginia
limited liability company (the “Borrower”), recites and provides:

RECITALS:

R-1. The Borrower has acquired a certain development site consisting of acreage
approved for a 117-unit multi-family apartment building, together with the
improvements thereon, whether now existing or hereinafter constructed, located
on Redland Road and Yellowstone Way, Montgomery County, Maryland, as more
particularly described on Exhibit A attached hereto (the “Property”), on which
the Borrower intends to undertake certain development improvements.

R-2. Subject to the terms of this Agreement, the Lender agrees to make an
acquisition and development loan (the “Loan”) to the Borrower, as more
particularly described in Section One below, for the purpose of financing the
acquisition and the Development (as hereinafter defined) of the Property.

R-3. The Lender and the Borrower agree that the Loan will be made and advanced
upon and subject to the terms, covenants and conditions set forth in this
Agreement.

R-4. Simultaneously herewith the Lender is making a separate credit facility
available to the Borrower (the “AD&C Loans”) for acquisition, development and
construction of housing with respect to certain property adjacent to the
Property (the “Housing Parcel”) that has been approved for construction of 39
single family detached or townhome housing units, which was to have been
subdivided pursuant to a record plat (the “Record Plat”) to create the Property
and the Housing Parcel each as a separate subdivided record lot; however, the
Record Plat has not been recorded and the Property and the Housing Parcel are
part of one single subdivided record lot known as P-146 in Montgomery County,
Maryland.

R-5. The Borrower has requested that the Lender waive the condition to closing
the Loan that the Record Plat be recorded, and the Lender is amenable to such
request provided the Borrower performs its duties and obligations strictly in
accordance with the terms and conditions of this Agreement.

AGREEMENT

ACCORDINGLY, for and in consideration of the foregoing Recitals which are a
material part of this Agreement and not mere prefatory language, and of the
mutual covenants and conditions set forth in this Agreement, and for other good
and valuable consideration the receipt and sufficiency of which are hereby
acknowledged, the Lender and the Borrower agree as follows:

 

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SECTION ONE

THE LOAN

1.1 Amount. The maximum principal amount that may be advanced under the Loan
shall not exceed the lesser of (i) Two Million Four Hundred Thousand and No/100
Dollars ($2,400,000.00), or (ii) sixty-five percent (65%) of the cost of
acquisition of the Property and the Development thereof in accordance with a
budget approved by the Lender, or (iii) sixty percent (60%) of the discounted
(“When Developed”) value of the Property pursuant to the Appraisal (hereinafter
defined) and any appraisals which may be engaged by the Lender from time to time
subsequent to the date hereof. The Loan will be evidenced by a Promissory Note
made by the Borrower payable to the order of the Lender (as the same may be
amended, renewed, restated, supplemented or substituted from time to time, the
“Note”) which shall be governed by Maryland law.

1.2 Purpose. The Borrower will use the Loan proceeds as follows: (i) up to One
Million Five Hundred Thousand and No/100 Dollars ($1,500,000.00) toward the
purchase price of the Property plus up to Seventy Thousand and No/100 Dollars
($70,000.00 toward closing costs (the “Acquisition Advance”) shall be applied to
costs (including closing costs) of acquisition of the Property; and (ii) up to
Eight Hundred Thirty Thousand and No/100 Dollars ($830,000.00) (the “Development
Advance” or if more than one “Development Advances”) shall be used for the
Development of the Property in accordance with a Development Budget that shall
have been approved by the Lender in advance and in accordance with plans and
specifications to be submitted to and approved by the Lender, and with advances
to be made as the work progresses, all as set forth in this Agreement. The
Lender shall not be obligated to make any Development Advances until the Record
Plat is recorded except for interest on the Loan for the first ninety (90) days
following the Loan closing, notwithstanding the provisions of this Loan
Agreement for the Interest Reserve, as hereinafter provided. For purposes of
this Agreement, the term “Development” shall mean, generally, (a) land clearing
and rough grading; (b) provision of storm drainage structures and facilities,
sediment control devices, base paving of streets, curbs and gutters;
(c) providing sewer and water distribution systems and erecting temporary street
signs; (d) provision of underground electric and gas utility lines, cable
television easements and easements for private utility companies to install
telephone lines and other utilities; and (e) other subdivision improvements as
required by governmental authorities in order for use and occupancy permits to
issue, all in accordance with final site plan review by Montgomery County,
Maryland and the Record Plat. The Development Budget for purposes of the
Development Advance and portions thereof shall include the foregoing Development
costs together with real estate taxes, an interest reserve to be withheld from
loan proceeds and applied monthly to payment of accrued interest as hereinafter
set forth, and other expenses approved by the Lender. Certain other costs
normally considered part of development costs shall be deferred and paid for by
the Borrower out of its own funds, including by way of example and not
limitation, final paving of streets, site amenities, landscaping and erosion
control.

1.3 Record Plat. The Borrower shall use commercially reasonable efforts with the
highest due diligence to cause the Record Plat to be approved by applicable
governmental authorities and recorded. The terms and conditions with respect to
the Record Plat are as follows:

 

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  (a)

If the Record Plat, in form as shall have been approved by the Lender, has not
been recorded within ninety (90) days from the closing of the Loan, an Event of
Default shall have occurred on the ninety-first (91st) day following the
closing.

 

  (b) The Deed of Trust (hereinafter defined) shall initially encumber the
Property and the Housing Parcel as security for the Loan. Upon recordation of
the Record Plat, the Deed of Trust shall be amended to reflect the new legal
description and the Lender’s loan policy of title insurance shall be
appropriately endorsed in form satisfactory to the Lender in all respects.

 

  (c) Provided there has then occurred no Event of Default hereunder or under
the AD&C Loans, following recordation of the Record Plat, if (i) the Borrower
sells the Property and upon closing of such sale pays the Loan in full, the
Lender shall release the Property from the lien of the Deed of Trust, or
(ii) the Borrower determines to develop the Property and transfer the Property
to an affiliate, the Lender shall release the Property from the lien of the Deed
of Trust and simultaneously therewith the Property shall be encumbered by a new
deed of trust (the “Apartment Parcel Deed of Trust”) as security for the Loan as
well as cross-collateral as security for the Loan and the AD&C Loans.

 

  (d) If applicable under Subparagraph 1.3(c) above, the Apartment Parcel Deed
of Trust shall be in the form as attached to this Agreement as Exhibit B and
shall constitute a first lien on the Property.

 

  (e) The Leases Assignment (hereinafter defined) shall encumber all leases,
rents and profits with respect to the Property and the Housing Parcel. The
Property may be released from the Leases Assignment in the event of (i) sale and
payment in full of the Loan as contemplated in Subparagraph 1.3(c) above or
(ii) transfer of the Property to an affiliate, in which event a new assignment
of leases and rents in form substantively identical to the Leases Assignment
shall be recorded against the Property simultaneously with such release.

 

  (f) UCC-1 Financing Statements that constitute a fixture filing shall be
recorded against the Property and the Housing Parcel. Such UCC-1 Financing
Statements may be terminated as to the Property in the event of (i) sale and
payment in full of the Loan as contemplated in Subparagraph 1.3(c) above or
(ii) transfer of the Property to an affiliate, in which event a new UCC-1
Financing Statement in form substantively identical to the initial instrument
shall be filed against the Property simultaneously with such termination.

1.4 Guarantor. Comstock Holding Companies, Inc. (the “Guarantor”) shall
guarantee the payment and performance of the Borrower’s obligations, covenants
and agreements under the Loan and, as evidenced by the Loan Documents, and shall
also guarantee the Carve Out Obligations (defined on Exhibit C attached hereto),
which guaranty shall be evidenced by an instrument of unlimited and
unconditional guaranty of payment, performance and completion from the Guarantor
for the benefit of the Lender, in form and substance satisfactory to the Lender
(the “Guaranty”).

 

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1.5 Term. The Note shall mature twelve (12) months after the date of closing on
the Loan (the “Maturity”). It is acknowledged and agreed that notwithstanding
any provisions herein, the Borrower has not applied for, nor has the Lender made
any commitment with respect to, any extension of such Maturity. Upon any
application for an extension, any approval of an extension on any terms would be
contingent upon the usual and customary underwriting procedures of EagleBank,
including without limitation, full credit and collateral evaluation and review,
the approval of the loan committee of EagleBank, and payment to the Lender of
extension fees as determined by the Lender.

1.6 Interest Rate. Commencing on the closing of the Loan, the unpaid balance of
each of the Note outstanding from time to time shall bear interest and be
payable at the floating rate per annum equal to three percent (3%) above the
thirty (30) day LIBOR Rate (hereinafter defined), rounded upwards, if necessary,
to the nearest one-eighth of one percent (0.125%). The LIBOR rate means, for
each calendar month, the annualized weighted average of the 30-day London
Interbank Offered Rates (at approximately 11:00 a.m. London time) for
U.S. Dollar transactions on the day that is two (2) business days prior to the
first day of that calendar month, as reported by Bloomberg Business News; if
Bloomberg Business News is not available, the Lender shall select a similar
source for the LIBOR index and shall notify the Borrower of such selection. If
no LIBOR index is available, or if the Lender determines in its sole discretion
that any reported LIBOR rate is unreliable, the Lender may select an alternative
index upon notice to the Borrower of such selection. Interest shall be
calculated using a 360-day year, based upon the actual number of days for which
the calculation is being made. Notwithstanding the above, in no event shall the
Note bear interest at a rate below the floor interest rate of five percent
(5%) per annum at any time (the “Interest Rate Floor”).

1.6 Interest Reserve. From the proceeds of the Loan, One Hundred Twenty Thousand
and No/100 Dollars ($120,000.00) shall not be disbursed but shall be reserved by
the Lender for the payment of interest on the Loan (the “Interest Reserve”)
until such reserve is exhausted. Notwithstanding the foregoing or any provision
of the Loan Documents to the contrary, the Lender shall not be obligated to make
any disbursements from the Interest Reserve if any Event of Default shall have
occurred, and further, notwithstanding the foregoing or any provision of any of
the Loan Documents to the contrary, nothing contained herein shall be deemed to
release or in any way to relieve the Borrower from its obligation under the Note
to pay interest as provided in the Note. Each disbursement from the Interest
Reserve shall constitute a disbursement of principal of the Loan and shall be
added to the then outstanding principal balance of the Loan.

1.7 Real Estate Tax Reserve. From the proceeds of the Loan, Sixty Thousand and
No/100 Dollars ($60,000.00) shall not be disbursed but shall be reserved by the
Lender (the “Taxes Reserve”) for the payment of real estate taxes and other
governmental impositions against the Property (collectively, “Taxes”) until such
reserve is exhausted. Notwithstanding the foregoing or any provision of the Loan
Documents to the contrary, the Lender shall not be obligated to make any
disbursements from the Taxes Reserve if any Event of Default shall have
occurred, and further, notwithstanding the foregoing or any

 

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provision of any of the Loan Documents to the contrary, nothing contained herein
shall be deemed to release or in any way to relieve the Borrower from its
obligation under the Loan Documents to pay Taxes as they become due. Each
disbursement from the Taxes Reserve shall constitute a disbursement of principal
of the Loan and shall be added to the then outstanding principal balance of the
Loan.

1.8 Collateral. The Loan shall be secured by, among other things, the following:

 

  (i) A first lien deed of trust, security agreement and fixture filing (as the
same may be amended, restated, supplemented or substituted, the “Deed of Trust”)
on the Property and the Housing Parcel;

 

  (ii) An assignment of Leases and Rents on the Property and the Housing Parcel
(as the same may be amended, restated, supplemented or substituted, the “Leases
Assignment”);

 

  (iii) Assignments of all Development documents including, without limitation,
plans and specifications, permits, architect’s contracts, engineering contracts,
and Development contracts (the “Documents Assignment”);

 

  (iv) Consents to Assignment executed by each of the general contractor,
architect and project engineer for the Development (the “Consents”);

 

  (v) An Environmental Indemnity Agreement made by the Borrower and the
Guarantor for the benefit of the Lender (as the same may be amended, restated,
supplemented or substituted, the “Environmental Indemnity”);

 

  (vi) Such UCC-1 Financing Statements as the Lender may determine to be
necessary or desirable.

1.9 Equity Requirement. As a condition of the Loan, as of the closing of the
Loan the Borrower shall have made an equity investment in the Property in an
amount not less than One Million Five Hundred Thousand and No/100 Dollars
($1,500,000.00), and shall have provided reasonable evidence of such investment
to the Lender in the form of cash investment or mezzanine financing acceptable
to the Lender in its sole discretion.

1.10 Cross Defaulted Loan. An event of default under the AD&C Loans (sometimes
herein collectively called the “Cross-Defaulted Loan”) shall constitute an Event
of Default under the Loan Documents. From and after recordation of the Record
Plat, release of the Property from the lien of the Deed of Trust, and
recordation of the Apartment Parcel Deed of Trust, (i) the Property shall
secure, in addition to the Loan, the AD&C Loans, and (ii) the Housing Parcel
shall secure, in addition to the AD&C Loans, the Loan. In addition, simultaneous
closing on the AD&C Loans shall be a condition to closing on the Loan.

1.11 Deposit Relationship. As a condition of the Loan, the Borrower shall
establish its primary operating account and all escrow accounts hereunder with
the Lender and shall maintain such accounts with the Lender throughout the term
of the Loan. In addition, the Borrower and/or Guarantor and/or any related
entities shall maintain an aggregate minimum monthly average aggregate deposit
balance with the Lender of ten percent (10%) of the combined outstanding
principal balances of the Loan

 

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and the Cross-Defaulted Loan, tested quarterly, with the first quarterly test
period commencing on April 1, 2013 and tested at June 30, 2013. Such deposits
shall be held in demand deposits or money market accounts. If at any time under
any of the Loan Documents the Lender is collecting deposits for the payment of
insurance premiums and/or real estate taxes, the amount(s) on deposit, to the
extent unapplied as of the date of any such semi-annual test, shall be counted
toward the foregoing deposit balance requirements. The foregoing deposit balance
requirement is in addition to any deposit balance requirement under the terms of
the loan documents for any other loan or loans by the Lender to the Borrower,
the Guarantor or any affiliate(s) of the Borrower or the Guarantor. The failure
to comply with the foregoing deposit balance requirements shall not constitute a
default under the Loan; however, interest shall accrue on all amounts
outstanding under the Loan at one-quarter of one percent (0.25%) plus the rate
of interest then payable under the Note (and the Interest Rate Floor shall also
increase by one-quarter of one percent (0.25%)) from the date of such failure
until such time as the deposit balance requirement is satisfied at the next
quarterly test.

1.12 Fees. The Borrower shall pay to the Lender a fee for the Loan in the amount
of Twelve Thousand and No/100 Dollars ($12,000.00), one-half of which has been
received by the Lender and the balance of which shall be paid upon closing of
the Loan. The Lender acknowledges receipt from the Borrower of Twelve Thousand
Five Hundred and No/100 Dollars ($12,500.00), for application to the Lender’s
third-party costs and towards the Lender’s underwriting in connection with the
Loan (including without limitation fees of appraisers, consultants and legal
counsel), any unused balance of which may be applied to the foregoing Loan fee.

1.13 Intercreditor Agreement. It is understood that, contemporaneously herewith,
the Borrower has borrowed One Million One Hundred Ten Thousand and No/100
Dollars ($1,110,000.00) (the “Subordinate Loan”) from Eagle Commercial Ventures,
LLC (“Subordinated Lender”). As a condition of closing the Loan, Subordinated
Lender shall enter into a Subordination and Standstill Agreement with the Lender
(the “Intercreditor Agreement”), in form and substance satisfactory to the
Lender in all respects, pursuant to which Subordinated Lender shall subordinate
all of its rights in and to the Subordinate Loan to the Lender’s rights,
remedies and security under the Loan Documents.

SECTION TWO

PAYMENTS, COMPUTATIONS, FEES, CHARGES AND PROTECTIVE ADVANCES

2.1 Payments. All payments due with respect to this Agreement or the Loan shall
be made in immediately available funds to the Lender at such place as designated
by the Lender from time to time. The Lender is authorized, but shall be under no
obligation, to charge any deposit account maintained by the Borrower with the
Lender or any affiliate of the Lender for any payments due to the Lender with
respect to this Agreement or the Loan. Payments shall be applied, at Lender’s
sole discretion: (i) first, to payment of accrued and unpaid interest, if any;
(ii) second, to payment of any principal then due, if any; (iii) third, to late
charges, if any; (iv) fourth, to reasonable attorneys’ fees and costs of
collection; and (v) fifth, to reduce the outstanding principal balance of the
Note until such principal shall have been fully repaid. All payments hereunder
shall be made without offset, demand counterclaim, deduction, abatement,
defense, or recoupment, each of which the Borrower hereby waives.

 

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2.2 Late Charges. If any payment due under the Note is not made within ten
(10) days of its due date, the Borrower shall pay to the Lender upon demand
(which may be in the form of the usual monthly billing or invoice) a late charge
equal to five percent (5%) of the amount of such payment.

1.3. Default Rate. After an Event of Default (hereinafter defined), the interest
which accrues on the Note shall be increased to the Default Rate (as defined in
the Note).

1.4 Computations. Interest and fees on the Loan shall be computed on the basis
of a year of three hundred sixty (360) days and actual days elapsed.

1.5 Prepayment. The Borrower may prepay the Note in whole or in part without
premium or penalty at any time upon ten (10) days prior written notice to the
Lender. Partial prepayments shall be applied to installments of principal in
their inverse order of maturity, if applicable. Amounts prepaid under the Note
may not be re-borrowed.

1.6 Indebtedness. As used in this Agreement, the term “Indebtedness” means all
present and future indebtedness of the Borrower to the Lender arising out of or
in connection with the Note or any of the other Loan Documents.

SECTION THREE

CONDITIONS

3.1 Conditions Precedent to Closing. In addition to any other conditions stated
in this Agreement, the following conditions must be satisfied prior to Lender
closing on the Loan.

(a) Loan Documents. Receipt by Lender of appropriately completed and duly
executed originals of this Agreement, the Note, the Guaranty, the Deed of Trust,
the Leases Assignment, the Documents Assignment, the Consents, the Environmental
Indemnity, UCC-1 Financing Statements and Intercreditor Agreement, all as Lender
may require (collectively, together with any other documents executed and
delivered in connection with the Indebtedness, the “Loan Documents”).

(b) Organizational Documents. The Borrower and each entity comprising the
Borrower shall supply to the Lender, to the extent it has not previously done so
in any prior transaction with the Lender: (i) a currently certified copy of its
Articles of Organization and all amendments thereto; (ii) evidence satisfactory
to the Lender and its counsel that it is in good standing in the jurisdiction
where organized and qualified to do business in every jurisdiction in which the
nature of its businesses or its properties makes such qualification necessary;
(iii) resolutions authorizing the due execution and delivery of the Loan
Documents to which it is a party; and (iv) certified copies of its Operating
Agreement and all amendments thereto. The Articles of Organization and the
Operating Agreement of Borrower and each entity comprising the Borrower shall
not be amended, changed or modified in any respect without prior written consent
of the Lender. In addition, the Guarantor shall supply, to the extent it has not
previously done so in any prior transaction with the Lender: (i) a currently
certified copy of its Articles of

 

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Incorporation and all amendments thereto; (ii) evidence satisfactory to Lender
and its counsel that it is in good standing in the jurisdiction where organized
and qualified to do business in every jurisdiction in which the nature of its
businesses or its properties makes such qualification necessary;
(iii) resolutions authorizing the due execution and delivery of the Loan
Documents to which it is a party and a certificate of incumbency; and
(iv) certified copies of its By-Laws and all amendments thereto. The Articles of
Incorporation and the Bylaws of the Guarantor shall not be amended, changed or
modified in any respect without the prior written consent of the Lender;
provided, however, that on the condition that the Lender is given thirty
(30) days advance written notice, the Lender hereby consents to the Guarantor’s
change in corporate domicile from Delaware to Virginia and all amendments to its
organizational documents as are reasonably required to effect such change in
domicile subsequent to the closing of the Loan; provided further that UCC-1
financing statements shall be filed in the changed domicile at the cost and
expense of the Borrower.

(c) Opinion. Receipt by the Lender of the opinion(s) of the counsel for Borrower
and the Guarantor, in form and content satisfactory to the Lender, in its sole,
but reasonable, discretion.

(d) Insurance. Receipt by the Lender of certificate(s) of insurance to evidence
a fully paid policy or policies of comprehensive public liability insurance
naming Lender as an additional insured thereunder in an amount not less than Two
Million and No/100 Dollars ($2,000,000.00) in the aggregate with not less than
One Million and No/100 Dollars ($1,000.000.00) per occurrence; in any event, the
amount of all insurance shall be sufficient to prevent any co-insurance
contribution on any loss, with each policy providing for a thirty (30) day prior
written notice of cancellation, amendment or alteration.

(e) Operating Account. The Borrower shall have established its primary operating
account with the Lender.

(f) Financing Statements. The financing statements necessary to perfect the
Lender’s security interest in the personal property subject to the Deed of
Trust, and in any other collateral requiring the filing of a financing statement
for perfection of a lien thereon, shall be duly filed in all appropriate offices
and jurisdictions, all other financing statements covering any of such personal
property shall be terminated or the Lender shall be reasonably satisfied that
such terminations are forthcoming, and filing and recording receipts evidencing
such filings and terminations shall be delivered to Lender, all in form and
substance satisfactory to the Lender.

(g) Property Documents. The Lender shall have received and approved in its sole
discretion, the following:

(1) Appraisals. An appraisal of the Property, prepared by an appraiser
acceptable to the Lender, in form and content acceptable to the Lender,
conforming to all regulatory and internal appraisal guidelines applicable to or
established by the Lender, in its sole, absolute, nonreviewable discretion,
reflecting a “when developed” discounted value satisfactory to the Lender (the
“Appraisal”);

 

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(2) Title Insurance. A commitment for title insurance (the “Title Commitment”)
insuring the first priority lien of the Deed of Trust in the aggregate amount of
the Note and the AD&C Loans, containing no exceptions unacceptable to the
Lender, issued in the name of the Lender by a title company acceptable to the
Lender and in an amount equal to the aggregate principal amount of the Note and
the AD&C Loans. The Title Commitment and the title policy issued pursuant
thereto (the “Title Policy”) shall reflect that all requirements for issuance of
the Title Policy have been satisfied, and shall contain such other endorsements
or coverages as the Lender may require.

(3) Survey. A current survey and legal description of the Property and the
Housing Parcel satisfactory to the Lender from a registered land surveyor of the
State of Maryland, which survey shall show all easements, rights of way and
other matters of record, shall locate all existing improvements on the Property
and the Housing Parcel, shall contain metes and bounds descriptions of each
applicable constituent portion of the Property acceptable to the Lender and its
counsel, shall generally show a state of facts acceptable to the Lender, and
shall contain a surveyor’s certificate satisfactory to the Lender.

(4) Subdivision Plat. Approval by the Lender and its construction consultant of
the form of Record Plat to be recorded.

(5) Development Approvals. Copies of the certified site plan for the Property
showing, without limitation, evidence satisfactory to the Lender that the
Property can be developed without any requirement for development of the Housing
Parcel.

(6) Development and Construction Budgets. Final budget for the Development for
the Property which shall have been reviewed and approved by the Lender in its
sole discretion and by the Lender’s Development and construction consultant (the
“Lender’s Inspector”). It is understood that the Development budget may be a
combined budget for development work on the Housing Parcel, in which event the
Lender will allocate funding under the Loan and the AD&C Loans based upon
percentage of work completed as determined by the Lender’s Inspector.

(7) Development Documents. The Plans and Specifications, Development Schedule
and any and all other Development documents requested by the Lender and/or the
Lender’s Inspector, which shall have been reviewed and approved by the Lender in
its sole discretion and by the Lender’s Inspector.

 

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(8) Flood Hazard. Evidence that no part of the Property or the Housing Parcel is
located in a special flood hazard area.

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

(10) Licenses and Permits. Copies of all licenses and permits in connection with
the Property and the Housing Parcel, including without limitation licenses,
permits, proffers and other conditions to final subdivision and site plan
approval for the Property and the Housing Parcel.

(11) Consultant’s Review. Satisfactory review and analysis by the Lender’s
construction consultant of the Development plans, documents and budgets.

(12) Zoning. Receipt by the Lender of a zoning endorsement to the Title Policy
acceptable to the Lender or such other written evidence as is acceptable to the
Lender that the Property and the Housing Parcel are zoned consistent with the
uses contemplated beyond any possibility of appeal and can be developed as
proposed as a matter of right, and to the effect, further, that there are no
pending proceedings, either administrative, legislative or judicial, which would
in any manner adversely affect the status of the zoning with respect to the
Property and the Housing Parcel or any part thereof.

(13) Marketing Report. Receipt and satisfactory review and analysis by the
Lender of a marketing report.

(h) No Default. No event shall have occurred and be continuing that constitutes
an Event of Default (as defined below).

(i) Representations. All representations and warranties contained in this
Agreement shall be true and correct in every material respect as of the date of
closing of the Loan.

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

 

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(k) Identification. As required by federal regulation, closing the Loan is
contingent upon satisfactory verification of identity of the signatories and
verification that none of the Borrower or the Guarantor or any signers is
restricted from conducting business in the United States.

3.2 Conditions Precedent to Advances of Loan. In addition to any other
conditions stated in this Agreement, the following conditions related to the
Development must be satisfied prior to any disbursements under the Loan and all
of the following matters shall have been approved by the Lender.

(a) Permits. Copies of any and all building and similar permits required in
connection with the Development, or such portion thereof for which advances are
requested, together with such evidence as the Lender may require to the effect
that all fees for such permits have been paid. Satisfactory evidence shall be
submitted to the Lender that all governmental approvals necessary for the
Development, or such portion thereof for which advances are requested, have been
obtained. The Lender shall also receive satisfactory evidence that all
applicable safety, ecological and environmental laws and any other codes or
regulations affecting the Development and/or proposed use of the Property have
been complied with.

(b) Plans and Specifications. Two (2) sets of complete copies of the final Plans
and Specifications of the Development, which Plans and Specifications shall be
satisfactory to the Lender in all respects. The Lender’s review of the Plans and
Specifications is solely for the benefit of the Lender, and the Lender’s
approval thereof shall not be deemed in any respect to be a representation or
warranty, expressed or implied, that the Development will be sound, have a value
of any particular magnitude or otherwise satisfy a particular standard. Prior to
any advances for hard costs, the Borrower shall furnish the Lender with copies
of the Montgomery County-approved stamped Plans, together with such evidence as
the Lender may require to the effect that such Plans and Specifications have
been approved by all governmental and quasi-governmental authorities having or
claiming jurisdiction, and together with a final Development Budget which must
be satisfactory to the Lender in its discretion.

(c) Trade Payment Breakdown. A breakdown of total development costs, which shall
include a draw schedule (the “Development Budget”) containing reasonable details
of amounts anticipated to be payable for each category of work to be performed
and materials to be supplied in connection with the Development, and a projected
schedule for the progress of the Development, all in such form and containing
such details as the Lender shall require. Any change orders shall be subject to
the Lender’s prior approval. No hard costs shall be advanced under the Loan
until such time as the Development Budget has been approved by the Lender in its
sole discretion. The Borrower may, from time to time, request reallocation of
amounts in the Development Budget based upon such reasonable supporting
documentation justifying such reallocation as may be approved by the Lender; any
such reallocation shall be subject to the Lender’s approval in its sole
discretion.

(d) Development Schedule. A projected Schedule (“Development Schedule”) for the
progress of the Development of the Property and a projection of cash flow, each
in such form and containing such details as the Lender shall require. The
Borrower shall be required to diligently pursue

 

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and proceed with the Development in accordance with the Development Schedule to
completion. Failure of the Borrower to meet the requirements of the Development
Schedule for completion of Development shall constitute an Event of Default
under this Agreement.

(e) General Contractor. All contracts for Development shall be subject to the
Lender’s approval. Each Development contract shall be assigned to the Lender
effective on a default under any of the Loan Documents. Each Development
contractor shall consent to such assignment and agree, in the event of any such
default, to continue performance of the contract for the Lender, if the Lender
so requests. Comstock Homes of Washington, L.C., an affiliate of the Guarantor,
is hereby approved as the general contractor for Development. Prior to any
advances for Development costs, the Borrower shall furnish the Lender with a
copy of the contractor’s license for that portion of the Development. The
Borrower shall also furnish the Lender with copies of licenses for all major
subcontractors.

(f) Architect’s and Engineer’s Certificate. The architect and the engineer for
the Development shall be subject to the Lender’s approval. In addition, the
contracts with the architect and the engineer shall be subject to the Lender’s
approval. A certificate from the architect and/or project engineer will be
required to the effect that the Development, if completed in accordance with the
Plans and Specifications, will comply with all federal, state, County and local
laws, statutes, ordinances, codes, regulations, rules or other laws applicable
to the Development (“Applicable Laws”). Prior to any advances for Development
costs, the Borrower shall furnish the Lender with a copy of the engineer’s
license and the architect’s license.

(g) Lender’s Development Consultant. All draw requests shall be submitted to the
Lender and the Lender’s Inspector for review and approval. The Borrower shall be
responsible for payment of all of the Lender’s Inspector’s fees.

3.3 Provisions Governing Disbursements of Loan. Disbursements of the Loan shall
be governed by the following provisions:

(a) The Development shall be performed by the Borrower in strict accordance with
all applicable (whether present or future) laws, ordinances, codes, rules,
regulations, requirements and orders of any governmental or regulatory authority
having or claiming jurisdiction. The Development shall be in strict accordance
with all applicable use or other restrictions and the provisions of any prior
declarations, covenants, conditions, restrictions and zoning ordinances and
regulations.

(b) The Borrower shall have submitted to the Lender and the Lender’s Inspector
such information as may be requested by the Lender or the Lender’s Inspector to
verify the Development costs which are to be incurred in connection with the
Development. The Lender shall not be obligated to authorize disbursement of Loan
proceeds with respect to the Development for an amount in excess of the
Development costs to be incurred in connection therewith as verified by the
Lender or the Lender’s Inspector pursuant to the provisions of the preceding
sentence. The funding of each draw request is subject to an inspection and
approval by the Lender’s Inspector.

 

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(c) Loan proceeds will be advanced in installments as the Development progresses
in accordance with the terms of this Agreement to finance the Development in
accordance with the Plans and Specifications, but no more often than once
monthly, provided that the Lender is satisfied that the amounts available under
the Loan will be sufficient to complete the work and pay or provide for all
reasonably anticipated Development costs through the required Development
completion date under the Development Schedule. In the event the Lender
determines that the amounts available under the Loan, together with any
additional cash provided by the Borrower to the Lender, if any, is insufficient
to complete the Development in such manner as the Lender may require, the
Borrower shall provide such funds necessary to complete the Development. Except
for advances for materials and supplies to be delivered to the Property, as to
which no retainage will be required, advances of the Loan shall be subject to
withholding of retainage in the amount of ten percent (10%) of direct
Development costs approved by the Lender or the Lender’s Inspector, and at the
Lender’s discretion of labor and materials brought into the Development and
eligible for payment on a trade payable basis.

(d) Advances of the Loan shall be conditioned upon the Lender’s receipt of
(i) written certification by parties approved by the Lender that the work which
is the basis of the requested advance was completed in accordance with the
approved Plans and Specifications and within the cost estimates approved by the
Lender (or such adjustments of cost estimates of line items as shall be required
and approved by the Lender, provided that sufficient funds to complete the
Development will be available under such adjusted estimates), to the
satisfaction of the Lender, and (ii) evidence that at that time all necessary
certificates required to be obtained from any board, agency or department
(government or otherwise) have been obtained. All documents required to be
submitted to the Lender as a condition of each disbursement shall be on standard
AIA forms and shall be furnished to the Lender at the Lender’s address set forth
in this Agreement. The Lender shall have at least ten (10) business days after
receipt of the foregoing documentation prior to funding an approved advance.

(e) The Lender shall have received a notice of title continuation or an
endorsement to the title insurance policy with respect to the Property
theretofore delivered to the Lender, showing that since the last preceding
advance, there has been no change in the status of title and no other exception
not theretofore approved by the Lender, which endorsement shall have the effect
of advancing the effective date of the policy to the date of the advance then
being made and increasing the coverage of the policy by an amount equal to the
advance then being made, if the policy does not by its terms provide
automatically for such an increase.

(f) Before making the first advance of Loan Proceeds, the Borrower shall have
provided to the Lender satisfactory documentary evidence that the general
contractor has obtained a Basic Business License from the State of Maryland and
such license is in effect.

 

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(g) Before making any advance of Loan proceeds, the Lender may require the
Borrower to obtain from any contractor or materialmen it may engage in
connection with the Development, acknowledgements of payment and releases of
liens and rights to claim liens, if applicable, down to the date of the last
preceding advance and concurrently with the final advance. All such
acknowledgements and releases shall be in form and substance satisfactory to the
Lender.

(h) The Lender shall not be obligated to make the final advance of Loan proceeds
hereunder, which shall include the retainage described above, unless (i) the
Lender’s Inspector has certified to the Lender on standard AIA forms that the
work is complete; (ii) the Lender has received evidence satisfactory to it that
all work requiring inspection by governmental or regulatory authorities having
or claiming jurisdiction has been duly inspected and approved by such
authorities and by any rating or inspection organization, bureau, association,
or office having or claiming jurisdiction; (iii) that completion of the
Development has occurred free and clear of all mechanics’ or materialmen’s liens
and any bills or claims for labor, materials and services in connection with the
completion of the Development; and (iv) certificates from the Borrower’s
architect, engineer and/or contractor, and, if required, from the Lender’s
Inspector, certifying that the Development has been completed in accordance
with, and as completed comply with, the Plans and Specifications and all laws
and governmental requirements. All fees and costs of the Lender’s Inspector
shall be paid by the Borrower.

(i) The Lender shall not be obligated to make any advances of Loan proceeds
hereunder unless, 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 usually furnished and
installed at that stage of the development have been furnished and installed,
and no default which has not been cured has occurred under this Agreement or any
of the documents evidencing, securing or guaranteeing the Loan.

SECTION FOUR

REPRESENTATIONS AND WARRANTIES

In order to induce the Lender to extend credit to the Borrower, the Borrower and
the Guarantor each make the following representations and warranties as to
itself:

4.1 Organization. The Borrower and each entity comprising the Borrower is a
limited liability company duly organized, validly existing and in good standing
under the laws of the Commonwealth of Virginia and is duly qualified as a
foreign limited liability company and in good standing under the laws of each
other jurisdiction in which such qualification is required. The Guarantor
represents and warrants that it is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware and is
duly qualified as a foreign corporation and in good standing under the laws of
each other jurisdiction in which such qualification is required.

5.2 Execution and Delivery. The Borrower and each entity comprising the Borrower
has the power, and has taken all of the necessary actions, to execute and
deliver and perform its obligations under the Loan Documents, and the Loan
Documents, when executed and delivered, will be binding obligations of each such
entity enforceable in accordance with their respective terms.

 

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4.3 Power. Each of the Borrower and each entity comprising the Borrower has the
power and authority to own its properties and to carry on its business as now
being conducted.

4.4 Financial Statements. Al financial statements and information delivered to
the Lender are correct and complete in all material respects and present fairly
the financial conditions, and reflect all known liabilities, contingent and
otherwise, of the Borrower and the Guarantor as of the dates of such statements
and information, and since such dates no material adverse change in the assets,
liabilities, financial condition, business or operations of the Borrower or the
Guarantor has occurred.

4.5 Taxes. All tax returns and reports of the Borrower and the Guarantor
required by law to be filed have been duly filed, and all taxes, assessments,
other governmental charges or levies (other than those presently payable without
penalty or interest and those that are being contested in good faith in
appropriate proceedings) upon the Borrower and/or the Guarantor and upon any of
their respective properties, assets, income or franchises, that are due and
payable have been paid.

4.6 Litigation. There is no action, suit or proceeding pending or, to the
knowledge of the Borrower or the Guarantor, threatened against or affecting the
Borrower or the Guarantor that, either in any case or in the aggregate, may
result in any material adverse change in the business, properties or assets or
in the condition, financial or otherwise, of the Borrower or the Guarantor, or
that may result in any material liability on the part of the Borrower or the
Guarantor that would materially and adversely affect the ability of the Borrower
or the Guarantor to perform its and/or their obligations under the Loan
Documents, or that questions the validity of any of the Loan Documents or any
action taken or to be taken in connection with the Loan Documents.

4.7 No Breach. The execution and delivery of the Loan Documents, and compliance
with the provisions of the Loan Documents, will not conflict with or violate any
provisions of law or conflict with, result in a breach of, or constitute a
default under, the organizational documents of the Borrower, or any judgment,
order or decree binding on the Borrower, or any other agreements to which the
Borrower is a party.

4.8 No Defaults. To the best of the Borrower’s knowledge, the Borrower is not in
default with respect to any debt, direct or indirect, upon or as to which the
Borrower has any liability or obligation.

4.9 Compliance. The Borrower is in compliance in all material respects with all
applicable laws and regulations, including, without limitation, the Employee
Retirement Income Security Act of 1974, as amended (“ERISA”).

 

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410 Approvals. No authorizations, approvals or consents of, and no filings and
registrations with, any governmental or regulatory authority or agency, are
necessary for the execution, delivery or performance of the Loan Documents by
the Borrower.

4.11 Title to Assets. The Borrower has good and marketable title to all of its
assets, subject only to the liens and security interests permitted by this
Agreement.

4.12 Use of Proceeds. The proceeds of the Loan shall be used only for the
purposes described in this Agreement. The proceeds of the Loan shall not be used
to purchase or carry any margin stock, as such term is define din Regulation U
of the Board of Governors of the Federal Reserve System.

4.13 Vacant Status of Property and Housing Parcel. Seneca Concrete, Inc., former
tenant of a portion of the Property and/or the Housing Parcel, has vacated its
leased premises, and the Property and the Housing Parcel are vacant and free of
any tenancy that would or might impair development thereof.

SECTION FIVE

COVENANTS OF BORROWER AND GUARANTOR

In consideration of credit extended or to be extended by the Lender, the
Borrower covenants and agrees as follows:

5.1 Financial Information. The Borrower and the Guarantor shall each deliver to
the Lender: (i) with respect to the Borrower, each year within ninety (90) days
after the close of its fiscal year, financial statements prepared in accordance
with standard accounting principles consistently applied, certified as true and
correct by an officer of each such entity; (ii) with respect to the Guarantor,
each year within ninety (90) days after the close of its fiscal year, audited
financial statements; (iii) each year within thirty (30) days after filing, a
copy of each such entity’s federal income tax return and all schedules thereto,
provided that in the event of such extension such entity shall provide the
Lender with a copy of the federal income tax return and all schedules thereto
within thirty (30) days of the filing of same with the Internal Revenue
Services, and (iv) promptly upon the Lender’s request, such financial and other
information as the Lender reasonably may require from time to time. All
financial statements shall be in such reasonable detail and shall be accompanied
by such certificates of the Borrower or the Guarantor, as applicable, as may
reasonably be required by the Lender.

5.2 Taxes. All tax returns and reports of the Borrower required by law to be
filed have been duly filed, and all taxes, assessments, other governmental
charges or levies (other than those presently payable without penalty or
interest and those that are being contested in good faith in appropriate
proceedings) upon the Borrower and upon the Borrower’s properties, assets,
income or franchises, that are due and payable, have been paid.

5.3 Compliance with Laws. The Borrower shall comply with all applicable laws and
regulations including, without limitation, ERISA.

 

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5.4 Maintain Existence. The Borrower and the Guarantor each shall maintain its
existence in good standing, maintain and keep its properties in good condition
(ordinary wear and tear excepted), maintain adequate insurance for all of its
properties with financially sound and reputable insurers. The Borrower shall
remain in the same line of business as it is on the date of this Agreement and
shall not enter into any new lines of business without the prior written consent
of the Lender.

5.5 Notices. As soon as it has actual knowledge, the Borrower shall notify the
Lender of the institution or threat of any material litigation or condemnation
or administrative proceeding of any nature involving the Borrower.

5.6 Books and Records. The Borrower shall maintain complete and accurate books
of account and records. The principal books of account and records shall be kept
and maintained at 1886 Metro Center Drive, 4th Floor, Reston, VA 10190. The
Borrower shall not remove such books of account and records without giving the
Lender at least thirty (30) days prior written notice. The Borrower, upon
reasonable notice from the Lender, shall permit the Lender, or any officer,
employee or agent designated by the Lender, to examine the books of account and
records maintained by the Borrower, and agree that the Lender or such officer,
employee or agent may audit and verify the books and records. The Borrower shall
reimburse the Lender for any reasonable expenses incurred by the Lender in
connection with any such audits. All accounting records and financial reports
furnished to the Lender by the Borrower and the Guarantor pursuant to this
Agreement shall be maintained and prepared in accordance with GAAP.

5.7 Liens. The Borrower shall not create, incur, assume or permit to exist any
mortgage, deed of trust, assignment, pledge, lien, security interest, charge or
encumbrance, including, without limitation, the right of a vendor or under a
conditional sale contract or the lessor under a capitalized lease (collectively,
(“Liens”) of any kind or nature in or upon any of the asset of the Borrower
except:

 

  (a) Liens created or deposits made that are incidental to the conduct of the
business of the Borrower, that are not incurred in connection with any borrowing
or the obtaining of any credit and that do not and will not interfere with the
use by the Borrower of any of its assets in the normal course of its business or
materially impair the value of such assets for the purpose of such business; and

 

  (b) Liens securing the Indebtedness.

5.8 Debt. Except as provided above in Section 5.7, without the prior written
consent of the Lender, the Borrower shall not incur or permit to exist any debt
for borrowed funds, the deferred purchase price of goods or services or
capitalized lease obligations, except for (a) trade debt incurred in the
ordinary course of business, and (b) the Indebtedness.

5.9 Contingent Liabilities. Without the prior written consent of the Lender,
neither the Borrower nor the Guarantor shall guarantee, endorse, become
contingently liable upon or assume the obligation of any person, or permit any
such contingent liability to exist, except by the endorsement of negotiable
instruments for deposit or collection or similar transactions in the ordinary
course of business.

 

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5.10 Sale of Assets. Without the prior written consent of the Lender, the
Borrower shall not sell, lease, assign or otherwise dispose of any of its assets
except for (a) the disposition of assets that are no longer needed or useful in
its business, (b) assets which have been removed and replaced, (c) sale and
conveyance of the Property following recordation of the Record Plat and payment
in full of all principal, accrued interest and other charges due under the Loan,
and (d) sales of housing lots and units on the Housing Parcel as provided for in
the Deed of Trust.

5.11 Mergers and Acquisitions. Without the prior written consent of the Lender,
the Borrower shall not merge or consolidate with, or acquire all or
substantially all of the assets, stock, partnership interests or other ownership
interests of, any other person.

5.12 Loans and Advances. Without the prior written consent of the Lender, the
Borrower shall not make any loan or advance to any affiliate, director, member,
manager, officer or employee of the Borrower, or any other person, except for
the creation of accounts receivable in the ordinary course of business on terms
that are no less favorable than would apply in an arms-length transaction.

5.13 Subsidiaries and Joint Ventures. Without the prior written consent of the
Lender, the Borrower shall not form any subsidiary, become a general or limited
partner in any partnership or become a party to a joint venture. If the Lender
grants its consent to the formation or acquisition of a subsidiary Borrower,
such entity shall cause each subsidiary to perform and observe all of the
covenants contained in this Agreement and the other Loan Documents.

5.14 Affiliates. Without the prior written consent of the Lender, the Borrower
shall not engage in business with any of its affiliates except in the ordinary
course of business and on terms that are no less favorable to the Borrower than
would apply in an arm’s length transaction.

5.15 Organization; Control and Management; Transfers. Until such time as the
Loan is fully repaid, there shall be no Transfer (hereinafter defined) of any
interest in the Borrower, nor any change in the Control (hereinafter defined) or
management of either the Borrower or the Guarantor, nor any Transfer of the
Property without the Lender’s prior written consent. “Transfer” means any
assignment, pledge, conveyance, sale, transfer, mortgage, encumbrance, grant of
a security interest or other disposition, either directly or indirectly, in the
aggregate of fifty percent (50%) or more of the beneficial ownership interests
of an entity and the possession, directly or indirectly, of the power to direct
or cause the direction of the management and policies of an entity, whether
through the ability to exercise voting power, by contract or otherwise.
“Controlled by” and “controlling” shall have the respective correlative meanings
thereto.

SECTION SIX

DEFAULT AND REMEDIES

6.1 Default. Each of the following shall constitute an “Event of Default” under
this Agreement:

 

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(a) Failure to Pay. If: (i) the Borrower shall fail to pay any monthly payment
required under the Note (“Monthly Payments”) when due thereunder or (ii) the
Borrower shall fail to pay any amount (other than the Monthly Payments) as and
when due under any of the other Loan Documents;

(b) Failure to Give Notices. If the Borrower fails to give the Lender any notice
required by Section 5.5 of this Agreement within thirty (30) days after it has
actual knowledge of the event giving rise to the obligation to give such notice.

(c) Failure to Permit Inspections. If the Borrower refuses to permit the Lender
to inspect its books and records in accordance with the provisions of
Section 5.6 or failure to permit the Lender to inspect the Property upon
reasonable advance notice.

(d) Failure to Record Record Plat. If the Record Plat is not recorded within
ninety (90) days following closing the Loan.

(e) Failure to Observe Covenants. If the Borrower fails to perform or observe
any non-monetary term, covenant, warranty or agreement contained in this
Agreement or in the other Loan Documents for which no cure period or another
cure period is provided, and such failure shall continue for a period of thirty
(30) days after written notice of such failure has been given to the Borrower by
the Lender; provided, however, if such default is not in the payment of any sum
due to the Lender hereunder, or was not the subject of an Event of Default for
which notice was previously provided, and provided the Borrower is diligently
pursuing the cure of such default , then the Borrower shall have an additional
sixty (60) days within which to cure such default prior to the Lender exercising
any right or remedy available hereunder, or at law or in equity.

(f) Defaults Under Loan Documents. If an Event of Default shall occur under the
Note or any other Loan Document and shall not be cured within any applicable
grace period.

(g) Breach of Representation. Discovery by the Lender that any representation or
warranty made or deemed made by the Borrower in this Agreement or in any other
Loan Document or in any statement or representation made in any certificate,
report or opinion delivered pursuant to this Agreement or other Loan Document or
in connection with any borrowing under this Agreement by the Borrower or the
Guarantor or any member, manager, officer, agent, employee or director of the
Borrower or the Guarantor, was materially untrue when made or deemed to be made.

(h) Voluntary Bankruptcy. If the Borrower or the Guarantor makes an assignment
for the benefit of creditors, files a petition in bankruptcy, petitions or
applies to any tribunal for any receiver or any trustee of the Borrower or the
Guarantor or any substantial part of the property of the Borrower or the
Guarantor, or commences any proceeding relating to the Borrower or the Guarantor
under any reorganization, arrangement, composition, readjustment, liquidation or
dissolution law or statute of any jurisdiction, whether in effect now or after
this Agreement is executed.

 

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(i) Involuntary Bankruptcy. If, within sixty (60) days after the filing of a
bankruptcy petition or the commencement of any proceeding against the Borrower
or the Guarantor seeking any reorganization, arrangement, composition,
readjustment, liquidation, dissolution or similar relief under any present or
future statue, law or regulation, the proceeding shall not have been dismissed,
or, if within sixty (60) days, after the appointment, without the consent or
acquiescence of the Borrower or the Guarantor, of any trustee, receiver or
liquidator of any Borrower or all or any substantial part of the properties of
the Borrower o the Guarantor, the appointment shall not have been vacated.

(j) Cross Default. If, as a result of default, any present or future obligations
of the Borrower or the Guarantor or any affiliate of the Borrower or the
Guarantor to the Lender or any other creditor, whether due to acceleration
provisions or otherwise therein, are declared to be due and payable prior to the
expressed maturity of such obligations.

(k) Cross Default to Particular Instruments: If an Event of Default by the
applicable borrower shall occur under any of the following, as any of the
following may be amended, substituted or replaced from time to time: (i) the
AD&C Loans, (ii) any loan documents evidencing and/or securing that certain loan
from the Lender to New Hampshire Ave. Ventures, LLC (“NHA”) in the amount of
$6,000,000.00, which is evidenced, among other things, by a Revolving
Development Loan Promissory Note dated August 13, 2012 made by NHA to the order
of the Lender; (iii) any loan documents evidencing and/or securing that certain
loan from the Lender to NHA in the amount of $4,000,000.00, which is evidenced,
among other things, by a Revolving Construction Loan Promissory Note dated
August 13, 2012 made by NHA to the order of the Lender; (iv) any loan documents
evidencing and/or securing that certain loan from the Lender to Comstock Potomac
Yard, L.C. and Comstock Penderbrook, L.C., jointly and severally, in the amount
of $9,960,000.00, which is evidenced, among other things, by a Deed of Trust
Note dated May 30, 2012 made by those obligors to the order of the Lender; and
(v) the Subordinate Loan.

(l) Material Adverse Change. A material adverse change occurs in the financial
or business condition of the Borrower or the Guarantor.

(m) Judgment. If a judgment, attachment, garnishment or other process is entered
against the Borrower and is not vacated or bonded within sixty (60) days after
entry (or such shorter period of time as necessary in order to avoid attachment
or foreclosure), or if a judgment, attachment, garnishment or other process is
entered against the Guarantor that would materially affect the Guarantor’s
ability to perform its obligations under the Loan Documents, and such judgment,
attachment, garnishment or other process is not vacated or bonded with in sixty
(60) day after entry (or such shorter period of time as necessary in order to
avoid attachment or foreclosure).

 

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(n) Dissolution. The dissolution, liquidation or termination of existence of the
Borrower or the Guarantor unless a substitute guarantor, satisfactory to the
Lender in its sole and absolute discretion, assumes all liability under the
Guaranty and Environmental Indemnity and executes any documents which the Lender
may reasonably require to implement such substitution, within sixty (60) days
after event of dissolution, liquidation or termination of existence.

(o) Change in Management/Control. A change in the management of or controlling
interest in the Borrower or the Guarantor without the prior written consent of
the Lender.

6.2 Remedies. Upon the occurrence of an Event of Default (a) the Lender, at its
option, by written notice to the Borrower, may declare all Indebtedness to the
Lender to be immediately due and payable, whether such Indebtedness was incurred
prior to, contemporaneous with or subsequent to the date of this Agreement and
whether represented in writing or otherwise, without presentment, demand,
protest or further notice of any kind, and (b) the Lender may exercise all
rights and remedies available to it under the Loan Documents and applicable law.
The Borrower agrees to pay all costs and expenses incurred by the Lender in
enforcing any obligation under this Agreement or the other Loan Documents,
including, without limitation, attorneys’ fees. No failure or delay by the
Lender in exercising any power or right will operate as a waiver of such power
or right, nor will any single or partial exercise of any power or right preclude
any other future exercise of such power or right, or the exercise of any other
power or right.

6.3 Borrower to Pay Fees and Charges. The Borrower shall pay all fees and
charges incurred in the procuring, making and enforcement of the Loan, including
without limitation the reasonable fees and disbursements of Lender’s attorneys,
charges for appraisals, the fee of Lender’s inspector and construction
consultant, fees and expenses relating to examination of title, title insurance
premiums, surveys, and mortgage recording, documentary, transfer or other
similar taxes and revenue stamps, loan extension fees, if any, and the Lender’s
fees for the Loan.

SECTION SEVEN

GENERAL PROVISIONS

7.1 Defined Terms. Each accounting term used in this Agreement, not otherwise
defined, shall have the meaning given to it under GAAP applied on a consistent
basis. The term “person” shall mean any individual partnership, corporation,
trust, joint venture, unincorporated association, governmental subdivision or
agency or any entity of any nature. The term “subsidiary” means, with respect to
any person, a corporation or other person of which shares of stock or other
ownership interest having ordinary voting power to elect a majority of the board
of directors or other managers of such corporation or person are at the time
owned, or the management of which it otherwise controlled, directly or
indirectly, through one or more intermediaries, by such person. The term
“affiliate” means, with respect to any specified person, any other person that,
directly or indirectly, controls or is controlled by, or is under common control
with, such specified person. All meanings assigned to defined terms in this
Agreement shall be applicable to the singular and plural forms of the terms
defined.

 

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7.2 Notices. All notices, requests, demands and other communication with respect
hereto shall be in writing and shall be delivered by hand, prepaid by Federal
Express (or a comparable overnight delivery service), or sent by the United
States first-class mail, certified, postage prepaid, return receipt requested,
to the parties at their respective addresses set forth as follows:

If to the Lender, to:

EAGLEBANK

7815 Woodmont Avenue

Bethesda, MD 20814

Attn: Douglas Vigen, Senior Vice President

With a copy to:

Friedlander Misler, PLLC

5335 Wisconsin Avenue, N.W., Suite 600

Washington, D.C. 20015

Attn: Leonard A. Sloan, Esq.

If to the Borrower, to:

Comstock Redland Road, L.C.

c/o Comstock Holding Companies, Inc.

1886 Metro Center Drive, 4th Floor

Reston, VA 20190

Attn: Christopher Clemente

With a copy to:

Comstock Redland Road, L.C.

c/o Comstock Holding Companies, Inc.

1886 Metro Center Drive, 4th Floor

Reston, VA 20190

Attn: Jubal Thompson, Esq.

Any notice, request, demand or other communication delivered or sent in the
manner aforesaid shall be deemed given or made (as the case may be) upon the
earliest of (a) the date it is actually received, (b) on the business day after
the day on which it is delivered by hand, (c) on the business day after the day
on which it is properly delivered by Federal Express (or a comparable overnight
delivery service), or (d) on the third (3rd) business day after the day on which
it is deposited in the United States mail. Any party may change such party’s
address by notifying the other parties of the new address in any manner
permitted by this Section.

 

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7.3 Successors and Assigns. This Agreement will be binding upon and inure to the
benefit of the Lender and the Borrower and their respective successors, assigns,
personal representatives, executors and administrators, provided that the
Borrower may not assign or transfer its rights under this Agreement.

7.4 Entire Agreement. Except for the other Loan Documents expressly referred to
in this Agreement, this Agreement represents the entire agreement between the
Lender and the Borrower, supersedes all prior commitments and may be modified
only by an agreement in writing.

7.5 Survival. All agreements, covenants, representations and warranties made in
this Agreement and all other provisions of this Agreement will survive the
delivery of this Agreement and the other Loan Documents and the making of the
advances under this Agreement and will remain in full force and effect until the
obligations of the Borrower under this Agreement and the other Loan Documents
are indefeasibly satisfied.

7.6 Governing Law. This Agreement will be governed by and construed in
accordance with the laws of the State of Maryland, without reference to conflict
of laws principles.

7.7 Headings. Section headings are for convenience of reference only and shall
not affect the interpretation of this Agreement.

7.8 Participations. The Lender shall have the right to sell all or any part of
its rights under the Loan Documents, and the Borrower authorizes the Lender to
disclose to any prospective participant in the Loan any and all financial and
other information in the Lender’s possession concerning the Borrower or the
collateral for the Loan.

7.9 No Third Party Beneficiary. The parties do not intend the benefits of this
Agreement or any other Loan Document to inure to any third party.

7.10 Waiver of Jury Trial. TO THE FULLEST EXTENT PERMITTED BY LAW, THE LENDER
AND THE BORROWER KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE ANY RIGHTS THEY
MAY HAVE TO A TRIAL BY JURY BASED ON, ARISING OUT OF OR UNDER, OR IN CONNECTION
WITH THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS.

7.11 Waiver. The rights of the Lender under this Agreement and the other Loan
Documents shall be in addition to all other rights provided by law. No waiver of
any provision of this Agreement, or any other Loan Document, shall be effective
unless in writing, and no waiver shall extend beyond the particular purpose
involved. No waiver in any one case shall require the Lender to give any
subsequent waivers.

 

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7.12 Severability. If any provision of this Agreement or any other Loan Document
is held to be void, invalid, illegal or unenforceable in any respect, such
provision shall be fully severable and this Agreement or the applicable Loan
Document shall be construed as if the void, invalid, illegal or unenforceable
provision were not included in this Agreement or in such Loan Document.

7.13 No Setoffs. With respect to a monetary default claimed by the Lender under
the Loan Documents, no setoff, claim, counterclaim, reduction or diminution of
any obligation or defense of any kind or nature that the Borrower has or may
have against the Lender (other than the defenses of payment, the Lender’s gross
negligence or willful misconduct) shall be available against the Lender in any
action, suit or proceeding brought by the Lender to enforce this Agreement or
any other Loan Document. The foregoing shall not be construed as a waiver by the
Borrower of any such rights or claims against the Lender, but any recovery upon
any such rights or claims shall be had from the Lender separately, it being the
intent of this Agreement and the other Loan Documents that the Borrower shall be
obligated to pay, absolutely and unconditionally, all amounts due under this
Agreement and the other Loan Documents.

7.14 No Merger. The Borrower and the Lender expressly agree that the Borrower’s
agreement and obligation to pay the Lender’s reasonable attorneys’ fees and
costs, and all other litigation expenses, shall not be merged into any judgment
obtained by the Lender, but shall survive the same and shall not be extinguished
by any monetary judgment. It is the express intent of the parties hereto that
all post-judgment collection fees and expenses (including reasonable attorneys’
fees and costs) shall survive entry of a final judgment and shall be collectible
by the Lender against the Borrower from time to time following entry of any
final judgment obtained by the Lender against the Borrower.

7.15. Counterparts. This Agreement may be executed for the convenience of the
parties in several counterparts, which are in all respects similar and each of
which is to be deemed to be complete in and of itself, and any one of which may
be introduced in evidence or used for any other purpose with the production of
the other counterparts thereof.

7.16 Consent to Jurisdiction. The Borrower irrevocably submits to jurisdiction
of any state or federal court sitting in the Commonwealth of Virginia or the
State of Maryland over any suit, action or proceeding arising out of or relating
to this Agreement, the Note or any other Loan Documents. The undersigned
irrevocably waives, to the fullest extent permitted by law, any objection that
the undersigned may now or hereafter have to the venue of any such suit, action
or proceeding brought in any such court and any claim that any such suit, action
or proceeding brought in any such court has been brought in an inconvenient
forum. Final judgment in any such court shall be conclusive and binding and may
be enforced in any court in which the undersigned is subject to jurisdiction by
a suit upon such judgment provided that service of process is effected as
provided herein or as otherwise permitted by applicable law.

7.17 Service of Process. The Borrower hereby consents to process being served in
any suit, action or proceeding instituted in the Commonwealth of Virginia or the
State of Maryland in connection with the Loan by (i) the mailing of a copy
thereof by certified mail, postage prepaid, return receipt requested, to the
Borrower at the address set forth in the Notices section of this Agreement and
(ii)

 

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serving a copy thereof upon the Borrower’s registered agent for service of
process. The undersigned irrevocably agrees that such service shall be deemed to
be service of process upon the undersigned in any such suit, action or
proceeding. Nothing in this Agreement shall affect the right of the Lender
otherwise to bring proceedings against the undersigned in the courts of any
jurisdiction or jurisdictions.

9.18 Exhibits. All exhibits referred to herein as attached hereto are
incorporated in full by reference as though fully set forth in this Agreement.
The Exhibits are:

 

Exhibit A:

   Legal Description of the Property and the Housing Parcel

Exhibit B:

   Form of Apartment Parcel Deed of Trust

Exhibit C:

   Carve Out Obligations

[SIGNATURES ON FOLLOWING PAGES]

 

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IN WITNESS WHEREOF, the Borrower and the Lender have caused this Agreement to be
executed in their respective names by duly authorized representatives as of the
day and year first above written. The Guarantor joins herein to consent and
agree to the terms, conditions, provisions and covenants of those sections of
this Agreement that address a covenant or obligation of the Guarantor.

 

WITNESS:   BORROWER:  

COMSTOCK REDLAND ROAD, L.C., a Virginia

limited liability company

  By:  

Comstock Holding Companies, Inc., a Delaware

corporation, its Manager

    By:  

 

      Christopher D. Clemente       Chief Executive Officer

[SEAL]

COMMONWEALTH OF VIRGINIA

COUNTY OF                     , ss:

I,                     , a Notary Public in and for the aforesaid jurisdiction,
do hereby certify that Christopher D. Clemente personally appeared before me in
said jurisdiction and acknowledged that he is the Chief Executive Officer of
Comstock Holding Companies, Inc., which is the Manager of Comstock Redland Road,
L.C., a Virginia limited liability company, party to the foregoing instrument,
and that the same is his act and deed and the act and deed of said Comstock
Redland Road, L.C.

IN WITNESS WHEREOF, I have set my hand and Notarial Seal, this      day of
            , 2013.

 

  

 

Notary Public

[SEAL]    My Commission expires:                        .    Notary Registration
No.                         .

 

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Witness:   GUARANTOR:  

COMSTOCK HOLDING COMPANIES, INC., a

Delaware corporation

______________     Print Name:       By:  

 

    Christopher D. Clemente     Chief Executive Officer

COMMONWEALTH OF VIRGINIA

COUNTY OF                     , ss:

I,                     , a Notary Public in and for the aforesaid jurisdiction,
do hereby certify that Christopher D. Clemente personally appeared before me in
said jurisdiction and acknowledged that he is the Chief Executive Officer of
Comstock Holding Companies, Inc., a Delaware corporation, party to the foregoing
instrument, and that the same is his act and deed and the act and deed of said
Comstock Holding Companies, Inc..

IN WITNESS WHEREOF, I have set my hand and Notarial Seal, this      day of
            , 2013.

 

  

 

Notary Public

[SEAL]    My Commission expires:                        .    Notary Registration
No.                         .

 

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Witness:   LENDER:   EAGLEBANK ______________     Print Name:       By:  

 

    Douglas Vigen     Senior Vice President

[SEAL]

COMMONWEALTH OF VIRGINIA

COUNTY OF                     , ss:

I,                     , a Notary Public in and for the aforesaid jurisdiction,
do hereby certify that Douglas Vigen personally appeared before me in said
jurisdiction and acknowledged that he a Senior Vice President of EAGLEBANK; that
he has been duly authorized to execute and deliver the foregoing instrument for
the purposes therein contained and that the same is his act and deed; that the
seal affixed to said instrument is such corporate seal and that it was so
affixed by order of the Board of Directors of said Bank; and that he signed his
name thereon by like order.

IN WITNESS WHEREOF, I have set my hand and Notarial Seal, this      day of
            , 2013.

 

  

 

Notary Public

[SEAL]    My Commission expires:                        .    Notary Registration
No.                         .

 

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EXHIBIT A

Legal Description of the Property and the Housing Parcel

Parcel P-146 in Montgomery County, Maryland, being that tract of land comprising
4.24307 acres, more or less, said tract of land being bisected by Yellowstone
Way.

Tax ID No. 04-001-00776834.

For metes and bounds description, see Exhibit “A” to Commitment for Title
Insurance issued by Stewart Title Guaranty Company on February 13, 2013, File
No. 01242 – 1549.

 

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EXHIBIT B

FORM OF APARTMENT PARCEL DEED OF TRUST

[ATTACHED]

 

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EXHIBIT C

CARVE OUT OBLIGATIONS

The Guarantor shall also guaranty the full and timely payment of any and all
actual loss, damage, cost, expense, liability, claim or other obligation
incurred by the Lender (including reasonable attorneys’ fees and out-of-pocket
costs actually incurred) arising out of or in connection with any one or more of
the following (the “Carve Out Obligations”):

(i) Fraud, material misrepresentation or willful misconduct by Borrower or
Guarantor or any of their respective members, managers, officers, principals, or
any other person properly authorized to make statements or representations, or
act, on behalf of Borrower or Guarantor in connection with the Loan or the
Property;

(ii) physical waste committed on the Property; damage to the Property as a
result of the intentional misconduct, recklessness or gross negligence of
Borrower or Guarantor, or any agent or employee of any such persons; or the
removal of any portion of the Property by or at the direction of Borrower or
Guarantor or any direct or indirect member or manager thereof, in violation of
the terms of the Loan Documents (as defined in the Loan Agreement) following a
default under the Loan which is not cured within any applicable grace or cure
period (an “Event of Default”);

(iii) subject to any right to contest or bond off such matters, as provided in
the Deed of Trust or Loan Agreement, failure to pay any valid taxes,
assessments, mechanics’ liens, materialmen’s liens or other liens which could
create liens on any portion of the Property which would be superior to the lien
or security title of the Deed of Trust or the other Loan Documents, to the full
extent of the amount claimed by any such lien claimant;

(iv) the breach of any representation, warranty or covenant in, and any
liability under any provision in, that certain Environmental Indemnity Agreement
of even date herewith given by Borrower and Guarantor to Lender or the breach of
any representation, warranty or covenant relating solely to, and any liability
under any provision concerning, environmental laws, hazardous substances or
asbestos in the Deed of Trust;

(v) the misapplication or conversion of (A) any insurance proceeds paid to
Borrower by reason of any loss, damage or destruction to the Property, (B) any
awards or other amounts received by Borrower in connection with the condemnation
of all or a portion of the Property, or (C) any rents from the Property
following an Event of Default or collected in advance; and

(vi) failure to maintain any insurance policies required under the Loan
Documents, or timely to pay or provide the amount of any insurance deductible,
to the extent of the applicable deductible, following a casualty or other
insured event.

 

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