Exhibit 10.12


 


CARVE-OUT GUARANTY


 


THIS CARVE-OUT
GUARANTY (this “Guaranty”) dated as of January 27, 2005, is made by
COMSTOCK HOMEBUILDING COMPANIES, INC., a Delaware corporation (“Guarantor”),
in favor of CORUS BANK, N.A. (“Lender”).


 


R E C I T A L S:


 


A.                                   COMSTOCK
PENDERBROOK, L.C., a Virginia limited liability company (“Borrower”),
and Lender have entered into a loan in the maximum principal sum of $67,000,000
(the “Loan”) pursuant to a loan agreement of even date herewith (the “Loan
Agreement”) and certain other documents.


 


B.                                     In
connection with the Loan, Borrower has executed and delivered to Lender a
promissory note, dated the date hereof (said note, together with any extensions
thereof or modifications or amendments thereto and any notes issued in substitution
or exchange therefor, being hereinafter referred to collectively as the “Note”).


 


C.                                     To
secure the payment of the obligations and liabilities of Borrower to Lender
under the Loan Agreement and the Note, Borrower has executed and delivered to
Lender a deed of trust and certain other documents and instruments evidencing
and securing the Loan, including but not limited to a Deed of Trust with
Absolute Assignment of Leases and Rents, Security Agreement and Fixture Filing
for the Loan, dated as of the date hereof (the “Deed of Trust”), which
is a lien on the Property.


 


D.                                    Lender
has required, as a condition precedent to making the Loan, that Guarantor
execute and deliver this Guaranty.


 


E.                                      Guarantor
has a financial interest in Borrower and it will be to the direct financial
interest and benefit of Guarantor to assist Borrower to obtain the Loan from
Lender.


 


F.                                      Guarantor
hereby acknowledges that this Guaranty is required by Lender as a condition
precedent and inducement to Lender to make the Loan.


 


NOW, THEREFORE, FOR VALUE RECEIVED, in consideration of the foregoing
Recitals, each of which is an integral part hereof and this Guaranty shall be
construed in light thereof, and in consideration of Lender making the Loan to
Borrower and for other good and valuable consideration, the receipt and
adequacy of which is hereby acknowledged, Guarantor agrees as follows:


 


1.                                       Definitions.


 


(a)                                  Except
as otherwise set forth herein, all capitalized terms used but not defined
herein shall have the meanings ascribed to such terms in the Deed of Trust or,
if not


 





















 


defined therein, in the Loan
Agreement, which definitions are incorporated herein by reference as if fully
set forth herein.


 


(b)                                 As
used herein, the term “Loan Party” shall mean any one or more of
Borrower, Guarantor and any other Person which is a party to this
Guaranty,  the Completion Guaranty, the
Environmental Indemnity Agreement or the Loan Documents, other than Lender.


 


(c)                                  All
references in this Guaranty, the Completion Guaranty, the Environmental Indemnity
Agreement and every other Loan Document to the Loan Agreement, the Note, the
Deed of Trust, the Completion Guaranty, the Environmental Indemnity Agreement
and each and every other Loan Document shall mean the Loan Agreement, the Note,
the Deed of Trust, the Completion Guaranty, the Environmental Indemnity
Agreement and each and every other Loan Document and all modifications,
amendments, supplements, extensions, replacements or restatements thereof or
thereto.


 


2.                                       Guaranty.


 


(a)                                  Guarantor
absolutely, unconditionally and irrevocably guarantees, as a principal obligor
and not as a surety, to Lender any loss (including principal), cost, damage or
expense suffered by Lender due to:


 


(i)                                     fraud
of Borrower or Guarantor;


 


(ii)                                  the
willful misconduct of Borrower or Guarantor and/or material misrepresentations
by Borrower or Guarantor in connection with the Loan;


 


(iii)                               the
commission of intentional waste with regard to the Property;


 


(iv)                              the
intentional misconduct of Borrower or Guarantor causing the cancellation of any
insurance required under the Loan Agreement or any other Loan Document;


 


(v)                                 the
failure of Borrower or Guarantor after the occurrence of an Event of Default to
apply any income generated by the Property (including, but not limited to,
rental receipts and/or security deposits) to any expenses of the Property
and/or payments of the Secured Obligations due to Lender, or to deliver such
income to Lender upon demand;


 


(vi)                              the
transfer or conveyance of the Property or any material portion thereof in violation
of the provisions of the Deed of Trust, the Loan Agreement or any other Loan
Document;


 


(vii)                           Borrower’s
failure to construct, operate or market the Property or utilize the Loan
proceeds in accordance with the Loan Agreement in any material way; or


 





















 


(viii)                        Borrower’s
acceptance of rental payments, if any, more than thirty (30) days in advance of
the due date.


 


(b)                                 Guarantor
absolutely, unconditionally and irrevocably guarantees, as a principal obligor
and not as a surety, to Lender any loss (including principal), cost, damage or
expense suffered by Lender upon the occurrence of any of the following, whether
or not the loss, cost, damage or expense suffered by Lender is caused by any of
the following:


 


(i)                                     if
Borrower, Guarantor or any other Person now or hereafter liable for the Loan
files a voluntary bankruptcy petition under any section or chapter of the
Bankruptcy Code or any similar law or regulation or is a party to a collusive
involuntary bankruptcy petition or any receivership proceedings, in which
Borrower, Guarantor or any other Person now or hereafter liable for the Loan is
the debtor, or the making of an assignment for the benefit of its creditors by
Borrower, Guarantor or any other Person now or hereafter liable for the Loan or
the filing of a case or proceeding by Borrower for its dissolution or
liquidation;


 


(ii)                                  if
Borrower, Guarantor or any other Person now or hereafter liable for the Loan
becomes a party to any case, action, suit or proceeding which suspends,
reduces, impedes, or impairs Lender’s right of recourse to the Property or any
part thereof, provided however, that: (1) the bringing of a good faith
counterclaim which if not raised in an enforcement action would be barred, and
which does not seek to enjoin the enforcement action of Lender; or (2) the good
faith denial of facts alleged by Lender in an enforcement action, shall not
give rise to liability under this subsection (ii); or


 


(iii)                               if
Borrower or Guarantor engages in any intentional act, omission, or
misrepresentation, which has the effect of suspending, delaying, reducing,
impeding, or impairing Lender’s right of recourse to the Property or any part
thereof.


 


Payments made
pursuant to this Guaranty shall be made regardless of any defense, right of
set-off or claims which Borrower, Guarantor or any other Loan Party may have
against Lender.  Lender may apply any and
all such payments to the Secured Obligations in any order of priority as Lender
shall, in its sole discretion, determine.


 


3.                                       Irrevocable
Guaranty.


 


(a)                                  This is an absolute, irrevocable, present and
continuing guaranty of payment and not of collection.


 


(b)                                 The
obligations of Guarantor hereunder are independent of and in addition to the
obligations of Borrower and any other Loan Party under the Completion Guaranty,
the Environmental Indemnity Agreement or any other Loan Document and a separate
action or actions may be brought or prosecuted against Guarantor, whether any
action is brought against


 





















 


Borrower or any other Loan
Party or whether Borrower or any other Loan Party is joined in any action or
actions.  In any action to enforce this
Guaranty, Lender, at its election, may proceed against Guarantor, with or
without:  (i) joining Borrower or any
other Loan Party in any such action; (ii) commencing any action against or
obtaining any judgment against Borrower or any other Loan Party; or (iii)
commencing any proceeding to enforce the Note or the Loan Agreement or to
realize upon all or any part of the Property; provided,  however,
nothing herein contained shall preclude Lender from suing on the Note and the
Loan Agreement or foreclosing the Loan Documents or from exercising any other
rights, remedies or power under the Completion Guaranty, the Environmental
Indemnity Agreement or any Loan Document, and if such foreclosure or other
rights, powers or remedies are availed of, only the net proceeds therefrom,
after deduction of all charges and expenses of every kind and nature
whatsoever, shall be applied in reduction of the Secured Obligations.  Lender shall not be required to institute or
prosecute proceedings to recover any deficiency as a condition of any payment
hereunder or enforcement hereof. 
Nevertheless, in the event Lender elects to pursue its remedies under
any one or more of the other Loan Documents and any disposition of the Property
or any part thereof results in a deficiency, Guarantor hereby further promises
and agrees to immediately pay to Lender the amount of such deficiency.  At any sale of the Property, whether by
foreclosure or otherwise, Lender may, at its discretion, purchase all or any
part of such the Property, offered for sale for its own account, and may apply
against the amount bid therefor the unpaid balance or any part thereof to the
Secured Obligations.


 


(c)                                  The
obligations and liabilities of Guarantor hereunder shall not be diminished or
offset by any payment by Guarantor under any other agreement, document, or
instrument entered into by Guarantor in favor of Lender.


 


4.                                       Return
of Payments.  Guarantor agrees that,
if at any time all or any part of the payments theretofore applied by Lender to
any of the Secured Obligations is rescinded or returned by Lender or Lender is
required to pay any amount thereof to any other Person for any reason
whatsoever (including, without limitation, the insolvency, bankruptcy,
liquidation or reorganization of any party or the determination that such
payment is held to constitute a preference under the bankruptcy laws):  (i) such Secured Obligations shall, for the
purposes of this Guaranty, be deemed to have continued in existence to the
extent of such payment, notwithstanding such application by Lender, and this
Guaranty shall continue to be effective or be reinstated, as the case may be,
as to such Secured Obligations, all as though such application by Lender had
not been made and Guarantor agrees to pay such amount to Lender upon demand;
and (ii) any security interest granted by Guarantor to Lender to secure Lender’s
performance under this Guaranty shall be deemed to be reinstated
notwithstanding any release by Lender of such security interest or pledge.  Guarantor shall execute any document,
instrument or financing statement necessary or desirable to effect this
provision.


 


5.                                       No
Discharge.  Guarantor agrees that the
obligations, covenants and agreements of Guarantor under this Guaranty shall
not be discharged, affected or impaired by:


 


(a)                                  the
renewal or extension of time for the payment and/or performance of the
obligations under the Completion Guaranty, the Environmental Indemnity
Agreement or any of the Secured Obligations under any other Loan Document,
whether made or performed with or without notice to or the knowledge or consent
of Guarantor;


 





















 


(b)                                 any
modification or amendment of the Loan Documents, with or without notice to or
the knowledge or consent of Guarantor, including but not limited to any further
or future extensions of credit which shall become a part of the Secured
Obligations, any change or modification of the interest rate, payment terms,
maturity date or any other covenant of any agreement of Borrower or any other
Loan Party;


 


(c)                                  any
transfer, waiver, compromise, settlement, modification, surrender, or release
of the Note, the Loan Agreement, the Completion Guaranty, the Environmental
Indemnity Agreement or any of the other Loan Documents;


 


(d)                                 the
release or agreement not to sue without reservation of rights of Borrower or
any other Loan Party;


 


(e)                                  the
existence of any defenses to enforcement of the Note, the Loan Agreement, the
Completion Guaranty, the Environmental Indemnity Agreement or any of the other
Loan Documents, other than payment in full of all the Secured Obligations;


 


(f)                                    any
failure, omission, delay or inadequacy, whether entire or partial, of Lender to
exercise any right, power or remedy regarding the Loan or to enforce or realize
upon (or to make Guarantor party to the enforcement or realization upon) any of
Lender’s security for the Loan, including, without limitation, the Property;


 


(g)                                 the
existence of any set-off, claim, reduction, or diminution of the Secured
Obligations, or any defense of any kind or nature, which Guarantor may have
against Borrower,  Borrower’s members or
any other Loan Party or which Borrower, Guarantor or any other Loan Party has
against Lender;


 


(h)                                 the
application of payments received from any source to the payment of any
obligation other than the Secured Obligations, even though Lender might
lawfully have elected to apply such payments to any part or all of the Secured
Obligations;


 


(i)                                     the
addition of any and all other endorsers, guarantors, obligors and other persons
liable for the payment and/or performance of the Secured Obligations, and the
acceptance of any other security for the payment and/or performance of the
Secured Obligations;


 


(j)                                     the
power or authority or lack of power or authority of Borrower to execute and
deliver the Note or the Loan Agreement, or of Borrower or any other Loan Party
to execute, acknowledge or deliver any one or more of the Loan Documents;


 


(k)                                  the
validity or invalidity of the Note, the Loan Agreement, the Completion
Guaranty, the Environmental Indemnity Agreement or the other Loan Documents;


 


(l)                                     the
existence or non-existence of Borrower or any other Loan Party as a legal
entity;


 


(m)                               the
transfer by Borrower or any other Loan Party of all, or any part of, or any interest
in all or any part of the Property;


 





















 


(n)                                 the
institution by or against Borrower, Borrower’s members or any other Loan Party
of bankruptcy, reorganization, readjustment, receivership or insolvency
proceedings of any nature, or the disaffirmation of the Completion Guaranty,
the Environmental Indemnity Agreement or any one or more of the Loan Documents
in any such proceedings or otherwise;


 


(o)                                 any
irregularity or the unenforceability (by reason of any Governmental Authority’s
purporting to reduce or amend or otherwise affect the Secured Obligations), or
the release or discharge of Borrower or Borrower’s members in any receivership,
bankruptcy, winding-up or other creditor proceedings;


 


(p)                                 the
determination by a court of competent jurisdiction that Borrower or any other
Loan Party is not required to pay and/or perform the Secured Obligations
pursuant to operation of law;


 


(q)                                 the
acceptance by Lender of payment of a part of the Secured Obligations, or any
failure, neglect or omission on the part of Lender to realize on or protect any
of the Secured Obligations or any real estate, personal property, or mortgage
or lien security given as security therefor, or to exercise any lien upon, or
right of appropriation of, any monies, credits or property of Borrower toward
liquidation of the Secured Obligations;


 


(r)                                    the
failure by Lender or anyone acting on behalf of Lender to perfect or maintain
perfection of any lien or security interest upon any part of the Property given
at any time to secure repayment of the Secured Obligations; or


 


(s)                                  any
right or claim whatsoever which Guarantor may have against Borrower, Borrower’s
members, any other Loan Party or Lender or the successors or assigns of any of
them;


 


all whether or not Guarantor shall have had notice or knowledge of any
act or omission referred to in the foregoing clauses (a) through (s) of this
Section.


 


Guarantor intends that Guarantor shall remain
liable hereunder as a principal obligor until the Secured Obligations shall
have been indefeasibly paid in full and all the Secured Obligations performed
in accordance with the terms and conditions of the Note and the other Loan
Documents, notwithstanding any fact, act, event or occurrence which might
otherwise operate as a legal or equitable discharge of a surety or guarantor.


 


6.                                       Application
Of Amounts Received.  Any amounts
received by Lender from whatever source on account of the Secured Obligations
may be applied by Lender toward the payment of the Secured Obligations, and in
such order of application, as Lender may from time to time elect, in accordance
with the provisions of the Loan Documents.


 


7.                                       Waiver.


 


(a)                                  Guarantor
expressly waives:


 


(i)                                     notice
of the acceptance by Lender of this Guaranty;


 





















 


(ii)                                  notice
of the existence, creation, payment or nonpayment of the Secured Obligations or
any modification, extension, or amendment thereof;


 


(iii)                               presentment,
demand, protest, notice of protest, notice of presentment, notice of dishonor,
default, non-payment, maturity, release, compromise, settlement, extension,
renewal of the Loan or any obligation under the Loan Documents, notice of
maturity, release, compromise or settlement of any or all commercial paper,
accounts, contract rights, documents, instruments, chattel paper and guarantees
at any time held by Lender with respect to the transactions contemplated in the
Loan Documents, and all other notices whatsoever;


 


(iv)                              any
failure by Lender to inform Guarantor of any facts Lender may now or hereafter
know about Borrower, any other Loan Party, the Property, the Secured
Obligations or the transactions contemplated by the Loan Documents;


 


(v)                                 notice
of any and all changes in the terms, covenants or conditions of the Note or of
the other Loan Documents, including extension and renewal;


 


(vi)                              any
and all substitutions, exchanges or releases of all or any part of the
Property;


 


(vii)                           the
release or agreement not to sue without reservation of rights of anyone liable
in any way for the repayment of the Secured Obligations;


 


(viii)                        all
rights to notice and a hearing prior to Lender’s taking possession or control
of, or to Lender’s replevy, attachment or levy upon the Property;


 


(ix)                                any
bond or security which might be required by any court prior to allowing Lender
to exercise any of Lender’s remedies;


 


(x)                                   the
release or agreement not to sue without reservation of rights of anyone liable
in any way for repayment of the Loan; and


 


(xi)                                the
benefit of all valuation, appraisement, extension and exemption laws;


 


it being understood and agreed that Lender has no duty to so inform and
that Guarantor is fully responsible for being and remaining informed by
Borrower of all circumstances bearing on the existence or creation of the risk
of nonpayment and/or nonperformance of the Secured Obligations.


 





















 


(b)                                 Credit
may be granted or continued from time to time by Lender to Borrower without
notice to or authorization from Guarantor, including but not limited to making
additional loans or other financial accommodations by Lender to Borrower or any
other Loan Party regardless of the financial or other condition of Borrower,
any other Loan Party or the Property and Guarantor agrees that the obligations,
covenants and agreements of Guarantor under this Guaranty shall not be
discharged, affected or impaired thereby.


 


(c)                                  No
modification or waiver of any of the provisions of this Guaranty shall be
binding upon Lender or Guarantor except as expressly set forth in a writing
duly signed and delivered on behalf of Lender.


 


(d)                                 Guarantor
further agrees that any exculpatory language pertaining to Borrower or to any
other Loan Party contained in the Note, the Loan Agreement or any other Loan
Document shall in no event apply to this Guaranty, and will not prevent Lender
from proceeding against Guarantor to enforce this Guaranty.


 


(e)                                  Guarantor
hereby waives the benefit of any law that would otherwise restrict or limit
Lender in the exercise of its right, which is hereby acknowledged, to
appropriate without notice at any time hereafter any indebtedness or obligation
matured or unmatured owing from Lender to Guarantor.  Lender may, from time to time, without demand
or notice of any kind, appropriate and apply toward the payment of such of the
Secured Obligations, and in such order of application, as Lender may, from time
to time, elect any and all such balances, credits, deposits, accounts, moneys,
cash equivalents and other assets, or in the name of Guarantor, then or
thereafter with Lender.  Guarantor hereby
assigns and transfers to Lender any and all cash, negotiable instruments,
documents of title, chattel paper, securities, certificates of deposit, deposit
accounts, other cash equivalents and other assets of Guarantor, in the
possession or control of Lender for any purpose.


 


(f)                                    Guarantor
hereby waives the filing of a claim with a court in the event of receivership
or bankruptcy of Borrower and waives every defense, cause of action,
counterclaim or setoff which Guarantor may now have or hereafter may have to
any action by Lender in enforcing this Guaranty, including, without limitation,
every defense, counterclaim or setoff which Guarantor may now have, or
hereafter may have, against Borrower, any other Loan Party or any other party
liable to Lender in any manner, other than mandatory counterclaims.  Guarantor ratifies and confirms whatever
Lender may do pursuant to the terms hereof and with respect to all or any part
of the Property and agrees that Lender shall not be liable for any error in
judgment or mistakes of fact or law; provided that nothing contained herein
shall be deemed to limit Lender’s liability for gross negligence or willful
misconduct.  Guarantor hereby agrees that
Guarantor may be joined as a party defendant in any legal proceeding
(including, but not limited to, a foreclosure proceeding) instituted by Lender
against Borrower or any other Loan Party.


 


8.                                       Enforcement
Costs:  If:


 


(a)                                  this
Guaranty, the Loan Agreement, the Note, the Completion Guaranty, the
Environmental Indemnity Agreement or any other Loan Document is placed in the
hands of an attorney for collection or enforcement or is collected or enforced
through any legal proceeding;


 





















 


(b)                                 an
attorney is retained to represent Lender in any bankruptcy, reorganization,
receivership, or other proceedings affecting creditors’ rights and involving a
claim under this Guaranty, the Note, the Completion Guaranty, the Environmental
Indemnity Agreement or any Loan Document;


 


(c)                                  an
attorney is retained to protect or enforce the security interest created by any
one or more of the Loan Documents; or


 


(d)                                 an
attorney is retained to represent Lender in any other proceedings whatsoever in
connection with a default by Guarantor under this Guaranty, or a default by
Borrower or any other Loan Party in connection with the Loan, any of the other
Loan Documents, the Completion Guaranty, the Environmental Indemnity Agreement
or the Property, or to protect or preserve any property which is collateral for
the Loan,


 


then Guarantor shall pay to
Lender upon demand all reasonable attorneys’ fees, costs and expenses,
including without limitation, court costs, filing fees, recording costs,
expenses of foreclosure, title insurance premiums, minutes of foreclosure and
all other costs and expense incurred in connection therewith (all of which are
referred to herein as “Enforcement Costs”), in addition to all other amounts
due hereunder. Any Enforcement Costs, together with interest thereon at the
Interest Rate (as defined in the Note), shall be a part of the Secured
Obligations, secured by the Property, payable by Guarantor to Lender in
accordance with the provisions of this Guaranty and the Loan Documents.  Any reference to attorney’s fees in this
Guaranty, the Completion Guaranty, the Environmental Indemnity Agreement or in
any other Loan Document shall include fees of any separate law firm or in-house
counsel employed by Lender in connection with the Loan.  Notwithstanding anything to the contrary
contained herein, fees of in-house counsel shall be charged at rates of medium
to large sized law firms in the City of Chicago, Illinois for attorneys of
comparable expertise and experience.


 


9.                                       Transfer
Of Secured Obligations. 
Notwithstanding any assignment or transfer of the Secured Obligations or
any interest therein, all portions of such Secured Obligations, including those
assigned or transferred, shall be and remain Secured Obligations for the
purposes of this Guaranty, and each and every immediate and successive assignee
or transferee of such Secured Obligations or interest shall, to the extent of
the Secured Obligations or interests assigned or transferred, be entitled to
the benefits of this Guaranty to the same extent as if such assignee or
transferee were Lender; provided  however, that unless the
assignor or transferor shall otherwise consent in writing, the assignor or
transferor shall have an unimpaired right, prior to and superior to that of its
assignee or transferee, to enforce this Guaranty for its benefit as to such
portions of the Secured Obligations or interests therein not assigned or
transferred.


 


10.                                 Subordination.  Any indebtedness or other obligation of
Borrower, now or hereafter held by or owing to Guarantor, is hereby
subordinated to the payment and performance in full of the Secured
Obligations.  Guarantor hereby covenants and
agrees that it will not accept payment of principal, interest or any other amount
of any indebtedness or other obligation of Borrower to Guarantor.  Such indebtedness or obligation
of Borrower to Guarantor shall, at the option of Lender, be collected, enforced
and received by Guarantor as trustee for Lender, and shall be paid over to
Lender on account of the Secured Obligations, but without impairing or
affecting in any manner the liability of Guarantor under the other provisions
of this Guaranty.


 





















 


Nothing in this Section or
elsewhere in this Guaranty shall be construed as Lender’s authorization of or
consent to the creation or existence of any such indebtedness of Borrower to
Guarantor.


 


11.                                 Governing
Law; Interpretation.


 


(a)                                  This
Guaranty has been negotiated, executed and delivered in Fairfax County,
Virginia and shall be governed by and construed in accordance with the internal
laws of the Commonwealth of Virginia, without reference to the conflicts of law
principles of that state.  In any
controversy, dispute or question arising hereunder, under the Completion
Guaranty, the Environmental Indemnity Agreement or under the other Loan
Documents, Guarantor consents to the exercise of jurisdiction over its person
and property by any court of competent jurisdiction situated in the
Commonwealth of Virginia (whether it be a court of such State, or a court of
the United States of America situated in such State), and in connection
therewith, agrees to submit to and be bound by, the jurisdiction of such court
upon Lender’s mailing of process by registered or certified mail, return
receipt requested, postage repaid, to Guarantor at its address for receipt of
notices under this Guaranty.


 


(b)                                 The
headings of sections and paragraphs in this Guaranty are for convenience only
and shall not be construed in any way to limit or define the content, scope, or
intent of the provisions hereof.  As used
in this Guaranty, the singular shall include the plural, and masculine,
feminine, and neuter pronouns shall be fully interchangeable, where the context
so requires.  If any provision of this
Guaranty or any paragraph, sentence, clause, phrase, or word, or the
application thereof, in any circumstances, is adjudicated by a court of
competent jurisdiction to be invalid, the validity of the remainder of this
Guaranty shall be construed as if such invalid part were never included herein.


 


(c)                                  Time
is of the essence of this Guaranty.


 


(d)                                 All
payments to be made hereunder shall be made in currency and coin of the United
States of America which is legal tender for public and private debts at the
time of payment.


 


(e)                                  Wherever
possible each provision of this Guaranty shall be interpreted in such manner as
to be effective and valid under applicable law, but if any provision of this
Guaranty shall be prohibited by or invalid under such law, such provision shall
be ineffective to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining provisions of
this Guaranty.


 


(f)                                    It
is agreed that Guarantor’s liability is independent of any other guaranties at
any time in effect with respect to all or any part of Borrower’s indebtedness
to Lender, including, but not limited to, the Completion Guaranty, and that
Guarantor’s liability hereunder may be enforced regardless of the existence of
any such other guaranties.


 


12.                                 Singular
and Plural; Joint and Several Liability. If there is more than one Borrower
entity, all references to Borrower herein shall be Borrower or any one or more
of them.  All obligations and liabilities
of Guarantor hereunder are in addition to, not in lieu of and are independent
of:  (a) all obligations of Borrower
under any other Loan Document, including the


 





















 


Note and the Loan Agreement;
and (b) any obligation of Guarantor under the Completion Guaranty, the
Environmental Indemnity Agreement or any other Loan Document to which Guarantor
is a party.  All obligations of Guarantor
hereunder shall be joint and several.


 


13.                                 Entire
Agreement.  This Guaranty, the Note,
the Completion Guaranty, the Environmental Indemnity Agreement and the other
Loan Documents constitute the entire agreement between the parties with respect
to the subject matter hereof and supersede all prior such agreements and
understandings, both written and oral. 
This Guaranty may not be modified or amended except by a written
instrument signed by Lender and Guarantor. 
If this Guaranty is executed in several counterparts, each of those
counterparts shall be deemed an original, and all of them together shall
constitute one and the same instrument.


 


14.                                 Payment
and Performance of Secured Obligations. Lender agrees that the obligations
of Guarantor under this Guaranty shall terminate, subject to the provisions of
Section 4 hereof, when Lender shall have received indefeasible payment in full
of all the Secured Obligations and all other sums due and owing under this
Guaranty and all the Secured Obligations shall have been fully performed.


 


15.                                 Successors
and Assigns; Miscellaneous.  This
Guaranty shall inure to the benefit of and may be enforced by Lender and any
subsequent holder of the Note, the Loan Agreement, the Completion Guaranty, the
Environmental Indemnity Agreement or the other Loan Documents, and all of the
covenants, agreements and obligations of Guarantor hereunder shall extend to
and be binding upon and enforceable against Guarantor and the heirs,
administrators, legal representatives, successors and assigns of
Guarantor.  This Guaranty and the
obligations hereunder shall not be discharged, affected, or impaired, in whole
or in part, upon the bankruptcy, insolvency or death of Guarantor.


 


16.                                 Further
Assurances; Representation by Counsel.


 


(a)                                  Guarantor
further covenants and agrees that Guarantor shall at any time and from time to
time, upon the reasonable request of Lender, take, or cause to be taken, any
action and execute and deliver any further documents which, in the reasonable
opinion of Lender, may be necessary, required or desirable in order to carry
out the intent and purposes of this Guaranty.


 


(b)                                 Guarantor
hereby represents and warrants that it has consulted and conferred with
competent legal counsel of its choice before executing this Guaranty, the
Completion Guaranty, the Environmental Indemnity Agreement and all other Loan
Documents.  Guarantor further represents
and warrants that it has read and understood the terms of this Guaranty and
intends to be bound hereby.  In the event
of an ambiguity or conflict in the terms hereof, the rule of construction
requiring resolution against the drafter of the document shall not be applied.


 


17.                                 Notices.  Any and all notices given in connection with
this Guaranty shall be deemed adequately given only if in writing and addressed
to the party for whom such notices are intended at the address set forth
below.  All notices shall be delivered in
accordance with the


 





















 


notice provisions of the Loan
Agreement.  Any and all notices referred
to in this Guaranty, or which either party desires to give to the other, shall
be addressed as follows:


 


	
  To
  Guarantor:

  	
  Comstock
  Homebuilding Companies, Inc.

  
	
   

  	
  11465 Sunset
  Hills Road, Suite 510

  
	
   

  	
  Reston, Virginia
  20190

  
	
   

  	
  Attention: Christopher Clemente

  
	
   

  	
  Telecopy
  Number: (703) 760-1520

  
	
   

  	
   

  
	
  with a copy to:

  	
  Bankert & Associates, P.C.

  
	
   

  	
  3025 Hamaker Court

  
	
   

  	
  Suite 501

  
	
   

  	
  Fairfax, Virginia 22031

  
	
   

  	
  Attention: Joseph E. Bankert, Esq.

  
	
   

  	
  Telecopy Number: (703) 876-4628

  
	
   

  	
   

  
	
  To Lender:

  	
  Corus Bank, N.A.

  
	
   

  	
  3959 N. Lincoln Avenue

  
	
   

  	
  Chicago, IL 60613

  
	
   

  	
  Attn: David Krischke, Assistant Vice
  President

  
	
   

  	
  Telecopy Number: (773) 832-3553

  
	
   

  	
   

  
	
  with a copy to:

  	
  Corus Bank, N.A.

  
	
   

  	
  3959 N. Lincoln Avenue

  
	
   

  	
  Chicago, IL 60613

  
	
   

  	
  Attn: Joel Solomon, General Counsel

  
	
   

  	
  Telecopy Number: (773) 832-3536

  
	
   

  	
   

  
	
  with a copy to:

  	
  Sidley Austin Brown & Wood LLP

  
	
   

  	
  1501 K Street, N.W.

  
	
   

  	
  Washington, D.C. 20005

  
	
   

  	
  Attn: Andrea J. Cummings, Esq.

  
	
   

  	
  Telecopy Number: (202) 736-8711

  



 


Any party hereto may, by notice given hereunder, designate any further
or different addresses to which subsequent notices, certificates or other
communications shall be sent.


 


18.                                 Additional
Representations and Warranties.  In
addition to and independent of any other obligation or liability under this
Guaranty, Guarantor hereby represents and warrants to Lender as follows:


 


(a)                                  Execution
and Binding Effect.  This Guaranty,
the Completion Guaranty, the Environmental Indemnity Agreement and each other
Loan Document to which Guarantor is a party and which is executed and delivered
or required to be executed and delivered on or before the date of which this
representation and warranty is made, or deemed made, has been duly and


 





















 


validly executed and delivered
by Guarantor.  This Guaranty, the
Completion Guaranty, the Environmental Indemnity Agreement and each such other
Loan Document constitutes, and the Completion Guaranty, the Environmental
Indemnity Agreement and each other Loan Document when executed and delivered by
Guarantor will constitute, the legal, valid and binding obligations of
Guarantor, jointly and severally, enforceable against Guarantor in accordance
with its terms, subject to bankruptcy, insolvency and other laws affecting
creditor’s rights generally.  This
Guaranty shall continue to be effective with respect to any guaranteed
obligations arising or created after any attempted revocation by Guarantor and
after Guarantor’s death, in which event this Guaranty shall be binding upon
Guarantor’s estate and Guarantor’s legal representatives and heirs.


 


(b)                                 Violation
of Agreements.  To the best of
Guarantor’s knowledge, neither the execution and delivery of this Guaranty, nor
consummation of the transactions herein or therein contemplated, nor
performance of or compliance with the terms and conditions hereof or thereof,
does or will at any time during the term hereof:


 


(i)                                     violates
or conflicts with any Laws, or


 


(ii)                                  violates,
conflicts with or will result in a breach of any term or condition of, or
constitute a default under, or result in (or give rise to any right, contingent
or otherwise, of any Person to cause) any termination, cancellation, prepayment
or acceleration of performance of, or result in the creation or imposition of
(or give rise to any obligation, contingent or otherwise, to create or impose)
any lien upon any property of Guarantor (except for any lien in favor of Lender
securing the Secured Obligations) pursuant to, or otherwise result in (or give
rise to any right, contingent or otherwise, of any Person to cause) any change
in any right, power, privilege, duty or obligation of Guarantor under or in
connection with:


 


(A)                              any
agreement or instrument creating, evidencing or securing any indebtedness or
guaranty equivalent to which Guarantor is a party or by which it or any of
their properties (now owned or hereafter acquired) may be subject or bound, or


 


(B)                                any
other agreement or instrument or arrangement to which Guarantor is a party or
by which it or any of its properties (now owned or hereafter acquired) may be
subject or bound.


 


(c)                                  Government
Approvals and Filings.  To the best
of Guarantor’s knowledge, no approval, order, consent, authorization,
certificate, license, permit or validation of, or exemption or other action by,
or filing, recording or registration with, or notice to, any governmental
authority (collectively, “Governmental Action”) is or will be necessary
in connection with the execution and delivery of this Guaranty, the Completion
Guaranty, the


 





















 


Environmental Indemnity
Agreement or any other Loan Document to which Guarantor is a party, the
consummation of the transactions herein or therein contemplated, the
performance of or compliance with the terms and conditions hereof or thereof,
or to ensure the legality, validity, binding effect, enforceability or
admissibility in evidence hereof or thereof.


 


(d)                                 Violation
of Laws.  To the best of Guarantor’s
knowledge, Guarantor is not in violation of any applicable statute, regulation
or ordinance of the United States of America, of any state, city, town, municipality,
county or of any other jurisdiction, or of any agency thereof (including, but
not limited to any Hazardous Materials Laws (as defined in the Environmental
Indemnity Agreement)).


 


(e)                                  Solvency.  Guarantor: (i) is now and at all times during
the term hereof shall be generally paying its debts as they mature; (ii) now
owns, and at all times during the term hereof shall own, property which, at a
fair valuation, is greater than the sum of its debts, and (iii) now has and at
all times during the term hereof shall have capital sufficient to carry on its
business and personal affairs and any such affairs in which it is about to
engage.


 


(f)                                    Proceeding.  There is no condition, event or circumstance
existing, or any litigation, arbitration, governmental or administrative
proceedings, actions, examinations, claims or demands pending nor, to Guarantor’s
knowledge, threatened affecting Guarantor which are likely to result in a
Material Adverse Effect, and Guarantor knows of no basis therefor.


 


(g)                                 Tax
Returns.


 


(i)                                     All
tax and informational returns required to be filed by or on behalf of Guarantor
have been properly prepared, executed and filed.  All taxes, assessments, fees and other
charges upon Guarantor, or upon any of its properties or incomes, which are due
and payable have been paid other than those not yet delinquent and payable
without premium or penalty, and except for those being diligently contested in
good faith by appropriate proceedings, and in each case adequate funds and
provisions for such taxes have been made by Guarantor.


 


(ii)                                  Guarantor
does not know of any proposed additional assessment or basis for any material
assessment for any additional taxes (whether or not reserved against).


 


(iii)                               Guarantor
has paid all charges shown to be due and payable on said tax returns or on any
assessments made against it or any of its property, and all other charges
imposed on it or any of its properties by any governmental authority.


 


(h)                                 Default
Under Other Agreements.  Guarantor
has not received any written notice of a default with respect to any indenture,
loan agreement, mortgage, deed or other similar agreement relating to the
borrowing of monies to which it is a party, and by which it is bound.


 





















 


(i)                                     Insurance.  Guarantor maintains with financially sound
and reputable insurers, not related to or affiliated with Guarantor, insurance
with respect to its properties and assets and against at least such
liabilities, casualties and contingencies and in at least such types and
amounts as is customary in the case of individuals having similar properties
and assets similarly situated.


 


(j)                                     Adverse
Conditions.  No condition,
circumstance, event, agreement, document, instrument, restriction, litigation
or proceeding (or to Guarantor’s knowledge, threatened litigation or proceeding
or basis therefor) relating to Guarantor exists (i) which are likely to result
in a Material Adverse Effect; (ii) which would constitute an Event of Default
under this Guaranty, the Completion Guaranty, the Environmental Indemnity
Agreement or any of the Loan Documents; or (iii) which would constitute such an
Event of Default with the giving of notice or lapse of time or both.


 


19.                                 Additional
Covenants Of Guarantor.


 


(a)                                  Guarantor
shall deliver or cause to be delivered to Lender those reports and financial
statements set forth below.  All such
financial statements shall be internally prepared and shall fairly and
accurately present in all material respects the assets, liabilities and
financial conditions of Guarantor and such other Persons, if any, described
therein as of and for the periods ending of such dates set forth therein.


 


(i)                                     A
disclosure of any judgments and pending or threatened material litigation
against Guarantor, Borrower or the Property promptly upon Guarantor’s awareness
of such litigation;


 


(ii)                                  On
or before April 30 of each year during the term of the Loan, federal and state
income tax returns of Guarantor certified to be true, complete and correct by
an authorized representative of Guarantor, as appropriate; provided, that if an
extension is filed by Guarantor with the Internal Revenue Service or applicable
state revenue department, then if Lender is provided a true, correct and
complete copy of such extension, Guarantor may deliver such income tax returns
to Lender simultaneously upon the filing thereof;


 


(iii)                               Within
ninety (90) days of the end of each fiscal year, completed, signed and dated
annual financial statements, including income statements and balance sheets, of
Guarantor, with such verifications, supporting documentation or additional
statements as Lender may reasonably request, certified by an officer of
Guarantor as being true, correct and complete; and


 


(iv)                              Guarantor
shall provide, from time to time during the term hereof, such other information
and reports, financial and otherwise, concerning Borrower, Guarantor and the
Property as Lender may reasonably request.


 





















 


(b)                                 Upon
demand by Lender, at any time and from time to time, whether or not an Event of
Default has occurred under the Note, the Loan Agreement or any other Loan
Document, Guarantor shall execute a reaffirmation of and shall remake this
Guaranty as of such date.  Failure of
Guarantor to reaffirm and remake this Guaranty at any time, on demand, shall be
an Event of Default hereunder and under the Note, the Loan Agreement and the
other Loan Documents, without notice or opportunity to cure.


 


20.                                 Jurisdiction
and Venue.


 


(a)                                  TO
THE MAXIMUM EXTENT PERMITTED BY LAW, GUARANTOR AND LENDER EACH HEREBY AGREES
THAT ALL ACTIONS OR PROCEEDINGS ARISING IN CONNECTION WITH THIS GUARANTY BE
TRIED AND DETERMINED IN A FEDERAL COURT OR STATE COURT LOCATED IN THE
COMMONWEALTH OF VIRGINIA.


 


(b)                                 TO
THE MAXIMUM EXTENT PERMITTED BY LAW, GUARANTOR AND LENDER EACH HEREBY EXPRESSLY
WAIVES ANY RIGHT IT MAY HAVE TO ASSERT THE DOCTRINE OF FORUM NON CONVENIENS
OR TO OBJECT TO VENUE TO THE EXTENT ANY PROCEEDING IS BROUGHT IN ACCORDANCE
WITH THIS SECTION; PROVIDED, HOWEVER, THAT ANY SUIT SEEKING ENFORCEMENT AGAINST
ANY COLLATERAL OR OTHER PROPERTY MAY BE BROUGHT, AT LENDER’S OPTION, IN THE
COURTS OF ANY JURISDICTION WHERE SUCH COLLATERAL OR OTHER PROPERTY MAY BE
FOUND.  GUARANTOR HEREBY EXPRESSLY AND
IRREVOCABLY SUBMITS TO THE JURISDICTION OF THE FEDERAL AND STATE COURTS OF THE
COMMONWEALTH OF VIRGINIA FOR THE PURPOSE OF SUCH LITIGATION AS SET FORTH ABOVE
AND IRREVOCABLY AGREES TO BE BOUND BY ANY JUDGMENT RENDERED THEREBY IN
CONNECTION WITH SUCH LITIGATION. 
GUARANTOR FURTHER IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS BY
CERTIFIED OR REGISTERED MAIL, POSTAGE PREPAID, OR BY PERSONAL SERVICE AT THE
ADDRESS OF GUARANTOR STATED ABOVE OR ANY OTHER METHOD PERMITTED BY LAW.  TO THE EXTENT THAT GUARANTOR HAS OR HEREAFTER
MAY ACQUIRE ANY IMMUNITY FROM JURISDICTION OF ANY COURT OR FROM ANY LEGAL
PROCESS (WHETHER THROUGH SERVICE OR NOTICE, ATTACHMENT PRIOR TO JUDGMENT,
ATTACHMENT IN AID OF EXECUTION OR OTHERWISE) WITH RESPECT TO ITSELF OR ITS
PROPERTY, GUARANTOR HEREBY IRREVOCABLY WAIVES SUCH IMMUNITY IN RESPECT OF ITS
OBLIGATIONS UNDER THIS GUARANTY.


 


21.                                 Waiver
of Jury Trial.  TO THE MAXIMUM EXTENT
PERMITTED BY LAW, GUARANTOR AND LENDER EACH HEREBY KNOWINGLY VOLUNTARILY AND
INTENTIONALLY WAIVES ANY RIGHT TO A TRIAL BY JURY IN RESPECT OF ANY ACTION,
CAUSE OF ACTION, CLAIM, DEMAND OR PROCEEDING ARISING OUT OF, UNDER OR IN
CONNECTION WITH THIS GUARANTY, THE COMPLETION GUARANTY, THE ENVIRONMENTAL
INDEMNITY AGREEMENT OR ANY OTHER LOAN DOCUMENT, OR IN ANY WAY CONNECTED WITH,
RELATED TO OR INCIDENTAL TO THE DEALINGS OF GUARANTOR AND LENDER WITH RESPECT
TO THIS GUARANTY, THE COMPLETION GUARANTY, THE ENVIRONMENTAL


 





















 


INDEMNITY AGREEMENT OR ANY
OTHER LOAN DOCUMENT, OR THE TRANSACTIONS RELATED HERETO, OR ANY COURSE OF
CONDUCT, COURSE OF DEALINGS, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS
OF EITHER PARTY IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING, AND
WHETHER SOUNDING IN CONTRACT, TORT, OR OTHERWISE.  TO THE MAXIMUM EXTENT PERMITTED BY LAW,
GUARANTOR AND LENDER HEREBY AGREE THAT ANY SUCH ACTION, CAUSE OF ACTION, CLAIM,
DEMAND OR PROCEEDING SHALL BE DECIDED BY A COURT TRIAL WITHOUT A JURY AND THAT
GUARANTOR OR LENDER MAY FILE AN EXECUTED COPY OF THIS GUARANTY WITH ANY COURT
OR OTHER TRIBUNAL AS WRITTEN EVIDENCE OF THE CONSENT OF GUARANTOR AND LENDER TO
THE WAIVER OF ITS RIGHT TO TRIAL BY JURY. 
NO PARTY SHALL SEEK TO CONSOLIDATE, BY COUNTER CLAIM OR OTHERWISE, ANY
ACTION IN WHICH A JURY TRIAL HAS BEEN WAIVED WITH ANY OTHER ACTION IN WHICH A
JURY TRIAL CANNOT BE OR HAS NOT BEEN WAIVED.


 


 


[THE REMAINDER OF THIS PAGE IS LEFT INTENTIONALLY BLANK]


 





















 


IN WITNESS
WHEREOF, Guarantor has executed this Guaranty as of the date first above
written.


 


GUARANTOR:


 


	
  COMSTOCK
  HOMEBUILDING COMPANIES, INC.,

  
	
  a Delaware
  corporation

  
	
   

  
	
  By:

  	
  /s/
  Christopher Clemente

  	
   

  
	
  Name:
  Christopher Clemente

  
	
  Title: Chief
  Executive Officer