**EXHIBIT 10.40****Execution Copy****GUARANTY AGREEMENT**     **THIS GUARANTY AGREEMENT**(this “Guaranty”) is made as of the 31st day of January,2006, by **COMSTOCK HOMEBUILDING COMPANIES, INC.**, a Delaware corporation (the “ Guarantor”) in favorof **BANK OF AMERICA, N.A.**, a national banking association (the “Lender”), and its successors andassigns.**R E C I T A L S****:**     **WHEREAS,**Lender has made an acquisition loan to Comstock Carter Lake, L.C. (“Borrower”) in themaximum principal amount of $26,000,000.00 (or so much thereof as shall be advanced) (suchextensions of credit being herein sometimes called individually and/or collectively the “Loan”);     **WHEREAS,**as a condition precedent to making the Loan, the Lender has required, among otherthings, the execution and delivery of this Guaranty by Guarantor;     **WHEREAS,**the Loan shall be made in accordance with the terms and conditions of a LoanAgreement of even date herewith, between the Lender and Borrower (as amended, modified orsupplemented from time to time, the “Loan Agreement”);     **WHEREAS,**the Loan shall be evidenced by certain notes, applications or agreements for theissuance of a letter or letters of credit, including, without limitation, that certain Deed ofTrust Note of even date herewith, from Borrower payable to the order of the Lender in the maximumprincipal amount of $26,000,000.00, or so much thereof as shall be advanced, and any otherinstrument or agreement executed from time to time by the Borrower in favor of the Lender, as anyof the same may from time to time be amended, modified, replaced or supplemented (the “Note”);     **WHEREAS,**the Guaranty is or shall be secured by one or more Credit Line Deed(s) of Trust andSecurity Agreements now or hereafter executed and delivered by the Borrower to certain trustees forthe benefit of the Lender, including, without limitation, that certain Credit Line Deed of Trustand Security Agreement of even date herewith, from Borrower as grantor, to certain trustees for thebenefit of the Lender (as amended, modified or supplemented from time to time, collectively, the“Deeds of Trust”), covering certain real property as more particularly described therein, as wellas all improvements located thereon;     **WHEREAS,**it is intended that this Guaranty extend to the Loan and all other amounts owingunder any of the “Loan Documents” (hereinafter defined), without any need for any notice to theGuarantor of the making of the Loan or advances thereunder and without any need for any supplementsor amendments to this Guaranty or any other documentation to be executed by the Guarantor; and     **WHEREAS,**unless otherwise defined herein, all capitalized terms used herein shall have themeanings assigned to them in the Loan Agreement.
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**Execution Copy****W I T N E S S E T H:**     For good and valuable consideration, the receipt and adequacy of which are herebyacknowledged, and as a material inducement to the Lender to extend credit to the Borrower from timeto time, the Guarantor hereby guarantees to the Lender the prompt and full payment and performanceof the Indebtedness and the other obligations in connection with the Loan as defined and describedbelow in this Guaranty (hereinafter sometimes collectively called the “Obligations”), upon thefollowing terms and conditions:     **1. ****Guaranty of Payment****.**The Guarantor hereby unconditionally and irrevocablyguarantees to the Lender the punctual payment when due, whether by scheduled payment date, uponmaturity, lapse of time, by acceleration of maturity, or otherwise, and at all times thereafter, ofall principal, interest (including interest accruing after the commencement of any bankruptcy orinsolvency proceeding by or against the Borrower, whether or not allowed in such proceeding), fees,late charges, costs, expenses, indemnification indebtedness (including, without limitation,indemnification for environmental matters), and other sums of money now or hereafter due and owingpursuant to (a) the terms of the Note, the Loan Agreement, the Deed(s) of Trust, and any and allother documents executed by the Borrower in connection with the Loan (the “Loan Documents”), now orhereafter existing, and specifically including any and all advances made by the Lender under theLoan Documents from sources other than the Loan, and interest on such advances, and (b) allrenewals, extensions, increases, refinancings, modifications, supplements or amendments to suchindebtedness, or any of the Loan Documents, or any part thereof (such indebtedness beinghereinafter collectively called the “Indebtedness”). This Guaranty covers the Indebtedness,whether presently outstanding or arising subsequent to the date hereof, whether or not presentlycontemplated by the Guarantor, the Borrower or the Lender, and whether or not the same shall beincurred after satisfaction, payment or reduction of any previous Indebtedness, including allamounts advanced and/or readvanced by the Lender in stages or installments. The guaranty of theGuarantor as set forth in this Section is a continuing guaranty of payment and not a guaranty ofcollection.     **2. ****Guaranty of Performance****.**The Guarantor additionally hereby unconditionally andirrevocably guarantees to the Lender the timely performance of all other obligations of theBorrower under all of the Loan Documents, including without limitation, compliance with allcovenants regarding environmental matters.     **3. ****Primary Liability of the Guarantor****.**This Guaranty is an absolute, irrevocable andunconditional guaranty of payment and performance. The Guarantorshall be liable for the payment and performance of the Obligations, as set forth in this Guaranty,as a primary obligor. This Guaranty shall be effective as a waiver of, and the Guarantor herebyexpressly waives any and all rights to which the Guarantor may otherwise have been entitled underany suretyship laws in effect from time to time, including any right or privilege, whether existingunder statute, at law or in equity, to require the Lender to take prior recourse or proceedingsagainst any collateral, security or Person (hereinafter defined) whatsoever. Upon the occurrenceof: (i) any Default under the Loan, (ii) any reasonable determination by the Lender that amaterial adverse
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**Execution Copy**change has occurred in the financial condition of the Guarantor, (iii) thedissolution or insolvency of Guarantor, subject to the provisions of Section 4 below, or (iv) anytransfer of assets of Guarantor without receiving fair value in exchange therefor, the Indebtednessshall be deemed immediately due and payable at the election of the Lender, and the Guarantor shall,on demand and without presentment, protest, any notice whatsoever, pay the amount due thereon tothe Lender or perform or observe the agreement, covenant, term or condition, as the case may be,and it shall not be necessary for the Lender, in order to enforce such payment or performance byGuarantor, first to institute suit or pursue or exhaust any rights or remedies against the Borroweror others liable on the Obligations or for such performance, or to institute suit or pursue orexhaust any rights or remedies against the Borrower or Guarantor or other sureties of theObligations as contemplated by applicable law or to enforce any rights against any security thatshall ever have been given to secure the Obligations, or to join the Borrower or any others liablefor the payment or performance of the Obligations or any part thereof in any action to enforce thisGuaranty, or to resort to any other means of obtaining payment or performance of the Obligations.The term “Person” as used herein shall mean all of the Borrower and the Guarantor.     **4. ****Representations, Warranties, and Covenants of the Guarantor****.**Guarantor herebyrepresents, warrants, and covenants that: (a) Guarantor will derive substantial benefit, directlyor indirectly, from the making of the Loan to the Borrower and from the making of this Guaranty bythe Guarantor; (b) this Guaranty is duly authorized and valid, and is binding upon and enforceableagainst the Guarantor; (c) the Guarantor is not, and the execution, delivery and performance by theGuarantor of this Guaranty will not cause the Guarantor to be, in violation of or in default withrespect to any law or in default (or at risk of acceleration of indebtedness) under any agreementor restriction by which the Guarantor is bound or affected; (d) Guarantor is a duly organized,validly existing limited liability company in good standing under the laws of the Commonwealth ofVirginia, is lawfully doing business in the jurisdiction where it operates, and has full power andauthority to enter into and perform this Guaranty; (e) except as may have been disclosed to theLender in writing, there is not now pending against or affecting the Guarantor, nor, to theknowledge of the Guarantor, is there threatened, any action, investigation, suit or proceeding byor before any administrative agency which if adversely determined would materially impair or affectthe Guarantor’s financial condition (f) all financial statements and information heretoforefurnished to the Lender by the Guarantor do, and all financial statements and information hereafterfurnished to the Lender by the Guarantor will, fully and accurately present the financial conditionof the Guarantor as of their dates and the results of the Guarantor’s operations for the periodstherein specified, and, since the date of the most recent financial statements of the Guarantorheretofore furnished to the Lender, no material adverse change has occurred in the financialcondition of the Guarantor, nor, except as heretofore disclosed in writing to the Lender, has theGuarantor incurred any material liability, direct or indirect, fixed or contingent; (g) aftergiving effect to this Guaranty, the Guarantor is solvent, is not engaged or about to engage inbusiness or a transaction for which the property of the Guarantor is an unreasonably small capital,and does not intend to incur or believes that it will incur debts that will be beyond its abilityto pay as such debts mature; (h) the Lender has no duty at any time to investigate or inform theGuarantor of the financial or business condition or affairs of the Borrower or any change
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**Execution Copy**therein,and the Guarantor will keep fully appraised of the Borrower’s financial and business condition; (i)the Guarantor acknowledges and agrees that the Guarantor may be required to pay and perform theObligations in full without assistance or support from the Borrower or any other Person; and (j)the Guarantor has read and fully understand the provisions contained in the Loan Agreement, theDeed(s) of Trust, and the other Loan Documents, each of which may be modified, extended,supplemented or extended from time to time without notice to or consent from the Guarantor andwithout affecting the obligations of the Guarantor under this Guaranty.     In addition, during the term of the Loan, Lender must be satisfied that Guarantor’s financialcondition meets the following requirements:(i) Adjusted Tangible Net Worth (ATNW) shall be at least $65,000,000 for fiscal year2005, increasing by 50% of consolidated after tax net earnings for each yearthereafter. Adjusted Tangible Net Worth is defined as GAAP net worth plussubordinated debt approved by Agent less any goodwill, organizational costs,leasehold improvements and Affiliate and/or stockholder receivables and investmentsin joint ventures; and(ii) Debt to Tangible Net Worth (“Leverage Ratio”) shall be 3.50:1. Leverage Ratiois the total Adjusted Liabilities to Adjusted Tangible Net Worth (ATNW). AdjustedLiabilities is defined as GAAP total liabilities less Variable Interest Entities,less subordinated debt due to related parties and investments in affiliates andjoint ventures that are not co-borrowers (“Related Venturer Subordinated Debt”),less subordinated debt (“Direct Subordinated Debt”), plus any other debt guaranteedby Borrower. For purposes hereof, a “Variable Interest Entity” is either: (A) anentity that is consolidated for financial statement purposes when (1) the equityinvestment at risk is not sufficient to permit the entity from financing itsactivities without additional subordinated financial support from other parties or(2) equity holders either (a) lack direct or indirect ability to make decisionsabout the entity (b) are not obligated to absorb expected losses of the entity or(c) do not have the right to receive expected residualreturns of the entity if they occur or (B) a “variable interest entity” as definedin Guarantor’s SEC-filed financial statements and as the definition of such term isamended from time to time based upon guidance from the Financial AccountingStandards Board. For purposes of clarity, the primary beneficiary of a VariableInterest Entity is the party that absorbs a majority of the Variable InterestEntity’s expected losses, receives a majority of the entity’s expected residualreturns, or both, as a result of ownership, contractual or other financial interestsin the entity.     The Guarantor’s representations, warranties and covenants are a material inducement to theLender to enter into the other Loan Documents and shall survive the execution hereof and anybankruptcy, foreclosure, transfer of security or other event affecting the Borrower, the Guarantor,any other party, or any security for all or any part of the Obligations.
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**Execution Copy**     **5. ****Financial Information****.**The Guarantor shall furnish or cause to be furnished to theLender upon request any financial statements for Guarantor and any entity related to the Guarantorcontaining such information and in such form as Lender may from time to time reasonably determine,provided the obligations of the Guarantor hereunder have not already terminated.          Without limiting the generality of the foregoing, the Guarantor shall furnish to the Lenderfinancial statements as follows:          (a) as soon as available, but in no event later than ninety (90) days after the close of itsfiscal year (but in no event earlier than the date such financial statements must be submitted togovernmental authorities), financial statements (all of which financial statements may include, asrequested by the Lender, a balance sheet, income statement, sources and uses of funds for suchfiscal and/or calendar year, projected sources and uses of funds for the coming year, detailedlisting and description of all contingent liabilities, tax returns, written verification ofliquidity and such other supporting schedules and documentation which the Lender may request). Allsuch financial statements shall be audited by a certified public accountant acceptable to theLender in all respects; and          (b) if requested by the Lender, within forty-five (45) days after the close of its quarterlybusiness period (but in no event earlier than the date such financial statements must be submittedto governmental authorities), the financial statements to be filed with applicable governmentalauthorities.     **6. ****Certain Agreements and Waivers by the Guarantor****.**          (a) The Guarantor hereby waives the benefits of Va. Code Ann. § 49-25 and § 49-26 as amendedand agrees that neither the Lender’s rights or remedies northe Obligations shall be released, diminished, impaired, reduced or affected by any one or more ofthe following events, actions, facts, or circumstances, and the liability of the Guarantor underthis Guaranty shall be absolute and unconditional irrespective of:          (i) any limitation of liability or recourse in any other Loan Document or arising underany law;          (ii) any claim or defense that this Guaranty was made without consideration or is notsupported by adequate consideration;          (iii) the taking or accepting of any other security or guaranty for,or right of recourse with respect to, any or all of the Obligations;          (iv) any homestead exemption or other exemption under applicable law;          (v) any release, surrender, abandonment, exchange, alteration, sale or otherdisposition, subordination, deterioration, waste, failure to protect or preserve,impairment, or loss of, or any failure to create or perfect any lien or
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**Execution Copy**security interestwith respect to, or any other dealings with, any collateral or security at any time existingor purported, believed or expected to exist in connection with any or all of theObligations, including any impairment of the Guarantor’ s recourse against any Person orcollateral;     (vi) whether express or by any operation of law, any full or partial release of theliability of the Guarantor, the Borrower or any other party hereunder or under any of theother Loan Documents;     (vii) the death, insolvency, bankruptcy, disability, dissolution, liquidation,termination, receivership, reorganization, merger, consolidation, change of form, structureor ownership, sale of all assets, or lack of corporate, partnership or other power of theBorrower, the Guarantor or any other party at any time liable for the payment or performanceof any or all of the Obligations;     (viii) either with or without notice to or consent of the Guarantor, any renewal,extension, modification or rearrangement of the terms of any or all of the Obligationsand/or any of the Loan Documents, including, without limitation, material alterations of theterms of payment (including changes in maturity date(s), interest rate(s) and amortization)or performance or any other terms thereof, or any waiver, termination, or release of, orconsent to departure from, any of the Loan Documents or any other guaranty of any or all ofthe Obligations, or any adjustment, indulgence, forbearance, or compromise that may begranted from time to time by the Lender to the Borrower, the Guarantor, and/or any otherPerson at any time liable for the payment or performance of any or all of the Obligations;     (ix) any neglect, lack of diligence, delay, omission, failure, or refusal of the Lenderto take or prosecute (or in taking or prosecuting) any action for the collection orenforcement of any of the Obligations, or to foreclose or take or prosecute any action toforeclose (or in foreclosing or taking or prosecuting any action to foreclose) upon anysecurity therefor, or to exercise (or in exercising) any other right or power with respectto any security therefor, or to take or prosecute (or in taking or prosecuting) any actionin connection with any Loan Document, or any failure to sell or otherwise dispose of in acommercially reasonable manner any collateral securing any or all of the Obligations;     (x) any failure of the Lender to notify the Guarantor of any creation, renewal,extension, rearrangement, modification, supplement, subordination, or assignment of theObligations or any part thereof, or of any Loan Document, or of any release of or change inany security, or of any other action taken or refrained from being taken by the Lenderagainst the Borrower or any security or other recourse, or of any new agreement between theLender and the Borrower, it being understood that the Lender shall not be required to givethe Guarantor any notice of any kind under any circumstances with respect to or inconnection with the Obligations, any and all rights to notice that the Guarantor may haveotherwise had being hereby waived by the Guarantor;
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**Execution Copy**     (xi) any refund of any payment by the Borrower or any other party liable for thepayment or performance of any or all of the Obligations;     (xii) the existence of any claim, set-off, or other right that the Guarantor may atany time have against the Borrower, the Lender (other than pursuant to a final judgment), orany other Person, whether or not arising in connection with this Guaranty or any other LoanDocument;     (xiii) the unenforceability of all or any part of the Obligations against theBorrower, whether because the Obligations exceed the amount permitted by law or violate anyusury law, or because the act of creating the Obligations, or any part thereof, is beyondthe scope of powers granted, or because the officers or Persons creating same acted inexcess of their authority, or because of a lack of validity or enforceability of or defector deficiency in any of the Loan Documents, or because the Borrower has any valid defense,claim or offset with respect thereto, or because the Borrower’s obligation ceases to existby operation of law, or because of any other reason or circumstance, it being agreed thatthe Guarantor shall remain liable hereunder regardless of whether the Borrower or any otherPerson are found not liable on the Obligations, or any part thereof, for any reason (andregardless of any joinder of the Borrower or any other party in any action to obtain paymentor performance of any or all of the Obligations);     (xiv) any order, ruling or plan of reorganization emanating from proceedings underTitle 11 of the United States Code with respect to the Borrower or any other Person,including any extension, reduction, composition, or other alteration of the Obligations,whether or not consented to by the Lender; or     (xv) any failure to notify the Guarantor of, or obtain the Guarantor’s consent to, themaking of the Loan or any advances thereunder.             (b) In the event that any payment by the Borrower or any other Person to the Lender is held toconstitute a preference, fraudulent transfer or other voidable payment under any bankruptcy,insolvency or similar law, or if for any other reason the Lender is required to refund such paymentor pay the amount thereof to any other party, such payment by the Borrower or any other party tothe Lender shall not constitute a release of the Guarantor from any liability hereunder, and thisGuaranty shall continue to be effective or shall be reinstated (notwithstanding any prior release,surrender or discharge by the Lender of this Guaranty or of the Guarantor), as the case may be,with respect to, and this Guaranty shall apply to, any and all amounts so refunded by theLender orpaid by the Lender to another Person (which amounts shall constitute part of the Obligations), andany interest paid by the Lender and any reasonable attorneys’ fees, costs and expenses paid orincurred by the Lender in connection with any such event. It is the intent of the Guarantor andthe Lender that the obligations and liabilities of the Guarantor hereunder are absolute andunconditional under any and all circumstances and that until the Obligations are fully and finallypaid and performed, and not subject to refund or disgorgement, the obligations and liabilities ofthe Guarantor hereunder shall not be discharged or released, in whole or in part, by any act oroccurrence that might, but for the provisions of this Guaranty, be deemed a
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**Execution Copy**legal or equitabledischarge or release of any of the Guarantor except as otherwise set forth herein. The Lendershall be entitled to continue to hold this Guaranty in its possession for a period of one year fromthe date the Obligations are paid and performed in full and for so long thereafter as may benecessary to enforce any obligation of the Guarantor hereunder and/or to exercise any right orremedy of the Lender hereunder.          (c) If acceleration of the time for payment of any amount payable by the Borrower under theNote or any other Loan Document is stayed or delayed by any law or tribunal, all such amounts shallnonetheless be payable by the Guarantor on demand by the Lender.     **7. ****Waiver of Trial by Jury; Consent to Jurisdiction****. WITHOUT INTENDING IN ANY WAY TOLIMIT THE PARTIES’ AGREEMENT TO ARBITRATE ANY “DISPUTE” (FOR PURPOSES OF THIS SECTION, AS DEFINEDIN THE “DISPUTE RESOLUTION” SECTION) AS SET FORTH IN THIS NOTE, AGREEMENT, OR GUARANTY, ASAPPLICABLE, TO THE EXTENT ANY “DISPUTE” IS NOT SUBMITTED TO ARBITRATION OR IS DEEMED BY THEARBITRATOR OR BY ANY COURT WITH JURISDICTION TO BE NOT ARBITRABLEOR NOT REQUIRED TO BE ARBITRATED, BORROWER AND LENDER WAIVE TRIAL BY JURY IN RESPECT OF ANY SUCH“DISPUTE” AND ANY ACTION ON SUCH “DISPUTE.” THIS WAIVER IS KNOWINGLY, WILLINGLY AND VOLUNTARILYMADE BY BORROWER AND LENDER, AND BORROWER AND LENDER HEREBY REPRESENT THAT NO REPRESENTATIONS OFFACT OR OPINION HAVE BEEN MADE BY ANY PERSON OR ENTITY TO INDUCE THIS WAIVER OF TRIAL BY JURY OR TOIN ANY WAY MODIFY OR NULLIFY ITS EFFECT. THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE PARTIESENTERING INTO THE LOAN DOCUMENTS. BORROWER AND LENDER ARE EACH HEREBY AUTHORIZED TO FILE A COPY OFTHIS SECTION IN ANY PROCEEDING AS CONCLUSIVE EVIDENCE OF THIS WAIVER OF JURY TRIAL. BORROWERFURTHER REPRESENTS AND WARRANTS THAT IT HAS BEEN REPRESENTED IN THE SIGNING OF THIS NOTE,AGREEMENT, OR GUARANTY, AS APPLICABLE, AND IN THE MAKING OF THIS WAIVER BY INDEPENDENT LEGALCOUNSEL, OR HAS HAD THE OPPORTUNITY TO BE REPRESENTED BY INDEPENDENT LEGAL COUNSEL SELECTED OF ITSOWN FREE WILL, AND THAT IT HAS HAD THE OPPORTUNITY TO DISCUSS THIS WAIVER WITH COUNSEL.**          The Guarantor irrevocably submits to the nonexclusive jurisdiction of any state or federalcourt sitting in the Jurisdiction of Choice over any suit, action or proceeding arising out of, orrelating to, this Guaranty, and irrevocably agrees that all claims in respect of such action orproceeding may be heard and determined in such state or federal court. The Guarantor irrevocablywaives, to the fullest extent permitted by law, any objection that the Guarantor may now orhereafter have to the laying of venue of any such suit, action or proceeding brought in any suchcourt, and any claims that any such suit, action or proceeding is brought in an inconvenient forum.Final judgment in any such suit, action or proceeding brought in any such court shall be
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**Execution Copy**conclusive and binding upon the Guarantor and may be enforced in any court in which the Guarantorare subject to jurisdiction, by a suit upon such judgment provided that service of process iseffected upon the Guarantor as provided in the Loan Documents or as otherwise permitted byapplicable law.     **8. ****Dispute Resolution**.     (a) Arbitration. Except to the extent expressly provided below, any Dispute shall,upon the request of either party, be determined by binding arbitration in accordance with theFederal Arbitration Act, Title 9, United States Code (or if not applicable, the applicable statelaw), the then-current rules for arbitration of financial services disputes of the AmericanArbitration Association, or any successor thereof (“AAA”) and the “Special Rules” set forth below.“Dispute” means any controversy, claim or dispute between or among the parties to this Note,Agreement, or Guaranty, as applicable, including any controversy, claim or dispute arising out ofor relating to (a) this Note, Agreement, or Guaranty, as applicable, (b) any other Loan Documents,(c)any related agreements or instruments, or (d) the transaction contemplated herein or therein(including any claim based on or arising from an alleged personal injury or business tort). In theevent of any inconsistency, the Special Rules shall control. The filing of a court action is notintended to constitute a waiver of the right of Borrower or Lender, including the suing party,thereafter to require submittal of the Dispute to arbitration. Any party to this Note, Agreement,or Guaranty, as applicable, may bring an action, including a summary or expedited proceeding, tocompel arbitration of any Dispute in any court having jurisdiction over such action. For thepurposes of this Dispute Resolution Section only, the terms “party” and “parties” shall includeany parent corporation, subsidiary or affiliate of Lender involved in the servicing, management oradministration of any obligation described in or evidenced by this Note, Agreement, or Guaranty, asapplicable, together with the officers, employees, successors and assigns of each of the foregoing.     (b) Special Rules.     (i) The arbitration shall be conducted in any U.S. state where real or tangiblepersonal property collateral is located, or if there is no such collateral, in the City andCounty where Lender is located pursuant to its address for notice purposes in this Note,Agreement, or Guaranty, as applicable.     (ii) The arbitration shall be administered by AAA, who will appoint an arbitrator. IfAAA is unwilling or unable to administer or legally precluded from administering thearbitration, or if AAA is unwilling or unable to enforce or legally precluded from enforcingany and all provisions of this Dispute Resolution Section, the any party to this Note,Agreement, or Guaranty, as applicable, may substitute another arbitration organization thathas similar procedures to AAA and that will observe and enforce any and all provisions ofthis Dispute Resolution Section. All Disputes shall be determined by one arbitrator;however, if the amount in controversy in a Dispute exceeds Five Million Dollars($5,000,000), upon the request of any party, the Dispute shall be decided by threearbitrators (for purposes of this Note, Agreement, or Guaranty, as applicable, referred tocollectively as the “arbitrator”).
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**Execution Copy**     (iii) All arbitration hearings will be commenced within ninety (90) days of the demandfor arbitration and completed within ninety (90) days from the date of commencement;provided, however, that upon a showing of good cause, the arbitrator shall be permitted toextend the commencement of such hearing for up to an additional sixty (60) days.     (iv) The judgment and the award, if any, of the arbitrator shall be issued withinthirty (30) days of the close of the hearing. The arbitrator shall provide a concisewritten statement setting forth the reasons for the judgment and for the award, if any. Thearbitration award, if any, may be submitted to any courthaving jurisdiction to be confirmed and enforced, and such confirmation and enforcementshall not be subject to arbitration.     (v) The arbitrator will give effect to statutes of limitations and any waivers thereofin determining the disposition of any Dispute and may dismiss one or more claims in thearbitration on the basis that such claim or claims is or are barred. For purposes of theapplication of the statute of limitations, the service on AAA under applicable AAA rules ofa notice of Dispute is the equivalent of the filing of a lawsuit.     (vi) Any dispute concerning this arbitration provision, including any such dispute asto the validity or enforceability of this provision, or whether a Dispute is arbitrable,shall be determined by the arbitrator; provided, however, that the arbitrator shall not bepermitted to vary the express provisions of these Special Rules or the Reservations ofRights in subsection (c) below.     (vii) The arbitrator shall have the power to award legal fees and costs pursuant to theterms of this Note, Agreement, or Guaranty, as applicable.     (viii) The arbitration will take place on an individual basis without reference to,resort to, or consideration of any form of class or class action.     (c) Reservations of Rights. Nothing in this Note, Agreement, or Guaranty, asapplicable, shall be deemed to (i) limit the applicability of any otherwise applicable statutes oflimitation and any waivers contained in this Note, Agreement, or Guaranty, as applicable, or (ii)apply to or limit the right of Lender (A) to exercise self help remedies such as (but not limitedto) setoff, or (B) to foreclose judicially or nonjudicially against any real or personal propertycollateral, or to exercise judicial or nonjudicial power of sale rights, (C) to obtain from a courtprovisional or ancillary remedies such as (but not limited to) injunctive relief, writ ofpossession, prejudgment attachment, or the appointment of a receiver, or (D) to pursue rightsagainst a party to this Note, Agreement, or Guaranty, as applicable, in a third-party proceeding inany action brought against Lender in a state, federal or international court, tribunal or hearingbody (including actions in specialty courts, such as bankruptcy and patent courts). Lender mayexercise the rights set forth in clauses (A) through (D), inclusive, before, during or after thependency of any arbitration proceeding brought pursuant to this Note, Agreement, or Guaranty, asapplicable. Neither the exercise of self help remedies nor the institution or maintenance of anaction for foreclosure or provisional or ancillary
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**Execution Copy**remedies shall constitute a waiver of the rightof any party, including the claimant in any such action, to arbitrate the merits of the Disputeoccasioning resort to such remedies. No provision in the Loan Documents regarding submission tojurisdiction and/or venue in any court is intended or shall be construed to be in derogation of theprovisions in any Loan Document for arbitration of any Dispute.     (d) Conflicting Provisions for Dispute Resolution. If there is any conflict betweenthe terms, conditions and provisions of this Section and those of any other provision or agreementfor arbitration or dispute resolution, the terms, conditions and provisions of this Section shallprevail as to any Dispute arising out of or relating to (i) this Note, Agreement, or Guaranty, asapplicable, (ii) any other Loan Document, (iii) any related agreements or instruments, or (iv) thetransaction contemplated herein or therein (including any claim based on or arising from an allegedpersonal injury or business tort). In any other situation, if the resolution of a given Dispute isspecifically governed by another provision or agreement for arbitration or dispute resolution, theother provision or agreement shall prevail with respect to said Dispute.     (e) Jury Trial Waiver in Arbitration. By agreeing to this Section, the partiesirrevocably and voluntarily waive any right they may have to a trial by jury in respect of anyDispute.     **9. ****Attorneys’ Fees and Costs of Collection****.**The Guarantor shall pay on demand allattorneys’ fees and all other costs and expenses incurred by the Lender in the enforcement of orpreservation of the Lender’s rights under this Guaranty. The Guarantor’s obligations andliabilities under this Section 9 shall survive any payment or discharge in full of the Obligations.     **10. ****Term of Guaranty****.**This Guaranty shall continue in effect until such time as theObligations have been fully and finally paid and performed, except that, and notwithstanding anyreturn of this Guaranty to the Guarantor, this Guaranty shall continue in effect (a) with respectto any of the Obligations that survive after expiration or termination of the Loan, (b) withrespect to all obligations and liabilities of the Guarantor for indemnification and for the paymentof all costs and expenses, as provided herein, and (c) as provided herein with respect topreferential, fraudulent or other voidable payments or other transfers.     **11. ****Subordination****.**If, for any reason whatsoever, the Borrower is now or hereafterbecomes indebted to the Guarantor:          (a) such indebtedness and all interest thereon and all liens, security interests and rightsnow or hereafter existing with respect to property of the Borrower securing same shall, at alltimes, be subordinate in all respects to the Obligations and to all liens, security interests andrights now or hereafter existing to secure the Obligations; and          (b) The Guarantor shall not be entitled to enforce or receive payment, directly or indirectly,of any such indebtedness of the Borrower to the Guarantor until the Obligations have been fully andfinally paid and performed. Notwithstanding the foregoing, the Guarantor may receive payments uponclose-out of any Project with regard to loans made by the Guarantor to the owner of any suchProject, or with
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**Execution Copy**regard to loans made to Borrower on behalf of the owner of any such Project.Notwithstandingthe foregoing, the Guarantor may receive payments from Borrower in the form of salaries orshareholder or member dividends.     **12. ****Subrogation****.**Notwithstanding anything to the contrary contained herein (a) theGuarantor shall not have any right of subrogation in or under any of the Loan Documents or toparticipate in any way therein, or in any right, title or interest in and to any security or rightof recourse for the Indebtedness, until the later of the date on which the Indebtedness has beenfully and finally paid, or the Loan has expired or been terminated, and (b) if the Guarantor is orbecomes an “insider” (as defined in Section 101 of the United States Bankruptcy Code) with respectto the Borrower, then the Guarantor hereby irrevocably and absolutely waives any and all rights ofcontribution, indemnification, reimbursement or any similar rights against the Borrower withrespect to this Guaranty (including any right of subrogation, except to the extent of collateralheld by the Lender), whether such rights arise under an express or implied contract or by operationof law. It is the intention of the parties that the Guarantor shall not be deemed to be a“creditor” (as defined in Section 101 of the United States Bankruptcy Code) of the Borrower byreason of the existence of this Guaranty in the event that the Borrower or the Guarantor becomes adebtor in any proceeding under the United States Bankruptcy code.     **13. ****Notices****.**Unless specifically provided otherwise, any notice for purposes of thisGuaranty shall be given in writing or by telecopier transmission and shall be addressed ordelivered to the respective addresses set forth at the end of this Guaranty, or to such otheraddress as may have been previously designated by the intended recipient by notice given inaccordance with this Section. If sent by prepaid, registered or certified mail (return receiptrequested), the notice shall be deemed effective when the receipt is signed or when the attemptedinitial delivery is refused or cannot be made because of a change in address of which the sendingparty has not been notified; and if transmitted by telecopier or personal delivery, the noticeshall be effective when received. No notice of change of address shall be effective except uponactual receipt.     **14. ****Cumulative Rights****.**The exercise by the Lender of any right or remedy hereunder orunder any other Loan Document, or at law or in equity, shall not preclude the concurrent orsubsequent exercise of any other right or remedy. The Lender shall have all rights, remedies andrecourses afforded to the Lender by reason of this Guaranty or any other Loan Document or by law orequity or otherwise, and the same shall be cumulative and concurrent and are intended to be, andshall be, nonexclusive. No waiver of any default on the part of the Guarantor or of any breach ofany of the provisions of this Guaranty or of any other document shall be considered a waiver of anyother or subsequent default or breach, and no delay or omission in exercising or enforcing therights and powers granted herein or in any other document shall be construed as a waiver of suchrights and powers, and no exercise or enforcement of any rights or powers hereunder or under anyother document shall be held to exhaust such rights and powers, and every such right and power maybe exercised from time to time. No provision of this Guaranty or any right, remedy or recourse ofthe Lender withrespect hereto, or any default or breach, can be waived, nor can this Guaranty or the
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**Execution Copy**Guarantor bereleased or discharged in any way or to any extent, except specifically in each case by a writingintended for that purpose (and which refers specifically to this Guaranty) executed, and deliveredto the Guarantor, by the Lender, except as otherwise provided herein.     **15. ****Disclosure of Information****.**The Lender may sell or offer to sell the Loan or aninterest in the Loan to one or more assignees or participants and may disclose to any such assigneeor participant or prospective assignee or participant any information the Lender has pertaining tothe Loan, the Obligations, this Guaranty, or the Guarantor. The Lender also may disclose any suchinformation to any regulatory body having jurisdiction over the Lender and to any agent or attorneyof the Lender and in such other circumstances and to such other parties as necessary or appropriatein the Lender’s reasonable judgment.     **16. ****Governing Law; Forum****.**This Guaranty is an agreement executed under seal, and itsvalidity, enforcement, and interpretation, shall for all purposes be governed by and construed inaccordance with the laws of the Jurisdiction of Choice and applicable United States federal law,and is intended to be performed in accordance with, and only to the extent permitted by, such laws.If the Guarantor is a corporation, the designation “(SEAL)” on this Guaranty shall be effective asthe affixing of Guarantor’s corporate seal physically to this Guaranty. All obligations of theGuarantor hereunder are payable and performable at the place or places where the Obligations arepayable and performable. The Guarantor hereby irrevocably submits generally and unconditionallyfor the Guarantor and in respect of the Guarantor’ respective property to the jurisdiction of anystate court, or any United States federal court, sitting in the state in which any of the Land islocated, over any suit, action or proceeding arising out of or relating to this Guaranty or theObligations. The Guarantor hereby irrevocably waives, to the fullest extent permitted by law, anyobjection that the Guarantor may now or hereafter have to the laying of venue in any such court andany claim that any such court is an inconvenient forum.     **17. ****Counterparts****.**This Guaranty may be executed in multiple counterparts, each ofwhich, for all purposes, shall be deemed an original, and all of which together shall constituteone and the same agreement.     **18. ****Miscellaneous****.**This Guaranty embodies the entire agreement between the Lender andthe Guarantor with respect to the guaranty by the Guarantor of the Obligations. This Guarantysupersedes all prior agreements and understandings, if any, with respect to guaranty by theGuarantor of the Obligations. This Guaranty may not be modified, amended or superseded except in awriting signed by the Lender and the Guarantor referencing this Guaranty by its date andspecifically identifying the portions hereof that are to be modified, amended or superseded. ThisGuaranty is binding not only on the Guarantor, but also on the Guarantor’s heirs, personalrepresentatives, successors and assigns. If any provision of this Guaranty or the applicationthereof toany Person or circumstance shall, for any reason and to any extent, be declared to be invalid orunenforceable, neither the remaining provisions of this Guaranty nor the application of suchprovision to any other Person or circumstance shall be affected thereby, and the remainingprovisions of this Guaranty, or the
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**Execution Copy**applicability of such provision to other Persons orcircumstances, as applicable, shall remain in effect and be enforceable to the maximum extentpermitted by applicable law.**[SIGNATURES ON THE FOLLOWING PAGE]**
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**Execution Copy**     **IN WITNESS WHEREOF,**the Guarantor duly executed and delivered this Guaranty, intending that itbe an instrument under seal, as of the date first written above.           WITNESS:       **GUARANTOR****:**                     COMSTOCK HOMEBUILDING COMPANIES,                   INC., a Delaware corporation             By:     By:            Name:         Christopher Clemente,          Title:           Chief Executive Officer                     (Seal)   Address: 11465 Sunset Hills Road          5th Floor          Reston, Virginia 20190  **ADDRESS OF LENDER****:****BANK OF AMERICA, N.A.**8300 Greensboro Drive