Exhibit 10.4


 


EXECUTION COPY


 


GUARANTY AGREEMENT


 


THIS GUARANTY AGREEMENT (this “Guaranty”) is made as of the 28 day of September, 2005, by COMSTOCK HOMEBUILDING COMPANIES, INC., a Delaware
corporation (the “ Guarantor”) in favor of BANK OF AMERICA, N.A.,
a national banking association (the “Lender”), and its successors and assigns.


 


R E C I T A L S:


 


WHEREAS,
Lender has made an acquisition and development loan to Comstock Bellemeade,
L.C. (“Borrower”) in the maximum principal amount of $46,725,000.00 (or so much
thereof as shall be advanced) and/or may issue letters of credit for the
Borrower’s account in connection therewith, including, without limitation, a
$1,000,000.00 letter of credit (such extensions 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 other
things, the execution and delivery of this Guaranty by Guarantor;


 


WHEREAS, the
Loan shall be made in accordance with the terms and conditions of a Loan
Agreement of even date herewith, between the Lender and Borrower (as amended,
modified or supplemented from time to time, the “Loan Agreement”);


 


WHEREAS, the
Loan shall be evidenced by certain notes, applications or agreements for the
issuance of a letter or letters of credit, including, without limitation, that
certain Deed of Trust Note of even date herewith, from Borrower payable to the
order of the Lender in the maximum principal amount of $46,725,000.00, or so
much thereof as shall be advanced, that certain Letter of Credit Note in the
principal amount of $1,000,000.00 of even date herewith, from Borrower payable
to the order of the Lender, and any other instrument or agreement executed from
time to time by the Borrower in favor of the Lender, as any of the same may
from time to time be amended, modified, replaced or supplemented (collectively,
the “Note”);


 


WHEREAS, the
Guaranty is or shall be secured by one or more Credit Line Deed(s) of Trust and
Security Agreements now or hereafter executed and delivered by the Borrower to
certain trustees for the benefit of the Lender, including, without limitation,
that certain Credit Line Deed of Trust and Security Agreement of even date
herewith, from Borrower as grantor, to certain trustees for the benefit 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 well as all improvements located thereon;


 


WHEREAS, it is
intended that this Guaranty extend to the Loan and all other amounts owing
under any of the “Loan Documents” (hereinafter defined), without any need for
any notice to the Guarantor of the making of the Loan or advances thereunder 


 


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and without any need for any supplements or
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
the meanings assigned to them in the Loan Agreement.


 


W I T N E S S E T H:


 


For good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, and as a material inducement to the
Lender to extend credit to the Borrower from time to time, the Guarantor hereby
guarantees to the Lender the prompt and full payment and performance of the
Indebtedness and the other obligations in connection with the Loan as defined
and described below in this Guaranty (hereinafter sometimes collectively called
the “Obligations”), upon the following terms and conditions:


 


1.             Guaranty of
Payment.  The Guarantor hereby unconditionally and
irrevocably guarantees to the Lender the punctual payment when due, whether by
scheduled payment date, upon maturity, lapse of time, by acceleration of
maturity, or otherwise, and at all times thereafter, of all principal, interest
(including interest accruing after the commencement of any bankruptcy or
insolvency 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 owing pursuant to (a) the
terms of the Note, the Loan Agreement, the Deed(s) of Trust, and any and all
other documents executed by the Borrower in connection with the Loan (the “Loan
Documents”), now or hereafter existing, and specifically including any and all
advances made by the Lender under the Loan Documents from sources other than
the Loan, and interest on such advances, and (b) all renewals, extensions,
increases, refinancings, modifications, supplements or amendments to such
indebtedness, or any of the Loan Documents, or any part thereof (such
indebtedness being hereinafter collectively called the “Indebtedness”).  This Guaranty covers the Indebtedness,
whether presently outstanding or arising subsequent to the date hereof, whether
or not presently contemplated by the Guarantor, the Borrower or the Lender, and
whether or not the same shall be incurred after satisfaction, payment or
reduction of any previous Indebtedness, including all amounts advanced and/or
readvanced by the Lender in stages or installments.  The guaranty of the Guarantor as set forth in
this Section is a continuing guaranty of payment and not a guaranty of
collection.


 


2.             Guaranty of
Performance.  The Guarantor additionally hereby
unconditionally and irrevocably guarantees to the Lender the timely performance
of all other obligations of the Borrower under all of the Loan Documents,
including without limitation, completion of the Improvements and compliance
with all covenants regarding environmental matters.


 


3.             Primary
Liability of the Guarantor.  This Guaranty is an absolute,
irrevocable and unconditional guaranty of payment and performance.  The Guarantor shall be liable for the payment
and performance of the Obligations, as set forth in this


 


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Guaranty, as a primary obligor.  This Guaranty shall be effective as a waiver
of, and the Guarantor hereby expressly waives any and all rights to which the
Guarantor may otherwise have been entitled under any suretyship laws in effect
from time to time, including any right or privilege, whether existing under
statute, at law or in equity, to require the Lender to take prior recourse or
proceedings against any collateral, security or Person (hereinafter defined)
whatsoever.  Upon the occurrence of:  (i) any Default under the Loan, (ii) any
reasonable determination by the Lender that a material adverse change has
occurred in the financial condition of the Guarantor, (iii) the
dissolution or insolvency of Guarantor, subject to the provisions of Section 4
below, or (iv) any transfer of assets of Guarantor without receiving fair
value in exchange therefor, the Indebtedness shall 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 to the 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 by Guarantor, first to institute
suit or pursue or exhaust any rights or remedies against the Borrower or others
liable on the Obligations or for such performance, or to institute suit or
pursue or exhaust any rights or remedies against the Borrower or Guarantor or
other sureties of the Obligations as contemplated by applicable law or to
enforce any rights against any security that shall ever have been given to
secure the Obligations, or to join the Borrower or any others liable for the
payment or performance of the Obligations or any part thereof in any action to
enforce this Guaranty, 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 hereby represents, warrants, and covenants that: (a) Guarantor
will derive substantial benefit, directly or indirectly, from the making of the
Loan to the Borrower and from the making of this Guaranty by the Guarantor; (b) this
Guaranty is duly authorized and valid, and is binding upon and enforceable
against the Guarantor; (c) the Guarantor is not, and the execution,
delivery and performance by the Guarantor of this Guaranty will not cause the
Guarantor to be, in violation of or in default with respect to any law or in
default (or at risk of acceleration of indebtedness) under any agreement or
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 of Virginia, is lawfully doing business in
the jurisdiction where it operates, and has full power and authority to enter
into and perform this Guaranty; (e) except as may have been disclosed to
the Lender in writing, there is not now pending against or affecting the
Guarantor, nor, to the knowledge of the Guarantor, is there threatened, any
action, investigation, suit or proceeding by or before any administrative
agency which if adversely determined would materially impair or affect the
Guarantor’s financial condition (f) all financial statements and
information heretofore furnished to the Lender by the Guarantor do, and all
financial statements and information hereafter furnished to the Lender by the Guarantor
will, fully and accurately present the financial condition of the Guarantor as
of their dates and the results of the Guarantor’s operations for the periods
therein specified, and, since the date of the most recent financial statements
of the Guarantor heretofore furnished to the Lender, no material adverse change
has occurred in the financial condition of the Guarantor, nor, except as


 


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heretofore disclosed in writing to the
Lender, has the Guarantor incurred any material liability, direct or indirect,
fixed or contingent; (g) after giving effect to this Guaranty, the
Guarantor is solvent, is not engaged or about to engage in business 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 ability to pay as such debts mature; (h) the Lender has
no duty at any time to investigate or inform the Guarantor of the financial or
business condition or affairs of the Borrower or any change 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 the Obligations 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, the
Deed(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 and without affecting the obligations of the
Guarantor under this Guaranty.


 


In addition, during the term of the Loan, Lender
must be satisfied that Guarantor’s financial condition meets the following
requirements:


 


(i) Adjusted Tangible Net Worth (ATNW) shall be
at least $65,000,000 for fiscal year 2005, increasing by 50% of consolidated
after tax net earnings for each year thereafter.   Adjusted Tangible Net Worth is defined as
GAAP net worth plus subordinated debt approved by Agent less any goodwill,
organizational costs, leasehold improvements and Affiliate and/or stockholder
receivables and investments in joint ventures; and


 


(ii) Debt to Tangible Net Worth (“Leverage
Ratio”) shall be 3.50:1.  Leverage Ratio
is the total Adjusted Liabilities to Adjusted Tangible Net Worth (ATNW).  Adjusted Liabilities is defined as GAAP total
liabilities less Variable Interest Entities, less subordinated debt due to
related parties and investments in affiliates and joint ventures that are not
co-borrowers (“Related Venturer Subordinated Debt”), less subordinated debt (“Direct
Subordinated Debt”), plus any other debt guaranteed by Borrower.  For purposes hereof, a “Variable Interest
Entity” is either: (A) an entity that is consolidated for financial
statement purposes when (1) the equity investment at risk is not
sufficient to permit the entity from financing its activities without
additional subordinated financial support from other parties or (2) equity
holders either (a) lack direct or indirect ability to make decisions about
the entity (b) are not obligated to absorb expected losses of the entity
or (c) do not have the right to receive expected residual returns of the
entity if they occur or (B) a “variable interest entity” as defined in
Guarantor’s SEC-filed financial statements and as the definition of such term
is amended from time to time based upon guidance from the Financial Accounting
Standards Board.   For purposes of
clarity, the primary beneficiary of a Variable Interest Entity is the party
that absorbs a majority of the Variable Interest Entity’s expected losses,
receives a majority of the entity’s expected residual returns, or both, as a
result of ownership, contractual or other financial interests in the entity.


 


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The Guarantor’s representations, warranties and
covenants are a material inducement to the Lender to enter into the other Loan
Documents and shall survive the execution hereof and any bankruptcy,
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.


 


5.             Financial
Information.  The Guarantor shall furnish or cause to be
furnished to the Lender upon request any financial statements for Guarantor and
any entity related to the Guarantor containing 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 Lender financial statements as follows:


 


(a)           as
soon as available, but in no event later than ninety (90) days after the close
of its fiscal year (but in no event earlier than the date such financial
statements must be submitted to governmental authorities), financial statements
(all of which financial statements may include, as requested by the Lender, a
balance sheet, income statement, sources and uses of funds for such fiscal
and/or calendar year, projected sources and uses of funds for the coming year,
detailed listing and description of all contingent liabilities, tax returns,
written verification of liquidity and such other supporting schedules and
documentation which the Lender may request). 
All such financial statements shall be audited by a certified public
accountant acceptable to the Lender in all respects; and


 


(b)           if
requested by the Lender, within forty-five (45) days after the close of its
quarterly business period (but in no event earlier than the date such financial
statements must be submitted to governmental authorities), the financial
statements to be filed with applicable governmental authorities.


 


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 amended and agrees that neither the Lender’s rights or remedies nor the
Obligations shall be released, diminished, impaired, reduced or affected by any
one or more of the following events, actions, facts, or circumstances, and the
liability of the Guarantor under this Guaranty shall be absolute and
unconditional irrespective of:


 


(i)            any
limitation of liability or recourse in any other Loan Document or arising under
any law;


 


(ii)           any claim or defense that this Guaranty was made without
consideration or is not supported 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;


 


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(iv)          any homestead exemption or other exemption under applicable
law;


 


(v)           any release, surrender, abandonment, exchange, alteration,
sale or other disposition, subordination, deterioration, waste, failure to
protect or preserve, impairment, or loss of, or any failure to create or
perfect any lien or security interest with respect to, or any other dealings
with, any collateral or security at any time existing or purported, believed or
expected to exist in connection with any or all of the Obligations, including
any impairment of the Guarantor’ s recourse against any Person or collateral;


 


(vi)          whether express or by any operation of law, any full or
partial release of the liability of the Guarantor, the Borrower or any other
party hereunder or under any of the other Loan Documents;


 


(vii)         the
death, insolvency, bankruptcy, disability, dissolution, liquidation,
termination, receivership, reorganization, merger, consolidation, change of
form, structure or ownership, sale of all assets, or lack of corporate,
partnership or other power of the Borrower, the Guarantor or any other party at
any time liable for the payment or performance of 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 Obligations
and/or any of the Loan Documents, including, without limitation, material
alterations of the terms 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, or consent to departure from, any of
the Loan Documents or any other guaranty of any or all of the Obligations, or
any adjustment, indulgence, forbearance, or compromise that may be granted from
time to time by the Lender to the Borrower, the Guarantor, and/or any other
Person 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 Lender
to take or prosecute (or in taking or prosecuting) any action for the
collection or enforcement of any of the Obligations, or to foreclose or take or
prosecute any action to foreclose (or in foreclosing or taking or prosecuting
any action to foreclose) upon any security therefor, or to exercise (or in
exercising) any other right or power with respect to any security therefor, or to take or
prosecute (or in taking or prosecuting) any action in connection with any Loan
Document, or any failure to sell or otherwise dispose of in a commercially
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 the Obligations or any part thereof, or of any
Loan Document, or of any release of or change in any security, or of any other action taken or refrained from being
taken by the Lender against the Borrower or any security or other recourse, or
of any new agreement between the Lender and the Borrower,


 


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it being understood that the Lender shall not be
required to give the Guarantor any notice of any kind under any circumstances
with respect to or in connection with the Obligations, any and all rights to
notice that the Guarantor may have otherwise had being hereby waived by the
Guarantor;


 


(xi)           any refund of any payment by the Borrower or any other
party liable for the payment or performance of any or all of the Obligations;


 


(xii)          the
existence of any claim, set-off, or other right that the Guarantor may at any
time have against the Borrower, the Lender (other than pursuant to a final
judgment), or any other Person, whether or not arising in connection with this
Guaranty or any other Loan Document;


 


(xiii)         the
unenforceability of all or any part of the Obligations against the Borrower,
whether because the Obligations exceed the amount permitted by law or violate
any usury law, or because the act of creating the Obligations, or any part
thereof, is beyond the scope of powers granted, or because the officers or Persons creating same
acted in excess of their authority, or because of a lack of validity or
enforceability of or defect or 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 exist by operation of
law, or because of any other reason or circumstance, it being agreed that the
Guarantor shall remain liable hereunder regardless of whether the Borrower or
any other Person are found not liable on the Obligations, or any part thereof,
for any reason (and regardless of any joinder of the Borrower or any other
party in any action to obtain payment or performance of any or all of the
Obligations);


 


(xiv)        any order, ruling or plan of reorganization emanating from
proceedings under Title 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, the
making 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 to constitute 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 payment or pay the amount thereof to any
other party, such payment by the Borrower or any other party to the Lender
shall not constitute a release of the Guarantor from any liability hereunder,
and this Guaranty 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 the Lender or
paid by the Lender to another Person (which amounts shall constitute part of
the Obligations), and any interest paid by the Lender and any reasonable
attorneys’ fees, costs and expenses paid or incurred by the Lender in
connection with any such event.  It is
the intent of the Guarantor and the Lender that


 


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the
obligations and liabilities of the Guarantor hereunder are absolute and
unconditional under any and all circumstances and that until the Obligations
are fully and finally paid and performed, and not subject to refund or
disgorgement, the obligations and liabilities of the Guarantor hereunder shall
not be discharged or released, in whole or in part, by any act or occurrence
that might, but for the provisions of this Guaranty, be deemed a legal or
equitable discharge or release of any of the Guarantor except as otherwise set
forth herein.  The Lender shall be
entitled to continue to hold this Guaranty in its possession for a period of
one year from the date the Obligations are paid and performed in full and for
so long thereafter as may be necessary to enforce any obligation of the
Guarantor hereunder and/or to exercise any right or remedy of the Lender
hereunder.


 


(c)           If
acceleration of the time for payment of any amount payable by the Borrower
under the Note or any other Loan Document is stayed or delayed by any law or
tribunal, all such amounts shall nonetheless be payable by the Guarantor on
demand by the Lender.


 


7.             Waiver of Trial
by Jury; Consent to Jurisdiction.   WITHOUT
INTENDING IN ANY WAY TO LIMIT THE PARTIES’ AGREEMENT TO ARBITRATE ANY “DISPUTE”
(FOR PURPOSES OF THIS SECTION, AS DEFINED IN THE “DISPUTE RESOLUTION” SECTION)
AS SET FORTH IN THIS NOTE,  AGREEMENT, OR
GUARANTY, AS APPLICABLE, TO THE EXTENT ANY “DISPUTE” IS NOT SUBMITTED TO
ARBITRATION OR IS DEEMED BY THE ARBITRATOR OR BY ANY COURT WITH JURISDICTION TO
BE NOT ARBITRABLE OR 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
VOLUNTARILY MADE BY BORROWER AND LENDER, AND BORROWER AND LENDER HEREBY
REPRESENT THAT NO REPRESENTATIONS OF FACT OR OPINION HAVE BEEN MADE BY ANY
PERSON OR ENTITY TO INDUCE THIS WAIVER OF TRIAL BY JURY OR TO IN ANY WAY MODIFY
OR NULLIFY ITS EFFECT.  THIS PROVISION IS
A MATERIAL INDUCEMENT FOR THE PARTIES ENTERING INTO THE LOAN DOCUMENTS.  BORROWER AND LENDER ARE EACH HEREBY
AUTHORIZED TO FILE A COPY OF THIS SECTION IN ANY PROCEEDING AS CONCLUSIVE
EVIDENCE OF THIS WAIVER OF JURY TRIAL. 
BORROWER FURTHER 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 LEGAL COUNSEL, OR HAS HAD THE OPPORTUNITY
TO BE REPRESENTED BY INDEPENDENT LEGAL COUNSEL SELECTED OF ITS OWN 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 federal court sitting in the
Jurisdiction of Choice over any suit, action or proceeding arising out of, or
relating to, this Guaranty, and irrevocably agrees that all claims in respect
of such action or proceeding may be heard and determined in such


 


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state
or federal court.  The Guarantor irrevocably
waives, to the fullest extent permitted by law, any objection that the
Guarantor may now or hereafter have to the laying of venue of any such suit,
action or proceeding brought in any such court, 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 conclusive and binding upon the
Guarantor and may be enforced in any court in which the Guarantor are subject
to jurisdiction, by a suit upon such judgment provided that service of process
is effected upon the Guarantor as provided in the Loan Documents or as
otherwise permitted by applicable 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 the Federal Arbitration Act, Title 9, United
States Code (or if not applicable, the applicable state law), the then-current rules for
arbitration of financial services disputes of the American Arbitration
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 of or 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 the event of any inconsistency, the
Special Rules shall control.  The
filing of a court action is not intended 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, to compel arbitration of any Dispute in any
court having jurisdiction over such action. 
For the purposes of this Dispute Resolution Section only, the terms
“party” and “parties” shall include any
parent corporation, subsidiary or affiliate of Lender involved in the
servicing, management or administration of any obligation described in or
evidenced by this Note, Agreement, or Guaranty, as applicable, 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 tangible personal property collateral is located, or if there is
no such collateral, in the City and County 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.  If AAA is
unwilling or unable to administer or legally precluded from administering the
arbitration, or if AAA is unwilling or unable to enforce or legally precluded
from enforcing any and all provisions of this Dispute Resolution Section, the
any party to this Note, Agreement, or Guaranty, as applicable, may substitute
another arbitration organization that has similar procedures to AAA and that
will observe and enforce any and all provisions of this Dispute


 


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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 three
arbitrators (for purposes of this Note, Agreement, or Guaranty, as applicable,
referred to collectively as the “arbitrator”).


 


(iii)          All arbitration hearings will be commenced within ninety
(90) days of the demand for 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 to extend 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 within thirty (30) days of the close of the hearing.  The arbitrator shall provide a concise
written statement setting forth the reasons for the judgment and for the award,
if any.  The arbitration award, if any,
may be submitted to any court having jurisdiction to be confirmed and enforced,
and such confirmation and enforcement shall not be subject to arbitration.


 


(v)           The arbitrator will give effect to statutes of limitations
and any waivers thereof in determining the disposition of any Dispute and may
dismiss one or more claims in the arbitration on the basis that such claim or
claims is or are barred.  For purposes of
the application of the statute of limitations, the service on AAA under
applicable AAA rules of a notice of Dispute is the equivalent of the
filing of a lawsuit.


 


(vi)          Any dispute concerning this arbitration provision,
including any such dispute as to 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 be permitted to
vary the express provisions of these Special Rules or the Reservations of
Rights in subsection (c) below.


 


(vii)         The arbitrator shall have the power to award legal fees and
costs pursuant to the terms 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, as applicable, shall be deemed to (i) limit the
applicability of any otherwise applicable statutes of limitation 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 limited to) setoff, or (B) to foreclose judicially or nonjudicially
against any real or personal property collateral, or to exercise judicial or
nonjudicial power of sale rights, (C) to obtain from a court provisional
or ancillary remedies such as (but not limited to) injunctive relief, writ of
possession, prejudgment attachment, or the appointment of a receiver, or (D) to
pursue rights against a party to this Note, Agreement, or Guaranty, as
applicable, in a third-party proceeding in any action brought against Lender in
a state, federal or international court, tribunal or hearing body


 


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(including
actions in specialty courts, such as bankruptcy and patent courts).  Lender may exercise the rights set forth in
clauses (A) through (D), inclusive, before, during or after the pendency
of any arbitration proceeding brought pursuant to this Note, Agreement, or
Guaranty, as applicable.  Neither the
exercise of self help remedies nor the institution or maintenance of an action
for foreclosure or provisional or ancillary remedies shall constitute a waiver
of the right of any party, including the claimant in any such action, to
arbitrate the merits of the Dispute occasioning resort to such remedies.  No provision in the Loan Documents regarding
submission to jurisdiction and/or venue in any court is intended or shall be
construed to be in derogation of the provisions in any Loan Document for
arbitration of any Dispute.


 


(d)           Conflicting
Provisions for Dispute Resolution. 
If there is any conflict between the terms, conditions and provisions of
this Section and those of any other provision or agreement for arbitration
or dispute resolution, the terms, conditions and provisions of this Section shall
prevail as to any Dispute arising out of or relating to (i) this Note,
Agreement, or Guaranty, as applicable, (ii) any other Loan Document, (iii) any
related agreements or instruments, or (iv) the transaction contemplated
herein or therein (including any claim based on or arising from an alleged
personal injury or business tort).  In any
other situation, if the resolution of a given Dispute is specifically governed
by another provision or agreement for arbitration or dispute resolution, the
other provision or agreement shall prevail with respect to said Dispute.


 


(e)           Jury Trial Waiver in Arbitration.  By
agreeing to this Section, the parties irrevocably and voluntarily waive any
right they may have to a trial by jury in respect of any Dispute.


 


9.             Attorneys’ Fees
and Costs of Collection.  The Guarantor shall pay on
demand all attorneys’ fees and all other costs and expenses incurred by the
Lender in the enforcement of or preservation of the Lender’s rights under this
Guaranty.  The Guarantor’s obligations
and liabilities 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 the Obligations have been
fully and finally paid and performed, except that, and notwithstanding any
return of this Guaranty to the Guarantor, this Guaranty shall continue in
effect (a) with respect to any of the Obligations that survive after
expiration or termination of the Loan, (b) with respect to all obligations
and liabilities of the Guarantor for indemnification and for the payment of all
costs and expenses, as provided herein, and (c) as provided herein with
respect to preferential, fraudulent or other voidable payments or other
transfers.


 


11.          Subordination.  If,
for any reason whatsoever, the Borrower is now or hereafter becomes indebted to
the Guarantor:


 


(a)           such
indebtedness and all interest thereon and all liens, security interests and
rights now or hereafter existing with respect to property of the Borrower
securing same shall, at all times, be subordinate in all respects to the
Obligations and to all liens, security interests and rights now or hereafter
existing to secure the Obligations; and


 


11





















 


(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 and finally paid and performed.  Notwithstanding the foregoing, the Guarantor
may receive payments upon close-out of any Project with regard to loans made by
the Guarantor to the owner of any such Project, or with regard to loans made to
Borrower on behalf of the owner of any such Project.  Notwithstanding the foregoing, the Guarantor
may receive payments from Borrower in the form of salaries or shareholder or
member dividends.


 


12.          Subrogation. 
Notwithstanding anything to the contrary contained herein (a) the
Guarantor shall not have any right of subrogation in or under any of the Loan
Documents or to participate in any way therein, or in any right, title or
interest in and to any security or right of recourse for the Indebtedness,
until the later of the date on which the Indebtedness has been fully and
finally paid, or the Loan has expired or been terminated, and (b) if the
Guarantor is or becomes an “insider” (as defined in Section 101 of the
United States Bankruptcy Code) with respect to the Borrower, then the Guarantor
hereby irrevocably and absolutely waives any and all rights of contribution,
indemnification, reimbursement or any similar rights against the Borrower with
respect to this Guaranty (including any right of subrogation, except to the
extent of collateral held by the Lender), whether such rights arise under an
express or implied contract or by operation of 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 by reason of the
existence of this Guaranty in the event that the Borrower or the Guarantor
becomes a debtor in any proceeding under the United States Bankruptcy code.


 


13.          Notices. 
Unless specifically provided otherwise, any notice for purposes of this
Guaranty shall be given in writing or by telecopier transmission and shall be
addressed or delivered to the respective addresses set forth at the end of this
Guaranty, or to such other address as may have been previously designated by
the intended recipient by notice given in accordance with this Section. If sent
by prepaid, registered or certified mail (return receipt requested), the notice
shall be deemed effective when the receipt is signed or when the attempted
initial delivery is refused or cannot be made because of a change in address of
which the sending party has not been notified; and if transmitted by telecopier
or personal delivery, the notice shall be effective when received.  No notice of change of address shall be
effective except upon actual receipt.


 


14.          Cumulative Rights.  The
exercise by the Lender of any right or remedy hereunder or under any other Loan
Document, or at law or in equity, shall not preclude the concurrent or
subsequent exercise of any other right or remedy.  The Lender shall have all rights, remedies
and recourses afforded to the Lender by reason of this Guaranty or any other
Loan Document or by law or equity or otherwise, and the same shall be
cumulative and concurrent and are intended to be, and shall be,
nonexclusive.  No waiver of any default
on the part of the Guarantor or of any breach of any of the provisions of this
Guaranty or of any other document shall be considered a waiver of any other or
subsequent default or breach, and no delay or omission in exercising or
enforcing the rights and powers granted herein or in any other document shall
be


 


12





















 


construed
as a waiver of such rights and powers, and no exercise or enforcement of any
rights or powers hereunder or under any other document shall be held to exhaust
such rights and powers, and every such right and power may be exercised from
time to time.  No provision of this
Guaranty or any right, remedy or recourse of the Lender with respect hereto, or
any default or breach, can be waived, nor can this Guaranty or the Guarantor be
released or discharged in any way or to any extent, except specifically in each
case by a writing intended for that purpose (and which refers specifically to
this Guaranty) executed, and delivered to 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 an interest in the Loan to one or more assignees or participants and may
disclose to any such assignee or participant or prospective assignee or
participant any information the Lender has pertaining to the Loan, the
Obligations, this Guaranty, or the Guarantor. 
The Lender also may disclose any such information to any regulatory body
having jurisdiction over the Lender and to any agent or attorney of the Lender
and in such other circumstances and to such other parties as necessary or
appropriate in the Lender’s reasonable judgment.


 


16.          Governing Law;
Forum.  This Guaranty is an agreement executed under
seal, and its validity, enforcement, and interpretation, shall for all purposes
be governed by and construed in accordance 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 as the affixing of
Guarantor’s corporate seal physically to this Guaranty.  All obligations of the Guarantor hereunder
are payable and performable at the place or places where the Obligations are
payable and performable.  The Guarantor
hereby irrevocably submits generally and unconditionally for the Guarantor and
in respect of the Guarantor’ respective property to the jurisdiction of any
state court, or any United States federal court, sitting in the state in which
any of the Land is located, over any suit, action or proceeding arising out of
or relating to this Guaranty or the Obligations.  The Guarantor hereby irrevocably waives, to
the fullest extent permitted by law, any objection that the Guarantor may now
or hereafter have to the laying of venue in any such court and any claim that
any such court is an inconvenient forum.


 


17.          Counterparts.  This
Guaranty may be executed in multiple counterparts, each of which, for all
purposes, shall be deemed an original, and all of which together shall
constitute one and the same agreement.


 


18.          Miscellaneous.  This
Guaranty embodies the entire agreement between the Lender and the Guarantor
with respect to the guaranty by the Guarantor of the Obligations.  This Guaranty supersedes all prior agreements
and understandings, if any, with respect to guaranty by the Guarantor of the
Obligations.  This Guaranty may not be
modified, amended or superseded except in a writing signed by the Lender and
the Guarantor referencing this Guaranty by its date and specifically
identifying the portions hereof that are to be modified, amended or
superseded.  This Guaranty is binding not
only on the Guarantor, but also on the Guarantor’s heirs, personal
representatives, successors and assigns. 
If any provision of this Guaranty or the


 


13





















 


application thereof to any Person or
circumstance shall, for any reason and to any extent, be declared to be invalid
or unenforceable, neither the remaining provisions of this Guaranty nor the
application of such provision to any other Person or circumstance shall be
affected thereby, and the remaining provisions of this Guaranty, or the
applicability of such provision to other Persons or circumstances, as
applicable, shall remain in effect and be enforceable to the maximum extent
permitted by applicable law.


 


 


[SIGNATURES ON THE FOLLOWING
PAGE]


 


14





















 


IN WITNESS WHEREOF, the Guarantor duly executed and delivered this Guaranty, intending
that it be an instrument under seal, as of the date first written above.


 


	
  WITNESS:

  	
  GUARANTOR:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
  COMSTOCK HOMEBUILDING COMPANIES,

  
	
   

  	
  INC., a Delaware corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/ Jubal R. Thompson

  	
   

  	
   

  	
  By:

  	
  /s/ Christopher Clemente

  	
   

  
	
   

  	
  Name:

  	
  Jubal R. Thompson

  	
   

  	
   

  	
  Christopher Clemente,

  
	
   

  	
  Title:

  	
  General Counsel

  	
   

  	
   

  	
  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


Suite 300


McLean,
Virginia 22102-3604


Attention:  Homebuilder Division


Fax
No:  (703) 761-8160


 


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