Exhibit 10.63
Execution Copy
FORBEARANCE AND CONDITIONAL
RELEASE AGREEMENT
THIS FORBEARANCE AND CONDITIONAL
RELEASE AGREEMENT (this
“ Agreement ”) is entered into as of November
, 2008 (the “ Effective Date
”), by and among HIGHLAND AVENUE PROPERTIES, LLC, a
Georgia limited liability company (“ Highland Avenue
”) and COMSTOCK HOMES OF ATLANTA, LLC, a Georgia
limited liability company, successor by merger to Parker-Chandler
Homes, Inc., a Georgia limited liability company (
“Comstock Atlanta” ), each a “
Borrower ” and collectively the “
Borrowers ”; COMSTOCK HOMEBUILDING COMPANIES,
INC. , a Delaware corporation (“ Guarantor
”), and BANK OF AMERICA, N.A. , a national banking
association (“ Lender ”).
R E C I T A L S:
A. Highland Avenue is indebted to
Lender with respect to a loan in the original stated principal
amount of $4,851,235.00 (the “ Highland Avenue Loan
”), which is (i) evidenced by that certain Note dated
May 2, 2005, payable by Highland Avenue Properties, LLC to the
order of Lender in said principal amount, (ii) secured by that
certain Deed to Secure Debt and Security Agreement dated
May 2, 2005 and recorded on May 4, 2005 in Deed Book
39924, Page 32, Fulton County, Georgia records, encumbering Land
Lots 18 & 19 of the 14th District, Fulton County, Georgia
(said property containing approximately 4.86 acres), and
(iii) unconditionally guaranteed by Guarantor pursuant to that
certain Amended and Restated Guaranty Agreement dated
December 28, 2006.
B. Comstock Atlanta is indebted to
Lender with respect to a loan in the original stated principal
amount of $7,500,000.00 (the “ Comstock Atlanta Loan
”) which is: (i) evidenced by that certain Real Estate
Note dated January 16, 2004, payable by Parker Chandler Homes
South Carolina, LLC, as predecessor in interest to Comstock Homes
of Atlanta, LLC, to the order of Lender in said principal amount;
(ii) secured in Jackson County, Georgia, by (a) that
certain Deed to Secure Debt and Security Agreement dated as of
January 16, 2004, originally recorded in the Superior Court of
Jackson County, Georgia on February 4, 2004 in Deed Book 33I
Page 369, (b) that certain Deed to Secure Debt and Security
Agreement dated as of January 16, 2004, originally recorded in
the Superior Court of Jackson County, Georgia on March 4, 2004
in Deed Book 33I, Page 374, (c) that certain Deed to Secure
Debt and Security Agreement dated as of June 23, 2005,
originally recorded in the Superior Court of Jackson County,
Georgia on July 22, 2005 in Deed Book 39U Page 783,
(d) that certain Deed to Secure Debt and Security Agreement
dated as of November 14, 2005, originally recorded in the
Superior Court of Jackson County, Georgia on November 28, 2005
in Deed Book 41P, Page 62, and (e) that certain Deed to Secure
Debt and Security Agreement dated as of September 29, 2006,
originally recorded in the Superior Court of Jackson County,
Georgia on October 4, 2006 in Deed Book 45U, Page 57
(collectively, as the same have been or may be amended, renewed,
supplemented or restated from time to time, and as the same, as
amended, have been subsequently recorded in the land records of
Jackson County, the “ Jackson Deed to Secure Debt
”), encumbering Land Lots 44, 45, 46, 47, 48, 49, 50, 58, 59
and 67, Brentwood Estates, Jackson County, Georgia;
(iii) secured in Paulding County, Georgia by (a) that
certain Deed to Secure Debt and Security Agreement dated as of
April 2, 2004 and originally recorded in the land records of
Paulding County, Georgia on April 16, 2004 in Deed Book 1623
Page 0891, (b) that certain Deed to Secure Debt and Security
Agreement dated as of October 29, 2004, and originally
recorded in Paulding County, Georgia on November 10, 2004 in
Deed Book 1764 Page 40, and (c) that certain Deed to Secure
Debt and Security Agreement dated as of
Forbearance Agreement-Signature
Page
February 24, 2005, and originally recorded
in Paulding County, Georgia on March 22, 2005 in Deed Book
1847, Page 420 (collectively, as the same have been or may be
amended, renewed, supplemented or restated from time to time, and
as the same, as amended, have been subsequently recorded in the
land records of Paulding County, the “ Paulding Deed to
Secure Debt ”), encumbering land lots 23, 24, 25, 48, 49,
158, 159, 160, 161, 165, 170, 172, 176, 177, 178, 179, 182, 184,
190, 191, 194, 195, 196, 197, 198, 199, 202, 205, 209, 219, 220,
221, 222, 223, 227, 228, 237 and 257 phase 3, Senator’s
Ridge, Paulding County, Georgia; and (iv) unconditionally
guaranteed by Guarantor pursuant to the Amended and Restated
Guaranty Agreement dated December 28, 2006 (the “
Guaranty ”).
The Highland Avenue Loan and the
Comstock Atlanta Loan are collectively referred to hereinafter as
the “ Loans ”. The Notes evidencing the Loans,
as more particularly described above, are collectively referred to
hereinafter as the “ Notes ” and the Deeds to
Secure Debt securing the Loans, as more particularly described
above, are collectively referred to hereinafter as the “
Security Deeds ”. The Notes and the Security Deeds are
individually referred to by reference to the related Loan (
e.g. , the Note evidencing the Highland Avenue Loan is
referred to hereinafter as the “ Highland Avenue Note
” and the Security Deed securing the Comstock Atlanta Loan is
referred to hereinafter as the “ Comstock Atlanta Security
Deed ”). The Notes, the Security Deeds, and the Guaranty,
as amended, if any, and all other ancillary documents evidencing
the Loans are collectively referred to hereinafter as the “
Loan Documents ”, and Borrowers and Guarantor are
collectively referred to hereinafter as “ Obligors
”.
C. Obligors are no longer willing to
comply with their respective obligations under the Loan Documents
and have offered to cooperate with Lender in the foreclosure of the
Security Deeds. Obligors have requested that Lender
(i) forbear from the exercise of its rights and remedies
against Guarantor under the Guaranty pending the foreclosure of the
Security Deeds, and (ii) release Obligors from their
obligations under the Loan Documents (other than those obligations
set forth in that certain Environmental Indemnification and Release
Agreement to be executed as of the date hereof, hereinafter
referred to as the “ Environmental Indemnity Agreement
”, in form attached hereto as Exhibit A ) at such time
as the foreclosure of the Security Deeds has been completed. Lender
is willing to grant Obligors’ and Guarantor’s request,
provided that the Obligors cooperate with Lender in the foreclosure
of the Security Deeds, and provided that Obligors do not commit any
Forbearance Termination Events as defined and enumerated herein.
The parties have entered into this Agreement to evidence their
agreement regarding the foregoing matters.
NOW, THEREFORE,
for and in consideration of the
foregoing Recitals, the covenants herein contained, and other good
and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged by each of the parties hereto, the parties
hereto agree as follows:
1. Confirmation of Recitals and
Other Matters . As a material inducement for Lender to enter
into this Agreement, Obligors agree with Lender, and represent and
warrant to Lender, that (i) the statements set forth in the
recitals to this Agreement are true and correct and contain no
material omission of fact, (ii) the Loans are in default and
all obligations under the Loan Documents are fully matured and
immediately due and payable in full without offset, defense, or
reduction, (iii) Obligors have received or waived any notices
to which they are entitled with respect to the existing defaults
under the Loan, and (iv) but for this Agreement, Lender, may,
at its option and without further notice to or demand upon any
Obligor or any other person, exercise and enforce any and all
rights and remedies under the Security Deeds, the Guaranty, and the
other Loan Documents.
Forbearance Agreement-Signature
Page
2. Forbearance Covenant .
Notwithstanding the existing defaults under the Loans, but subject
to the terms and conditions stated in this Agreement, Lender agrees
that it will not take any action or file any proceedings, whether
under the Guaranty, at law, or in equity, to enforce the rights and
remedies of Lender against Guarantor (the foregoing covenant being
hereinafter referred to as the “ Forbearance Covenant
”). The Forbearance Covenant will remain in effect until the
occurrence of a Forbearance Termination Event (as defined below).
Upon written notice of the occurrence of a Forbearance Termination
Event that is not cured by Obligors within fifteen days thereafter,
Lender will have the right at any time and from time to time to
exercise any and all rights and remedies available against
Guarantor under the Guaranty or Environmental Indemnity Agreement,
at law or in equity, to the same extent as Lender would be entitled
if the Forbearance Covenant had never been part of this Agreement.
As used herein, the term “ Forbearance Termination
Event ” means the occurrence of one or more of the
following events:
(a) If Lender determines that any
acknowledgment, representation or warranty made by any Obligor in
this Agreement is untrue or inaccurate in any material
respect;
(b) If any Obligor breaches,
defaults, repudiates, or fails to perform or observe any of that
Obligor’s obligations or agreements stated in this
Agreement;
(c) If any Obligor (or any person
acting on behalf of any Obligor) commences, joins in, assists,
cooperates in, or participates as an adverse party (except for
compulsory legal process which requires testimony) in any suit or
other proceeding against Lender or any affiliate, officer,
director, or employee of Lender, relating to the Loans, any
Collateral for the Loans, or the business affairs of any
Obligor;
(d) If any Obligor (or any person
acting on behalf of any Obligor) breaches, defaults, repudiates, or
fails to perform or observe any of that Obligor’s obligations
or agreements relating to environmental regulations or hazardous
materials, as set forth and defined in the Environmental Indemnity
Agreement; or
(e) If any Obligor (or any person
acting on behalf of any Obligor) takes any action to prevent or
hinder Lender’s carrying out and completion of the
foreclosure of the Security Deeds, including any Obligor (or any
person acting on behalf of any Obligor) taking direct or indirect
action, or permitting any action which would allow such Obligor to
(i) file or consent to the filing of any petition, either
voluntary or involuntary, to take advantage of any applicable
insolvency, bankruptcy, liquidation or reorganization statute,
(ii) seek or consent to the appointment of a receiver,
liquidator or any similar official, or (iii) make an
assignment for the benefit of creditors.
(f) If Obligors fail to pay in full
on or before December 1, 2008 all past due real property taxes
pertaining to the Collateral (defined below) including, without
limitation, past due real property taxes owing to Fulton County,
Texas, Jackson County, Texas and Paulding County Texas.
3. Foreclosure of Collateral
. (a) Obligors acknowledge that Lender intends to commence (or
has commenced) proceedings to foreclose its security title, lien,
and security interest in and to all real and personal property
securing the Loans, as described in the Security
Forbearance Agreement-Signature
Page
Deeds and the other Loan Documents
(collectively, the “ Collateral ”), in
accordance with the provisions of the Loan Documents and applicable
law (the “ Foreclosure Proceedings &rd
