CHCI Comstock Holding Companies Inc

On October 13, 2017, Comstock Investors X, L.C. (“Investors X”), a subsidiary of Comstock Holding Companies, Inc. (the “Company”), amended its Operating Agreement to increase the amount of the aggregate capital raise to up to Nineteen Million Five Hundred Thousand Dollars ($19,500,000) that may be drawn as needed at the request of the Company (“Private Placement”). The initial accredited investor in Investors X, an entity wholly owned by Christopher Clemente, the Chief Executive Officer of the Company (“Purchaser”), contributed the additional capital. The investment has been made pursuant to a second amendment to the operating agreement of Investors X entered into by the Company and the Purchaser (the “Amendment to Operating Agreement”).

The proceeds from the Private Placement provide capital primarily for the planned construction of the Company’s Totten Mews project, consisting of forty single family attached homes in Washington, D.C., its Towns at 1333 project, consisting of eighteen single family attached homes in the City of Alexandria, Virginia, its Richmond Station project, consisting of 158 townhomes in Manassas, Virginia, and the Marwood East project, consisting of 40 single family homes in Loudoun County, Virginia (individually or collectively, a “Project”). Proceeds of the Private Placement may be utilized (i) to provide capital needed to complete the Projects, (ii) to pay off investors in the private capital raise of Comstock Investors IX, L.C., and (iii) for general corporate purposes of the Company.

As part of the Private Placement, the Company issued a warrant (“Warrant”) to the Purchaser to purchase shares of the Company’s Class A Common Stock (“Class A Common Stock”). The Warrant represents the right to purchase an aggregate amount of up to 50,000 shares of Class A Common Stock. The Warrant has an initial exercise price (subject to certain restrictions as indicated on the Warrant) equal to the average of the closing price of the Class A Common Stock over the 20 trading days preceding the issuance of the Warrant. The exercise price and number of shares of Class A Common Stock issuable upon the exercise of the Warrant will be subject to adjustment as a result of certain events as described in the Warrant. The Warrant contains a cashless exercise provision. In the event the Purchaser exercises the Warrant on a cashless basis, the Company will not receive any proceeds from such exercise. The Warrant may be exercised at any time in whole or in part prior to October 12, 2027.

The foregoing description of the material terms of the Amendment to the Operating Agreement and the Warrant is qualified in its entirety by reference to the full text of the form of the Amendment to the Operating Agreement and the form of Warrant, which will be filed as exhibits to the Company’s Form 10-Q for the quarter ending September 30, 2017.