Exhibit 10.21

 

 

 

PURCHASE AND SALE AGREEMENT

 

 

FAIR OAKS PENDERBROOK APARTMENTS L.L.C.,

 

Seller

 

and

 

 

COMSTOCK HOMES, INC.

 

 

Purchaser

 

 

Premises:

Penderbrook Apartments

 

Fairfax, Virginia

 

 

Date:

As of November 9, 2004

 

 

 

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TABLE OF CONTENTS

 

1

Definitions And Usage

 

 

 

 

2

Agreement Of Purchase And Sale; Conveyancing Instruments

 

 

 

 

3

Purchase Price

 

 

 

 

4

Title

 

 

 

 

5

Closing

 

 

 

 

6

Representations Of The Purchaser

 

 

 

 

7

Representations Of The Seller

 

 

 

 

8

Purchaser’s Due Diligence

 

 

 

 

9

Operation Of The Buildings And Other Improvements

 

 

 

 

10

Environmental Liabilities

 

 

 

 

11

Closing Documentation

 

 

 

 

12

Closing Adjustments; Closing Costs; And Transfer Taxes

 

 

 

 

13

Risk Of Loss

 

 

 

 

14

Escrow

 

 

 

 

15

Default; Conditions To Closing

 

 

 

 

16

No Assignment

 

 

 

 

17

Brokers

 

 

 

 

18

Notices

 

 

 

 

19

Exchange Provisions

 

 

 

 

20

Miscellaneous

 

 

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PURCHASE AND SALE AGREEMENT made as of the 9th day of November, 2004, between
FAIR OAKS PENDERBROOK APARTMENTS L.L.C., a limited liability company organized
and existing under the laws of the State of Delaware having its principal office
c/o W&M Properties, L.L.C., 60 East 42nd Street, New York, New York 10165; and
COMSTOCK Homes, Inc., a corporation organized and existing under the laws of the
Commonwealth of Virginia having its principal office at 11465 Sunset Hills Road,
Suite 510, Reston, Virginia 20190.

 

W I T N E S S E T H

 

In consideration of the premises and mutual covenants herein contained, the
parties hereto agree as follows:

 

1.     Definitions and Usage.

 

1.01         The following terms used herein shall have the meanings hereinafter
ascribed to them:

 

(a)   “Acceptable Title” shall mean such title to the fee simple to the Premises
as any reputable title insurance company licensed to conduct business in the
Commonwealth of Virginia would be willing to insure (without an extra risk
premium) in a fee owner’s title insurance policy without exception other than
the Permitted Title Exceptions.

 

(b)   “Buildings” shall mean the buildings situated on the Premises.

 

(c)   “Buildings and other Improvements” shall mean the Buildings, structures,
parking lots, and all other physical improvements constructed on any portion of
the Premises.

 

(d)   “Business Days” shall mean all days, excluding Saturdays, Sundays, and all
days observed by the courts of the Commonwealth of Virginia sitting in Fairfax
County as legal holidays.

 

(e)   “Closing” shall mean the settlement conference at which the conveyance of
the Property by the Seller to the Purchaser shall be made pursuant to the terms
and provisions of this Agreement.

 

(f)    “Closing Date” shall mean the date on which the Closing shall occur as
specified in Article 5 of this Agreement.

 

(g)   “Contract Deposit” shall mean the sums deposited with the Escrow Agent
pursuant to paragraphs (a) and (b) of Section 3.02 and 5.01 hereof.

 

(h)   “Contract Period” shall mean the period from the date of this Agreement
through the Closing Date, inclusive.

 

(i)    “Contracts” shall mean any and all service contracts and cable service
and telecom agreements to which the Real Property or any portion thereof, the
Seller or the Seller’s managing agent may be subject, affecting any portion of
the Real Property.  Contracts do not include the Seller’s management agreement
with the Seller’s managing agent.

 

(j)    “Conveyancing Instruments” shall mean the deed, assignments, and bill of
sale referred to in Sections 2.02 through 2.06 hereof.

 

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(k)   “Cure Amount” shall mean one hundred thousand and no/100 ($100,000.00)
dollars.

 

(l)    “Damage or destruction” shall have the meaning ascribed in paragraph (a)
of Section 13.01.

 

(m)  “Due Diligence Fee” shall mean seventy-five thousand and no/100
($75,000.00) dollars payable pursuant to section 8.01 hereof.

 

(n)   “Due Diligence Period” shall mean the period specified in the first
sentence of Section 8.01.

 

(o)   “Eastdil” shall mean Eastdil Realty Company, L.L.C.

 

(p)   “Environmental Laws” shall mean all (and “Environmental Law” shall mean
any of the) federal, state and municipal laws, statutes, codes and ordinances,
now or hereafter enacted or promulgated, pertaining to (i) the production,
generation, release, discharge, emission, disposal, transportation, containment
or storage, clean-up or remediation of any condition involving any Hazardous
Substance, (ii) the licensing or permitting of any of the activities referred to
in clause (i) or (iii) the regulation of any of such activities or any Hazardous
Activity; including the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, 42 U.S.C. §§ 9601 et seq., as amended by the Superfund
Amendments and Reauthorization Act of 1986; the Resource Conservation and
Recovery Act of 1976, 42 U.S.C. §§ 6901 et seq.; the Federal Water Pollution
Control Act, 33 U.S.C. §§ 1251 et seq.; the Clean Air Act, 42 U.S.C. §§ 7401 et
seq.; the Clean Water Act, 33 U.S.C. §§ 1251 et seq.; the National Environmental
Policy Act, 42 U.S.C. § 4321; the Hazardous Materials Transportation Act of
1975, 49 U.S.C. §§ 1801-1812; the Toxic Substances Control Act, 15 U.S.C. §§
2601 et seq.; the Refuse Act, 33 U.S.C. §§ 401 et seq.; any state or municipal
environmental protection or environmental conservation statute or ordinance; or
any law amending or superseding any of the foregoing; and any law of like or
similar import to any of the foregoing, and the rules and regulations
promulgated pursuant to such laws, statutes, codes and ordinances and all
executive, administrative and judicial orders and decrees issued in connection
with the enforcement of the foregoing, whether foreseen or unforeseen, ordinary
or extraordinary, whether applying retroactively or prospectively.

 

(q)   “ERISA” shall mean the Employee Retirement Income Security Act of 1974, as
amended the Employee Retirement Income Security Act of 1974, as amended.

 

(r)    “Escrow Agent” shall mean Premier Title Insurance Company.

 

(s)   “Escrow Fund” shall mean the sum of (i) the Contract Deposit and (ii) any
and all interest and dividends that may be earned on or paid with respect to the
Contract Deposit.

 

(t)    “Hazardous Activity” shall mean any activity, process, procedure or
undertaking, whether occurring before, on or after the date hereof, which
directly or indirectly (i) produces, generates or creates any Hazardous
Substance; (ii) causes or results (or threatens to cause or result) in the
release of any Hazardous Substance into the environment (including the air,
ground water, watercourses or water systems); (iii) involves the production,
generation, release, discharge, emission, disposal, transportation or storage,
clean-up or remediation of any Hazardous Substance; or (iv) causes or tends to
cause the Real Property or any portion to become a hazardous waste treatment,
storage or disposal facility within the meaning of any Environmental Law.

 

(u)   “Hazardous Condition” shall mean any condition which would be the basis
for (i) any claim for damages, clean-up costs, remediation costs, fines or
penalties under any Environmental Law or applicable common law or (ii) the
imposition of any lien on any property pursuant to any Environmental Law.

 

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(v)   “Hazardous Substance” shall mean any hazardous substance as defined in the
Comprehensive Environmental Response, Compensation and Liability Act of 1980, 42
U.S.C. §§ 9601 et seq., as amended by the Superfund Amendments and
Reauthorization Act of 1986; hazardous waste as defined in the Resource
Conservation and Recovery Act of 1976, 42 U.S.C. §§ 6901 et seq., as any of the
foregoing may be amended or superseded; oil; petroleum products, derivatives,
compounds or mixtures; minerals, including asbestos; chemicals; gasoline;
medical waste; polychlorinated  biphenyls (pcb’s); methane; radon; radioactive
material, volatile hydrocarbons; or other material, whether naturally occurring,
man-made or the by-product of any process, which is toxic, harmful or hazardous
or acutely hazardous to the environment or public health or safety; or any other
substance the existence of which on or at any property would be the basis for a
claim for damages, clean-up costs or remediation costs, fine, penalty or lien
under any Environmental Law or applicable common law.

 

(w)  “Insubstantial damage or destruction” shall have the meaning ascribed in
paragraph (b) of Section 13.01.

 

(x)    “Intangibles” shall mean, to the extent under the control of the Seller
and transferable by their terms, any and all (a) permits, licenses, approvals,
utility rights, development rights, guaranties, warranties, security codes,
access codes, post office boxes, telephone exchange numbers and systems
(including “800” and “888” numbers for the Premises), (b) copyrights,
trademarks, service marks, trade logos and other marks and trade names, all
domain names and the content of all web pages relating solely to the ownership,
use, operation and management of the Premises, including without limitation, the
right to use the name “Penderbrook”, (c) existing surveys, blueprints, drawings,
plans and specifications for or with respect to the Premises or any part thereof
in the Seller’s possession or control; and (d) tenant lists and marketing,
promotional and advertising drawings, brochures, booklets, manuals and other
materials concerning the Property or any part thereof, including electronic
versions thereof.

 

(y)   “Intended Use” shall mean the use of the Buildings and other Improvements
for the uses permitted by the Certificate(s) of Compliance or Occupancy or
Residential Use Permits issued for the Buildings and other Improvements in
effect on the date of this Agreement or for condominium ownership of the
residential apartment units.

 

(z)    “Leases” shall mean all leases, subleases, licenses, and other occupancy
agreements affecting the Premises.

 

(aa) “Permitted Title Exceptions” shall mean the following, to the extent that
any one or more of the same pertain to any portion of the Real Property:

 

(i)        the title exceptions referred to in Schedule B annexed hereto and
made part hereof;

 

(ii)       real estate taxes, unpaid installments of assessments, water and
sewer charges, which are or may become liens upon the Real Property and which
are not due and payable as of the Closing Date;

 

(iii)      any state of facts shown on that certain survey of the Real Property
dated November 19, 1995 prepared by Dewberry & Davis (the “Survey”) and any
subsequent state of facts that an accurate survey of the Real Property would
reveal, provided that such subsequent state of facts does not prevent the
Intended Use of the Buildings and other Improvements or render title
unmarketable;

 

(iv)      the Leases and the rights of tenants thereunder as tenants only;

 

(v)       zoning resolutions, ordinances and regulations and other statutes,
codes and regulations regulating the use and occupancy of real estate, including
building, fire and safety codes, Environmental Laws, and the Federal Fair
Housing Act and any state or municipal equivalent;

 

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(vi)      standard exclusions to coverage and conditions to such coverage set
forth in a standard ALTA owner’s title insurance policy customarily used in
Virginia without endorsement as would be issued on the Closing Date by any
reputable title insurance company licensed to conduct business in the
Commonwealth of Virginia.

 

(bb) “Personal Property” shall mean to the extent located at the Premises and
owned by the Seller, all items of personal property, including, without
limitation, the following: refrigerators, stoves, ovens, ranges, dishwashers,
clothes washers and dryers, air conditioning units, light fixtures, mirrors,
fixtures, computers, computer software applications, licenses and programs that
are transferable by their terms, boilers, and the supplies (not consumed prior
to Closing), office machines and apparatus, Intangibles, and the items referred
to on Schedule H annexed hereto and made part hereof, which Personal Property is
to be conveyed in their “as is” condition on the Closing Date to the Purchaser.

 

(cc) “Premises” shall mean the land described by metes and bounds in Schedule A
annexed hereto and made part hereof.

 

(dd) “Property” shall mean (i) the fee simple estate in the Premises, (ii) the
Real Property, (iii) all right, title and interest of the Seller, if any, in and
to the land lying in the bed of each street or highway in front of or adjoining
the Premises to the center line of such street or highway, (iv) the Leases and
the rents therefrom from and after the Closing Date, (v) any unpaid award for
any Taking by eminent domain or any damage to the Premises by the change of
grade of any street or highway, (vi) the ways, easements, rights, privileges,
and appurtenances in and to the Premises, and (vii) the Personal Property.  The
Property specifically excludes all claims and causes of action of Seller against
former and current tenants of the Buildings.

 

(ee) “Purchase Price” shall mean the aggregate sum payable by the Purchaser to
the Seller as specified in Section 3.01 of this Agreement in consideration of
the conveyances of the Property to be made by the Seller pursuant to Article 2
hereof.

 

(ff)   “Purchaser” shall mean Comstock Homes, Inc.

 

(gg) “Real Property” shall mean the Premises and the Buildings and other
Improvements.

 

(hh) “Seller” shall mean Fair Oaks Penderbrook Apartments L.L.C.

 

(ii)   “Substantial damage or destruction” shall have the meaning ascribed in
paragraph (c) of Section 13.01.

 

(jj)   “Taking” shall have the meaning ascribed in paragraph (d) of Section
13.01.

 

1.02         The words “herein,” “hereof,” “hereto,” “hereunder” and variants
thereof shall be interpreted as being references to this Agreement as a whole
and not merely the clause, paragraph, Section or Article in which such word
appears.  Lists following words such as  “include” and “including” shall be
deemed to be examples only and not exhaustive of all possible items of similar
nature that could otherwise have been set forth and the words “include” and
“including” shall be read to mean “to include or including, without limiting the
generality of the foregoing.”

 

1.03         Where any representation made herein by the Seller is made “to the
best of the Seller’s knowledge,” it is understood and agreed that such
representation is made based solely upon the actual knowledge, without
investigation, of the person who is, on the date hereof, the manager of the Real
Property.

 

1.04         Wherever appropriate in this Agreement, personal pronouns shall be
deemed to include the other genders and the singular or plural of any defined
term or other word shall, as the context may require, be deemed to include, as
the case may be, either the plural or the singular.  All Article,

 

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Section, Schedule and Exhibit references set forth herein shall, unless the
context otherwise specifically requires, be deemed references to the Articles,
Sections, Schedules, and Exhibits of this Agreement.

 

2.     Agreement of Purchase and Sale; Conveyancing Instruments.

 

2.01         The Seller shall sell and the Purchaser shall purchase the Property
upon the terms and subject to the conditions hereinafter set forth.

 

2.02         The Seller shall on the Closing Date convey and the Purchaser shall
accept Acceptable Title to the Real Property by a special warranty deed in the
form annexed hereto and made part hereof as Exhibit 1.

 

2.03         The Seller shall on the Closing Date assign without representation
or warranty (except as set forth herein) to the Purchaser all of the Seller’s
right title and interest in and to the Leases, and the Purchaser shall accept
the same and assume all of the Seller’s obligations under the Leases, by an
assignment and assumption agreement in the form annexed hereto and made part
hereof as Exhibit 2.

 

2.04         The Seller shall on the Closing Date convey to the Purchaser the
Personal Property, in its “as is” condition on such day, by a bill of sale in
the form annexed hereto and made part hereof as Exhibit 3.

 

2.05         The Seller shall on the Closing Date assign without representation
or warranty (except as set forth herein) to the Purchaser all of the Seller’s
right, title and interest under each of the Contracts, and the Purchaser shall
accept the same and assume all of the Seller’s obligations under the Contracts,
by an assignment and assumption agreement in the form annexed hereto and made
part hereof as Exhibit 4.

 

2.06         The Seller shall on the Closing Date assign without representation
or warranty (except as set forth herein) to the Purchaser all of the Seller’s
right, title and interest under each transferable license and permit in the
Seller’s possession for the use and operation of any items constituting
Intangibles, and any equipment and apparatus for the Buildings and other
Improvements, and the Purchaser shall accept the same and assume all of the
Seller’s obligations under such licenses and permits, by an assignment and
assumption agreement in the form annexed hereto and made part hereof as Exhibit
5.

 

3.     Purchase Price.

 

3.01         The Purchase Price to be paid by the Purchaser to the Seller for
the Property is seventy-five million and no/100 ($75,000,000.00) dollars.

 

3.02         The Purchase Price shall be paid by the Purchaser to the Seller in
the lawful currency of the United States of America, as follows:

 

(a)   Four hundred twenty-five thousand and no/100 ($425,000.00) dollars within
one (1) business day after the execution of this Agreement by Seller and
Purchaser by immediately available funds wired to the Escrow Agent’s designated
account in accordance with wiring instructions provided by the Escrow Agent,
time being of the essence;

 

(b)   Five hundred thousand and no/100 ($500,000.00) dollars upon the expiration
of the Due Diligence Period by immediately available funds wired to the Escrow
Agent’s designated account in accordance with wiring instructions provided by
the Escrow Agent, time being of the essence; and

 

(c)   The balance of the Purchase Price (as adjusted pursuant to Article 12
hereof) upon the Closing on the Closing Date by federal funds wired to the
Escrow Agent and then to one or more accounts designated by the Seller two (2)
Business Days prior to the Closing Date.  Notwithstanding anything herein set
forth to the contrary, the Due Diligence Fee shall be applied to the payment of
this portion of the Purchase Price.

 

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3.03         If the Purchaser shall fail to make the payment (or deliver a
permitted letter of credit in lieu thereof) pursuant to paragraph (b) of Section
3.02 within two (2) Business Days following notice from the Seller that the
Purchaser failed to make such payment or three (3) Business Days following the
due date of such payment, whichever is earlier, the same shall constitute a
default of the Purchaser hereunder, and the Seller may terminate this Agreement
and retain any Escrow Fund as liquidated damages.

 

3.04         No portion of the Purchase Price has been allocated to any Personal
Property that may be conveyed pursuant hereto.  If any governmental authority
shall assess any sales tax (or similar tax) in connection with the conveyance of
such Personal Property, the Purchaser shall pay such tax and any interest or
penalties or both which may be payable with respect to the same and indemnify
and hold the Seller harmless for any such taxes, interest and penalties which
the Seller may become obligated to pay.  The obligations of the Purchaser
pursuant to this Section 3.04 shall survive the Closing.

 

3.05         The Seller may use any portion of the proceeds of the Purchase
Price at the Closing to satisfy and discharge any lien or other title defect
affecting the Real Property or any other, property, estate or interest to be
conveyed pursuant hereto.

 

3.06         Funds wired in connection with the Closing (including the Contract
Deposit) by the Escrow Agent and the Seller’s designated recipient shall be
unable to confirm receipt of such funds by 2:00 p.m. Eastern Standard Time, then
there shall be added to (and deemed to be included in the definition of) the
Purchase Price a sum equal to the product which results from multiplying (i) the
amount of the Purchase Price by (ii) 0.00023 by (ii) the number of days
(including the Closing Date) from the Closing Date to the first Business Day
when such funds have been received by the Seller and the Seller’s designated
recipient.  No conveyance to be made by the Seller pursuant hereto shall be
deemed effective until the entire Purchase Price shall have been received by the
Seller and the Seller’s designated recipient(s) thereof and such receipt has
been confirmed by the Seller or the Seller’s recipient(s), as the case may be.

 

3.07         For the purposes hereof, the term “immediately available funds”
shall mean United States dollars, which require no further clearance to be
invested immediately by the Seller and earn interest thereon from the time of
such investment.  Notwithstanding anything herein set forth to the contrary, the
Purchaser may, in lieu of the payments under paragraph (a) or paragraph (b) of
Section 3.02 or both of them, deliver to the Escrow Agent one or more
irrevocable, unconditional letters of credit payable on sight issued (or
confirmed for payment) by Branch Banking and Trust Company or another New York
Clearinghouse Association member bank having capital and surplus of at least $10
billion, payable to the Seller as the sole beneficiary.  Any such letter of
credit shall be payable upon presentation of only said letter of credit and a
sight draft and shall have an expiry date not earlier than November 9, 2005.

 

4.     Title.

 

4.01         The Purchaser shall promptly order a title report of the Real
Property from a national title insurance company licensed to do business in the
Commonwealth of Virginia or such company’s agent.  The Purchaser shall promptly
inform the Seller and its counsel of any title defect (including any defect
disclosed by a survey of the Premises) not among the Permitted Title Exceptions
after learning of the same and deliver a copy of such title report (and any
survey prepared on behalf of or obtained by the Purchaser) to the Seller
promptly after the receipt of the same, but not later than the last day of the
Due Diligence Period.  If the Purchaser shall fail to notify the Seller and its
counsel of the existence of any title exception or defect not among the
Permitted Title Exceptions by the expiration of the Due Diligence Period, then
objection to such title exceptions and defects shall be deemed to have been
waived by the Purchaser, and such title exceptions and defects shall be deemed
to be Permitted Title Exceptions.  If any title exception or defect not among
the Permitted Title Exceptions shall arise after the Due Diligence Period, the
Purchaser shall notify the Seller thereof within two (2) Business Days of the
Purchaser’s becoming aware of the same or such title exceptions and defects
shall likewise be deemed to have been waived by the Purchaser and such title
exceptions and defects shall be deemed to be Permitted Title Exceptions.

 

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4.02         The Seller shall not be obligated to cure any title defect or to
remove any exception to title not among the Permitted Title Exceptions
(including any violation noted or issued, of any building, fire, safety,
Environmental Law, or other law, code, ordinance or regulation affecting the
Real Property), if the aggregate cost of curing all such title defects and
removing such exceptions not among the Permitted Title Exceptions (including any
violation noted or issued, of any building, fire, safety, Environmental Law or
other law, code, ordinance or regulation affecting the Real Property) shall
exceed the Cure Amount, except that the Seller shall cause any mortgage (or deed
of trust) of the Real Property securing indebtedness for borrowed money, and any
judgment against the Seller and mechanics’ or other statutory liens, encumbering
the Real Property to be discharged of record irrespective of the amount.  If the
Seller elects to cure any title defect or to remove any exception to title not
among the Permitted Title Exceptions (including any violations noted or issued,
of any or all building, fire, safety and other laws, codes, ordinances and
regulations affecting the Real Property), (which election shall be made by the
Seller within five (5) Business Days after receipt of the Purchaser’s
objections), it shall be entitled to adjourn the Closing Date for up to sixty
(60) days to attempt to cure such defect or remove such exception. 
Notwithstanding anything herein contained to the contrary, the Seller shall not
be obligated to institute or prosecute any legal proceeding to cure or discharge
any title defect or exception to title.

 

4.03         If the Seller shall have notified the Purchaser of the Seller’s
unwillingness or inability to cure title defects or remove exceptions not among
the Permitted Title Exceptions or among those title exceptions that the Seller
has agreed to discharge pursuant to Section 4.02 hereof, because the cost of
curing such title defects or removing such exceptions will exceed the Cure
Amount, or if, as of the Closing Date (as the same may have been adjourned as
provided in this Agreement), the Seller is unable to convey Acceptable Title to
the fee simple of the Premises to the Purchaser, then the Purchaser may, upon
notice to the Seller, terminate this Agreement.  The Purchaser may elect to
consummate this transaction subject to such title defects or exceptions upon all
of the terms and provisions and subject to all of the conditions set forth in
this Agreement (except the obligation of the Seller to convey Acceptable Title)
by giving notice to the Seller within five (5) Business Days after the effective
date of the Seller’s notice.  If the Purchaser shall elect to consummate this
transaction as provided in the Purchaser’s notice, the Seller shall convey the
Property to the Purchaser without diminution of the Purchase Price, subject to
the Permitted Title Exceptions and such additional title exceptions as the
Seller shall have elected not to cure or remove except that Purchaser shall be
entitled to a credit against the Purchase Price equal to the Cure Amount and
subject to the Seller’s obligations to satisfy mortgages and liens pursuant to
Section 4.02.  If the Purchaser shall have elected to terminate this Agreement
pursuant to this Section 4.03 and such election shall not have been canceled as
provided above in this Section 4.03, then the Seller and the Purchaser shall
instruct the Escrow Agent to disburse the Escrow Fund to the Purchaser, and no
party shall have any further rights or obligations hereunder.  Such rights to
terminate this Agreement and to receive the Escrow Fund shall be the Purchaser’s
sole remedies if the Seller is unwilling or unable to cure or remove any such
title defect or exception.

 

5.     Closing.

 

5.01         The Closing shall take place on December 29, 2004.  The Purchaser
may adjourn the Closing once until not later than January 14, 2004 by (i) the
depositing with the Escrow Agent not later than December 27, 2004, the sum of
five hundred thousand and no/100 ($500,000.00) dollars (or a letter of credit
conforming to the requirements of Section 3.07), which sum shall be added to the
Contract Deposit and applied, upon Closing, to the Purchase Price, and (ii)
giving the Seller notice of such adjournment simultaneously with making such
deposit.

 

5.02         The Seller and the Purchaser shall endeavor to agree upon
preliminary estimates of the closing adjustments and prorations to be made in
accord with Article 12 hereof at least three (3) Business Days prior to the
Closing Date and the final adjustments and prorations not less than one (1)
Business Day prior to the Closing Date.  At least one (1) Business Day prior to
the Closing Date the Seller and the Purchaser shall deliver to the Escrow Agent
the documents to be executed and delivered at the Closing pursuant to Article 11
hereof and the balance of the Purchase Price (as adjusted pursuant to Article
12).  Upon confirmation by the Escrow Agent that it is prepared to issue an
owner’s form of title insurance policy to the Purchaser insuring Acceptable
Title to the Purchaser and all other conditions precedent to its

 

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disbursement of the Purchase Price, the Escrow Agent shall wire the entire
Purchase Price (as so adjusted) and all other moneys that the Escrow Agent is
holding in immediately available funds to the Seller and its designees, if any. 
Upon confirmation by the Seller that the funds have been received, the Escrow
Agent shall then distribute the documents it is holding to the applicable
parties and issue the Purchaser’s title insurance policy.

 

6.     Representations of the Purchaser.

 

6.01         The Purchaser represents and warrants to the Seller that:

 

(a)   THE TRANSACTION CONTEMPLATED BY THIS AGREEMENT HAS BEEN NEGOTIATED BETWEEN
THE SELLER AND THE PURCHASER.  THIS AGREEMENT REFLECTS THE MUTUAL AGREEMENT OF
THE SELLER AND THE PURCHASER, AND THE PURCHASER HAS CONDUCTED OR SHALL CONDUCT
ITS OWN INDEPENDENT EXAMINATION OF THE PROPERTY.  OTHER THAN THE MATTERS
SPECIFICALLY REPRESENTED HEREIN, BY WHICH ALL OF THE FOLLOWING PROVISIONS OF
THIS PARAGRAPH ARE LIMITED, THE PURCHASER HAS NOT RELIED UPON AND SHALL NOT RELY
UPON ANY REPRESENTATION OR WARRANTY OF THE SELLER OR ANY OF THE SELLER’S AGENTS
OR REPRESENTATIVES NOT SPECIFICALLY SET FORTH HEREIN, AND THE PURCHASER HEREBY
ACKNOWLEDGES THAT EXCEPT AS SPECIFICALLY SET FORTH IN THIS AGREEMENT, NO SUCH
REPRESENTATION HAS BEEN MADE.  THE PURCHASER ACKNOWLEDGES AND AGREES THAT EXCEPT
AS SPECIFICALLY SET FORTH IN THIS AGREEMENT, BY EXECUTING THIS AGREEMENT THE
SELLER SPECIFICALLY DISCLAIMS, AND NEITHER IT NOR ANY OF ITS AFFILIATES NOR ANY
OTHER PERSON IS MAKING, ANY REPRESENTATION, WARRANTY OR ASSURANCE WHATSOEVER TO
THE PURCHASER, AND NO WARRANTIES OR REPRESENTATIONS OF ANY KIND OR CHARACTER,
EITHER EXPRESS OR IMPLIED, EXCEPT AS SPECIFICALLY SET FORTH IN THIS AGREEMENT,
ARE MADE BY THE SELLER OR RELIED UPON BY THE PURCHASER WITH RESPECT TO THE
STATUS OF TITLE TO OR THE MAINTENANCE, REPAIR, CONDITION, DESIGN OR
MARKETABILITY OF ANY OF THE PROPERTY INCLUDING (I) ANY IMPLIED OR EXPRESS
WARRANTY OF MERCHANTABILITY, (II) ANY IMPLIED OR EXPRESS WARRANTY OF FITNESS FOR
A PARTICULAR PURPOSE, (III) ANY IMPLIED OR EXPRESS WARRANTY OF CONFORMITY TO
MODELS OR SAMPLES OF MATERIALS, (IV) ANY RIGHTS OF PURCHASER UNDER APPROPRIATE
STATUTES TO CLAIM DIMINUTION OF CONSIDERATION, (V) ANY CLAIM BY PURCHASER FOR
DAMAGES BECAUSE OF DEFECTS, WHETHER KNOWN OR UNKNOWN, WITH RESPECT TO THE
BUILDINGS AND OTHER IMPROVEMENTS OR THE PERSONAL PROPERTY, (VI) THE FINANCIAL
CONDITION OR PROSPECTS OF THE REAL PROPERTY, AND (VII) THE COMPLIANCE OR LACK
THEREOF OF ANY OF THE BUILDINGS OR THE OTHER IMPROVEMENTS WITH GOVERNMENTAL
REGULATIONS, IT BEING THE EXPRESS INTENTION OF THE SELLER AND THE PURCHASER
THAT, EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT, THE PROPERTY SHALL BE
CONVEYED AND TRANSFERRED TO THE PURCHASER IN ITS PRESENT CONDITION AND STATE OF
REPAIR, “AS IS” AND “WHERE IS”, WITH ALL FAULTS.  The Purchaser is a
knowledgeable, experienced and sophisticated purchaser of real estate, and it is
relying solely on its own expertise and that of Purchaser’s consultants in
purchasing the Property.  Prior to the date hereof and during the Due Diligence
Period, the Purchaser has conducted or shall conduct such inspections,
investigations and other independent examinations of the Property and related
matters as the Purchaser deemed or deems necessary, including but not limited to
the physical and environmental conditions thereof, and shall rely upon same and
not upon any statements of the Seller (excluding the limited matters
specifically represented by the Seller herein) or of any member officer,
director, employee, agent or attorney of the Seller.  The Purchaser acknowledges
that all information obtained by the Purchaser was or shall be obtained from a
variety of sources, and the Seller shall not be deemed to have represented or
warranted the completeness, truth, or accuracy of any of the documents or other
such information heretofore or hereafter furnished to the Purchaser.  Upon
Closing, the Purchaser will assume the risk that adverse matters, including, but
not limited to,

 

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adverse physical and environmental conditions, that may not have been revealed
by the Purchaser’s inspections and investigations.  The Purchaser further
acknowledges and agrees that there are no oral agreements, warranties or
representations, collateral to or affecting the Property, by the Seller, any
agent of the Seller or any third party, except as specifically set forth
herein.  The Seller is not liable or bound in any manner by any oral or written
statements, representations, collateral to or relating to the Property, by the
Seller, any agent of the Seller or any third party, except to the extent
specifically provided herein.  The Seller is not liable or bound in any manner
by any oral or written statements, representations or information pertaining to
the Property furnished by any real estate broker, agent, employee, servant or
other person, unless the same are specifically set forth or referred to herein. 
The Purchaser acknowledges that the Purchase Price reflects the “as is, where
is” nature of this sale and any faults, liabilities, defects or other adverse
matters that may be associated with the Property.  The Purchaser (with the
Purchaser’s counsel) as fully reviewed the disclaimers and waivers set forth in
this Agreement and understands the significance and effect thereof.  The
Purchaser acknowledges and agrees that the disclaimers and other agreements set
forth herein are an integral part of this Agreement, and that the Seller would
not have agreed to sell the Property to the Purchaser for the Purchase Price
without this disclaimer and other agreements set forth in this Agreement.  The
terms and conditions of this paragraph (a) shall expressly survive the Closing,
shall not merge with the provisions of any Conveyancing Instruments or other
documents delivered in connection with the sale of the Property and shall be
deemed to be incorporated into the deed conveying title to the Real Property.

 

(b)   Neither the Seller nor any broker or other person purporting to represent
or speak on behalf of the Seller has made any representation respecting the
financial condition or position of the Real Property or the Seller, any
projected income from the Real Property, the marketability of the same, the
state of the real estate market or any other matter respecting the financial or
economic viability of the Real Property, except as may be specifically set forth
in the Schedules hereto.

 

(c)   The Purchaser is not relying upon any statements made by or on behalf of
the Seller concerning (i) the condition or operation or maintenance of the Real
Property, or (ii) any other matter concerning any of the Property, not
specifically stated in the body of this Agreement or in any Schedule hereto.

 

(d)   The Purchaser is not and shall not be as of the Closing Date an employee
benefit plan as defined in Section 3(30) of ERISA, which is subject to Title I
of ERISA, nor a plan as defined in Section 4975(e)(1) of the Internal Revenue
Code of 1986, as amended, and the assets of the Purchaser shall not constitute
“plan assets” of one or more of such plans within the meaning of Department of
Labor Regulation Section 2510.3-101.

 

(e)   The persons executing this Agreement on behalf of the Purchaser have been
duly authorized to do so by the appropriate governing or managing authority of
the Purchaser, and this Agreement constitutes the valid and binding obligation
of the Purchaser, enforceable in accordance with its terms.

 

6.02         Each of the representations and warranties made by the Purchaser in
Section 6.01 is material and may only be waived by the Seller and only by means
of a writing signed by it.

 

7.     Representations of the Seller.

 

7.01         The Seller represents and warrants to the Purchaser, that on the
date hereof:

 

(a)   The persons executing this Agreement on behalf of the Seller have been
duly authorized to do so by the appropriate governing or managing authority of
the Seller, and this Agreement constitutes the valid and binding obligation of
the Seller, enforceable in accordance with its terms.

 

(b)   The information with respect to the Real Property set forth in the
following Schedules annexed hereto and made part hereof is, as of the date
hereof, true and complete information

 

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respecting each of the sets of matters referred to in such Schedules: Schedules
C (current rent roll of the Building), Schedule D (Contracts), Schedule F
(employees of the Buildings), Schedule G (insurance coverage for the Buildings
and Other Improvements), Schedule H (Personal Property as of the date thereon
set forth), Schedule I (unpaid costs of improvements and allowances owed to
Tenants under Leases), and Schedule J (unpaid commissions owed to brokers in
connection with Leases).  Schedule E has been intentionally omitted.

 

(c)   The Seller has not received notice of violation of any zoning, building,
fire or safety code, Environmental Law, the Federal Fair Housing Act or any
state or municipal equivalent, or other applicable law that has not been
discharged.

 

(d)   To the best of the Seller’s knowledge, it is not in material breach of any
Lease and it has not received notice from any tenant of such a material breach
that has not been cured;

 

(e)   It has not received notice of any material breach of any material
obligation to any third party under any of the documents listed among the
Permitted Title Exceptions or under any Contract that has not been cured.

 

(f)    No real estate tax contests are pending.

 

(g)   No apartment units comprising the Property are occupied by persons other
than bona fide tenants, and no employees of Seller or its property manager are
in possession of any apartments, except two employees under Leases that provide
that any such Lease may be terminated upon ten (10) days’ notice if the relevant
employee’s employment is terminated.

 

7.02         The Seller shall update and revise each of the Schedules referred
to in paragraph (b) of Section 7.01 so that the same shall be accurate as of a
date not earlier later than two (2) Business Days preceding the Closing Date,
but no such updated and revised Schedule shall be deemed to be a representation
(or contain representations) which shall survive the delivery of the
Conveyancing Instruments at the Closing except as provided in Section 7.08
hereof.

 

7.03         No representation is made with respect to the existence of any
Lease, tenancy, or Contract on the Closing Date, and the existence of any of the
foregoing on the Closing Date is not a condition precedent to the Purchaser’s
obligation to consummate this transaction.  Notwithstanding the foregoing, the
updated rent roll shall be true, correct and complete as of the date made.

 

7.04         A representation of the Seller shall be deemed untrue or incomplete
only if (i) the Purchaser did not know that such representation is untrue, (ii)
such representation is factually untrue and (iii) such representation is
material.  Notwithstanding the provisions of the preceding sentence, if the
Purchaser shall discover any of the Seller’s representations to be untrue
factually, the Purchaser shall give the Seller notice thereof promptly after
discovering such fact and the Seller shall have the opportunity (not to exceed
thirty (30) days) to correct any such untrue factual representation.  If the
Seller is able to correct such conditions that made the representation untrue
factually so that it is true as of the date of such correction, the
representation shall be deemed true as if made accurately on the date hereof. 
If the Purchaser fails to afford the Seller the opportunity to correct such
condition, then the Purchaser shall be deemed to have waived any rights and
remedies arising by reason of such untrue representation.

 

7.05         Subject to the terms and provisions of Section 7.04, the
Purchaser’s sole right and remedy arising by reason of any untrue or incomplete
representation discovered by the Purchaser prior to Closing shall be to
terminate this Agreement and have the Escrow Fund paid to the Purchaser together
with the Purchaser’s reasonable costs of due diligence up to $75,000.

 

7.06         All of the Seller’s representations hereunder shall be deemed
merged in the Conveyancing Instruments and shall not survive the conveyances of
the Property to the Purchaser, except as provided in Section 7.07.  The
acceptance by the Purchaser of the Conveyancing Instruments by the Purchaser
shall constitute conclusive proof that the Seller shall have performed all of
its obligations under

 

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this Agreement and shall have no further or continuing obligations or
liabilities to the Purchaser arising under or by virtue of this Agreement or out
of the transactions contemplated by the parties hereto, except as may be
expressly set forth in this Agreement or the closing documents.

 

7.07         The Seller’s representations set forth in Section 7.01 shall
survive the Closing for one hundred eighty (180) days.  Following the Closing,
if any such representation shall prove to be untrue or incomplete as defined in
Section 7.04, the Purchaser may commence an action for the actual damages
suffered thereby, provided that such action shall have been commenced within
such 180-day period, time being of the essence.

 

8.     Purchaser’s Due Diligence.

 

8.01         In consideration of the Purchaser simultaneously herewith
depositing with the Escrow Agent the Due Diligence Fee (which shall be payable
to the Seller in accordance with Sections 3.02, 8.03, and 14.01), commencing on
the date of this Agreement and expiring on December 1, 2004 or such earlier date
as the Purchaser shall have waived its rights to terminate this Agreement under
Section 8.03 (which right shall conclusively be deemed to have been waived by
making the Contract Deposit pursuant to paragraph (b) of Section 3.02) (the “Due
Diligence Period”), the Purchaser (and the Purchaser’s accountants, engineers
and other consultants) may, subject to the terms and provisions of this Article
8 and upon at least two Business Days’ notice to the Seller,  (i) subject to the
rights of tenants of the Premises, enter upon the Real Property for the purpose
of making such inspections and surveys thereof as the Purchaser may desire, (ii)
review the Leases and (iii) inspect, during regular business hours at the
offices of the managing agent of the Real Property, the Contracts and the other
books and records of such managing agent relating to the operation, leasing and
maintenance of the Real Property.  Nothing in this Section 8.01 shall be
construed to permit the Purchaser or any other person on behalf of the Purchaser
to inspect or review any (x) income tax returns or files relating to income
taxes of the Seller or any partner, officer, member, agent or other principal of
the Seller or (y) reports, correspondence, memoranda or compendia of information
prepared by counsel for the Seller which may be the subject of any privilege or
by any other persons in contemplation of litigation or any other official
proceeding or hearing, except real estate tax certiorari (or equivalent)
proceedings.  The Seller reserves the right to have one or more representatives
present at any such inspection, test, examination or walk-through of the Real
Property and at any examination of the Leases, Contracts or books and records. 
No test or physical penetration of any portion of the Real Property may be
conducted without the prior approval of the Seller, which approval shall not be
unreasonably withheld.  The Purchaser shall maintain and deliver to Seller
certificates of comprehensive liability and property damage insurance in a
coverage amount of not less than one million ($1,000,000) dollars per occurrence
and underwritten by a carrier reasonably acceptable to the Seller, naming the
Seller, its members and managing agent as insureds against any damage, injury,
expenses and other liabilities which the undersigned may incur arising out of
any negligence or misconduct by any of the Purchaser’s representatives while
present at the Real Property to perform any activity permitted under this
Section 8.01.  The Purchaser shall promptly pay the Seller the Seller’s cost to
repair any damage to any Buildings and other Improvements caused by or resulting
from activities associated with such representatives (excluding, however,
conditions merely discovered by the Purchaser) and restore the damaged property
to its condition immediately prior to such activities and shall indemnify Seller
against any related costs.   During the Due Diligence Period, the Seller shall
make available to the Purchaser and its representatives copies of the Leases,
the Contracts, such Certificate(s) of Compliance or Occupancy and Residential
Use Permits for the Buildings and other Improvements as are in the possession of
the Seller and its managing agent, the most recent real estate tax bills for the
Real Property, such plans and drawings of the Buildings and other Improvements
as are in the possession of the Seller and its managing agent and, subject to
the foregoing provisions of this Section 8.01, such other books and records of
the Property, including, without limitation, the items set forth in Schedule K
attached hereto, as are in the possession of the Seller and its managing agent.

 

8.02         (a)   All information respecting the Real Property obtained
pursuant to Section 8.01 or other source not in the public domain prior to the
Closing by the Purchaser or any other person acting on behalf of the Purchaser
shall be held in the strictest confidence and shall not be revealed to any
person (other than persons retained or employed by Purchaser, the Purchaser’s
consultants and lenders, who have a

 

12

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need to know such information) except pursuant to subpoena or court or other
competent authority’s order.  If the Purchaser or any person acting on behalf of
the Purchaser shall be made the subject of a subpoena or the order of any court
or other competent authority’s directing the Purchaser or such other person to
divulge any such information, the Purchaser shall notify the Seller of such
subpoena or order promptly after being served with the same to permit the Seller
to contest such subpoena or court order or to seek such other protective relief
as the Seller may deem desirable.  The Purchaser shall instruct each person to
whom the Purchaser imparts any such information about the Real Property pursuant
to this Article 8 to be bound by the terms and provisions of this Section 8.02.

 

(b)   All duly authorized representatives of the Purchaser who may participate
in the Purchaser’s inspections and other due diligence shall be instructed by
the Purchaser to be bound by the terms and provisions of this Section 8.02.

 

(c)   Provided that the Seller is not in material breach of this Agreement and
the Purchaser has terminated this Agreement in accord with Section 8.03, the
Purchaser shall deliver to the Seller, promptly after receipt by the Purchaser,
copies of all title abstracts and reports, surveys, inspection and test reports
and environmental and engineering reports with respect to the Real Property that
may be prepared for the Purchaser by third-party engineers, providers,
consultants or contractors.  All such copies shall be delivered without
representation or warranty and may not be relied upon by the Seller.

 

(d)   The Purchaser shall not request any governmental authority to inspect any
portion of the Real Property but the Purchaser may request from appropriate
agencies information concerning zoning, compliance with codes or other
ordinances and certificates of occupancy.

 

8.03         The Purchaser may terminate this Agreement for any reason on or
before the expiration of the Due Diligence Period, time being of the essence, by
giving the Seller notice of such termination, time being of the essence.  If the
Purchaser shall so terminate this Agreement pursuant to this Section 8.03 and
the Seller shall not have made an untrue or incomplete representation (as
defined in Section 7.04) or other breach or default hereunder which shall have
formed the basis of such termination, then the Purchaser shall direct the Escrow
Agent to disburse the Due Diligence Fee of seventy-five thousand and no/100
($75,000.00) dollars to the Seller in consideration of the Seller’s having
removed the Property from the market for the duration of the Due Diligence
Period and the balance of the Escrow Fund to the Purchaser (without the
requirement of obtaining consent of the Seller and notwithstanding contrary
instruction from the Seller) and neither party shall have any further obligation
or claim against the other arising out of this Agreement (except for such claims
as the Seller may have by reason of any covenant or condition set forth in
Sections 8.01 or 8.02).  If the Purchaser shall not have given such notice of
termination in a timely manner under this Section 8.03, then the right to
terminate this Agreement pursuant to this Section 8.03 shall be deemed waived
for all purposes, the right to terminate this Agreement pursuant to this Section
8.03 shall be of no force or effect, and the balance of the Contract Deposit (as
specified in paragraph (b) of Section 3.02) hereof shall be unconditionally due
and payable.  If this Agreement is not terminated pursuant to this Section 8.03,
the Contract Deposit shall not be refundable to the Purchaser for any reason not
specifically set forth herein.

 

8.04         Pursuant to the provisions of Section 8.01 and 8.02, the Purchaser
may inspect the Real Property during the Contract Period subsequent to the Due
Diligence Period.

 

9.     Operation of the Buildings and Other Improvements.

 

        During the Contract Period, the Seller shall (i) continue to manage,
maintain, repair and operate the Real Property in accordance with the Seller’s
customary practices, including, evicting tenants, making repairs, hiring and
firing employees, entering into, modifying, and terminating Leases and
Contracts, and applying security deposits under the Leases as permitted
thereunder (provided, however, that without Purchaser’s prior written consent,
Seller shall not enter into any Lease with a term in excess of one (1) year or
with renewal options in favor of the tenant thereunder); (ii) not apply security
deposits, except in connection with evicting a tenant or with respect of a
tenant who has vacated his apartment; (ii) operate the Real Property in
accordance with applicable laws; (iv) not enter into Contracts to which the

 

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Purchaser shall be subject following the Closing, (v) operate the Real Property
in accord with applicable laws and (vi) not enter into Leases except at
arms-length, at fair market rents for terms customary in the market, on the
Seller’s standard form of lease.  The Seller shall maintain insurance coverage
for the Buildings and other Improvements comparable to the insurance referred to
on Schedule G hereto.

 

10.  Environmental Liabilities.

 

10.01       Except in connection with the Seller’s breach of an express
representation or warranty set forth herein, the Purchaser hereby waives any
claim against the Seller, its partners, employees, and agents and affiliates
arising out of any Hazardous Activity conducted or any Hazardous Substance or
Hazardous Condition existing at, in or about the Real Property; provided,
however, that such waiver shall not extend to third party claims for which the
Purchaser may be liable as a result of any act or failure to act on the part of
the Seller.

 

10.02       From and after the Closing, the Purchaser shall indemnify and hold
the Seller, its partners, employees and agents and affiliates harmless against
any cost, claim, or liability (including attorneys’ fees) arising by virtue of
the existence at any time of any Hazardous Activity conducted at or any
Hazardous Substance or Hazardous Condition first arising or occurring at, in or
about the Real Property from and after the Closing Date caused or suffered by
the Purchaser.

 

10.03       The obligations of the Purchaser pursuant to this Article 10 shall
survive the delivery of the Conveyancing Instruments at the Closing.

 

11.  Closing Documentation.

 

11.01       At the Closing, the Seller shall deliver to the Purchaser:

 

(a)   the deed as heretofore described in Section 2.02;

 

(b)   an assignment and assumption agreement as heretofore described in Section
2.03 with respect to each of the Leases which shall provide that the Purchaser
is assuming all of the obligations of the Seller under the Leases from and after
the Closing Date;

 

(c)   a bill of sale, for any Personal Property being conveyed incidental to the
Real Property as heretofore described in Section 2.04;

 

(d)   an assignment and assumption agreement as heretofore described in Section
2.05 of the Contracts which shall provide that the Purchaser is assuming all of
the obligations of the Seller under the Contracts (including any obligations to
union personnel and other persons who may be beneficiaries under any such
agreements) from and after the Closing Date;

 

(e)   an assignment and assumption agreement as heretofore described in Section
2.06 of the licenses and permits and other items constituting Intangibles which
shall provide that the Purchaser is assuming all of the obligations of the
Seller under such licenses and permits from and after the Closing Date;

 

(f)    updated and revised Schedules pursuant to Section 7.02 hereof;

 

(g)   such instruction manuals, warranties and guarantees with respect to the
Building’s systems, equipment and apparatus as are in possession of the Seller
or the Seller’s managing agent;

 

(h)   all Leases and tenants files in the possession of the Seller or its
managing agent as then are in effect;

 

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(i)    the Contracts in the possession of the Seller or its managing agent as
then are in effect;

 

(j)    any licenses and permits referred to herein and on any Schedule, the
items referred to on Schedule H, and other items of Intangibles in the
possession or control of the seller or its managing agent as then are in effect;

 

(k)   letters addressed to each of the tenants under the Leases, including
statements to the effect that their respective security deposits under the
Leases have been delivered to and received by the Purchaser (and containing such
other statements and information as may be required pursuant to law to relieve
the Seller of further liability for the maintenance and return of the security
deposits under the Leases);

 

(l)    letters addressed to service providers informing them of either (i) the
assumption of their Contracts by the Purchaser or (ii) the termination of their
Contracts, provided, however, that the Contracts designated as “Cannot be
Cancelled” on Schedule D shall be assumed by the Purchaser;

 

(m)  the Building’s managing agent’s records (excluding those deemed to be
confidential by reason of any privilege asserted by the Seller) pertaining to
the operation of the Building;

 

(n)   any and all plans, specifications, and drawings of the Buildings and other
Improvements as are in the possession or control of the Seller or its managing
agent;

 

(o)   a certification to the effect that the Seller is not a “foreign person” as
defined in the Foreign Investment in Real Property Tax Act;

 

(p)   evidence of the authority of the Seller to consummate this transaction and
proof of its legal subsistence as an entity as reasonable required by the
Purchaser’s title insurance company;

 

(q)   an updated rent roll certified as accurate as of the Closing Date by the
Seller;

 

(r)    records and correspondence in the possession of the Seller or the
Seller’s managing agent in respect of the Contracts being assumed by the
Purchaser;

 

(s)   a certification that the representations and warranties made in Section
7.01 (as updated pursuant to Section 7.02) are true and complete as of the
Closing Date;

 

(t)    evidence of the termination of the management agreement between the
Seller and its managing agent;

 

(u)   evidence of payment of Eastdil’s commission or Eastdil’s written agreement
not to look to the Purchaser for payment of Eastdil’s commission; and

 

(v)   a customary owner’s affidavit in favor of the title insurance company
insuring the Purchaser’s title (but no such affidavit shall impose liability
upon the Purchaser for events or acts occurring after the Closing).

 

11.02       At the Closing, the Purchaser shall, as applicable, deliver or
execute and deliver to the Seller:

 

(a)   the balance of the Purchase Price as adjusted for net closing adjustments
between the Seller and the Purchaser as hereinafter provided;

 

(b)   the agreement of assignment and assumption of the Leases as heretofore
described in Section 2.03;

 

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(c)   the aforesaid assignment and assumption agreement of the Contracts as
heretofore described in Section 2.05;

 

(d)   the aforesaid assignment and assumption agreement of the licenses and
permits as heretofore described in Section 2.06;

 

(e)   the letters heretofore described in paragraph (k) of Section 11.01; and

 

(f)    evidence of the authority of the Purchaser to consummate this transaction
and proof of its legal subsistence as an entity as reasonably required by the
Purchaser’s title insurance company.

 

11.03.   Each of the parties shall execute such transfer tax and other tax
returns incidental to this transaction as required by law and such other title
affidavits documents as may be reasonably required to consummate the
transactions under this Agreement in accordance with its Terms.

 

12.  Closing Adjustments; Closing Costs; and Transfer Taxes.

 

12.01       Subject to the terms and provisions of Section 12.02 and Section
12.03, the following items shall be adjusted at the Closing as of 11:59 p.m. of
the day immediately preceding the Closing Date and the net amount of such
closing adjustments shall be applied, as the case may be, as a credit to or
debit against the balance of the Purchase Price payable at the Closing:

 

(a)   real estate taxes, assessments, vault fees, if any, and any other ad
valorem taxes, provided that if a final bill for any of such real estate taxes,
assessments, vault fees, or other ad valorem taxes has not been rendered as of
the Closing Date for the then current or any prior fiscal period, then the
adjustment for such real estate tax, assessment, vault fee or other ad valorem
tax shall be made on the basis of the then available tax bills for the then most
recent period, and such taxes and other items shall be prorated after the
Closing when such final tax bill has been rendered and any amount owed by reason
of such proration shall be paid promptly by the applicable party;

 

(b)   water charges and sewer rents (to the extent feasible, the Seller shall
supply meter readings as close as possible to the Closing Date or if there are
no such meters, then adjustments shall be based on the most recent bills
therefor), to be reconciled, if necessary, after the Closing when bills for the
period since the most recent meter readings or bills have been issued;

 

(c)   special district impositions, if any;

 

(d)   Contract fees or charges and fees and charges with respect to the
Intangibles, if any;

 

(e)   license and permit fees for the licenses and permits being assigned and
assumed as herein provided;

 

(f)    rents and other charges under the Leases (based on actual collections
with no adjustment for concessions or abatements), provided that rents received
by the Seller or the Purchaser following the Closing shall first be applied (and
adjusted) to the month in which the Closing occurs, then to the then current
month, and then to all periods following the then current month.  The Purchaser
shall collect, report semi-annually through and including the first anniversary
of the Closing Date, in writing to Seller, and hold in trust for the Seller’s
benefit any such rents received after the Closing that are payable to the Seller
hereunder.

 

(g)   gas and other fuel (if applicable) pursuant to a reading of the supplier
of the same not earlier than forty-eight (48) hours prior to the Closing Date;

 

(h)   electricity charges based upon the last available electrical reading;

 

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(i)    any other utilities including electricity services (to the extent
feasible, the Seller shall supply meter readings as close as possible to the
Closing Date or if there are no such meters, then adjustments shall be based on
the most recent bills therefor), to be reconciled, if necessary, after the
Closing when bills for the period since the most recent meter readings or bills
have been issued;

 

(j)    all assessments and charges under the agreements recorded in Deed Book
6808 page 1706, Deed Book 6836 page 1792, Deed Book 6912 page 1925, and any
amendments thereto entered into prior to the Closing Date, provided that any
refund due to the Seller thereunder shall be credited to it at the Closing and
Seller’s rights to such refund shall be assigned to the Purchaser; and

 

(k)   If adjusted pursuant to customary practice, Fairfax County Business,
Professional and Occupation Tax for the (fiscal) year in which the Closing
occurs.

 

12.02       To the extent that any rent or other charge or any other matter to
be adjusted or apportioned at the Closing is based upon estimates or if complete
information is not available at the Closing to make the final calculations as of
the Closing Date or any rent or charge under any of the Leases is not payable by
the tenants as of such date, then the Purchaser shall pay to the Seller that
portion of such rents or charges applicable to all periods through the Closing
Date (as are then calculable and, if not so calculable, then estimated based
upon the most recent information available), provided, that if the Seller shall
have collected any such rents, charges and other matters for any period
occurring on and after the Closing Date, the Seller shall credit the Purchaser
with the amount thereof.  If the information necessary to compute any closing
adjustment is not available at the Closing or if any adjustment is based upon an
estimate, then such adjustment shall be made as promptly as feasible following
the Closing.

 

12.03       If either party shall discover any error in the computation of any
closing adjustment, such error shall be corrected promptly following
notification thereof by the discovering party to the other (provided, that such
notification shall be given within thirty (30) days following the discovery
thereof but not later than one (1) year following the Closing Date), and an
appropriate payment to correct the same shall then be made.

 

12.04       If, at Closing, any then tenant of the Real Property, is delinquent
in the payment of rent payable for any period expiring prior to the month in
which the Closing occurs, the Purchaser shall purchase and the Seller shall
sell, without representation or warranty, the Seller’s claims for such
delinquencies for one-half (1/2) of the amount thereof (but the Purchaser’s
maximum payment therefor shall not exceed ten thousand and no/100 ($10,000.00)
dollars).

 

12.05       [Intentionally deleted].

 

12.06       At the Closing, the Purchaser shall assume any unpaid tenant
referral fees (not to exceed $1,500), of which the Seller represents that as of
the date hereof there are none.  The Seller shall, upon the Closing, terminate
all utility company accounts and seek the return of all utility deposits the
Seller shall have made with the utility companies and agencies servicing the
Real Property.  The Purchaser shall open new accounts in its own name with the
appropriate utility companies and agencies and shall indemnify the Seller for
all liabilities sustained by the Seller for third party claims arising out of
any failure of the Purchaser to open any such account timely.  This obligation
shall survive the Closing.

 

12.07       At the Closing, the Seller shall, (i) credit the Purchaser with the
amounts of security deposits and interest thereon and (ii) assign to the
Purchaser at the Closing all non-cash security deposits under the Leases.  If
any of such security deposits shall be in the form of certificates of deposit,
letters of credit or other non-cash instruments, the Purchaser shall bear any
transfer fees that may be levied in connection with any such assignment.  For
the purposes of this Section 12.07, the amount of any such security deposits
(whether in cash or other form) shall be that amount still retained by the
Seller after applying, in accordance with Section 9.01, any such security
deposit under the relevant Lease and retention by the Seller of any portion of
interest earned on any security deposit, which under law a landlord under any
lease may retain as a service fee or otherwise.

 

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12.08       The Seller shall pay the State Grantor’s Tax imposed upon the
conveyance of the Real Property by the Commonwealth of Virginia and one-half
(1/2) of any fee charged by the Escrow Agent for its services pursuant to any
provision of this Agreement.

 

12.09       The Purchaser shall pay the following expenses with respect to the
conveyance of The Property pursuant to this Agreement.

 

(a)   premiums for its owner’s title insurance policy, any endorsements thereto,
and any lender’s title insurance policy;

 

(b)   the cost of obtaining any update to any existing survey or a new survey of
the Real Property;

 

(c)   any taxes imposed upon debt instruments imposed by the Commonwealth of
Virginia or any political subdivision thereof and all fees and other charges
payable to any lender to the Purchaser;

 

(d)   all other State and County transfer taxes;

 

(e)   one-half (1/2) of any fees charged by the Escrow Agent for its services
pursuant to any provision of this Agreement; and

 

(f)  any transfer and/or license fees associated with software applications,
licenses, and programs to be conveyed to the Purchaser pursuant hereto.

 

12.10       Each party hereto shall bear its own attorney’s legal charges with
respect to the transactions to be consummated pursuant hereto.

 

12.11       The obligations of the parties under this Article 12 shall survive
the Closing.

 

13.          Risk of Loss.

 

13.01       For the purposes of this Article 13, the following terms used herein
shall have the meanings ascribed to them:

 

(a)   “Damage or destruction” shall mean any damage to or the destruction in
whole or in part of any of the Buildings and other Improvements on the Premises;

 

(b)   “Insubstantial damage or destruction” shall mean any damage or destruction
the estimated cost of repair or restoration made in good faith by any
independent contractor retained by the Seller does not exceed $1,000,000.

 

(c)   “Substantial damage or destruction” shall mean any damage or destruction
the estimated cost of repair or restoration made in good faith by any
independent contractor retained by the Seller exceeds $1,000,000.

 

(d)   “Taking” shall mean the vesting of title of any estate or interest in any
portion of the Real Property in any governmental or quasi-governmental authority
or any other person or entity by virtue of the exercise of the power of eminent
domain.

 

13.02       If there shall occur prior to the Closing any insubstantial damage
or any Taking of a portion of the Real Property the estimated value of which (as
determined by the Seller’s casualty insurer) does not exceed $1,000,000, or, in
the case of a Taking, does not result in (i) the loss of reasonable access to
the Premises, (ii) the loss of any apartment unit or parking spaces, or (iii)
that would cause the Real Property to be non-conforming under any applicable
zoning or land use law, ordinance, permit, or approval so that it could not be
converted to condominium ownership, this Agreement shall continue in full force

 

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and effect and the Purchaser shall receive an assignment of all of the Seller’s
right, title and interest to the insurance proceeds or condemnation award, as
applicable, to be paid (or theretofore paid) accruing to the owner of the
Premises for such damage or Taking, plus a credit against the Purchase Price in
amount equal to Seller’s deductible.  Notwithstanding the foregoing, if the
Seller’s insurance company has not admitted liability by the Closing Date for an
amount to restore any insubstantial damage or destruction, the Seller may
adjourn the Closing for up to sixty (60) days to obtain the insurance company’s
agreement to cover such loss and if at the expiration of such 60-day period,
such agreement has not been obtained and the Seller has not agreed to reduce the
Purchase Price by the estimated value of such loss, the Purchaser may elect, by
notice given within ten (10) Business Days after the expiration of such 60-day
period, to consummate this transaction without diminution of the Purchase Price
(except for the amount of any insurance deductible) or terminate this
Agreement.  If the insurer has agreed to liability for such loss or if the
Seller shall have agreed to reduce the Purchase Price by such amount, this
Agreement shall not be terminated.  If the Purchaser does not timely make any
election under this Section 13.02 a right to which it is granted, then this
Agreement shall be deemed terminated.  Upon a termination of this Agreement
pursuant to this Section 13.02, the Escrow Fund shall be paid to the Purchaser
as its exclusive remedy.

 

                        13.03       If there shall occur prior to the Closing
any substantial damage or any Taking of a portion of the Real Property the
estimated value of which (as determined by the Seller’s casualty insurer)
exceeds $1,000,000, or, in the case of a Taking, results in (i) the loss of
reasonable access to the Premises, (ii) the loss of any apartment unit or
parking spaces, or (iii) that would cause the Real Property to be non-conforming
under any applicable zoning or land use law, ordinance, permit, or approval so
that it could not be converted to condominium ownership, then the Purchaser may
elect to (i) terminate this Agreement by giving notice of such election to the
Seller within ten (10) Business Days after receiving notice of such event (with
the estimate of the value of such loss), whereupon this Agreement shall be
terminated and the Seller and the Purchaser shall instruct the Escrow Agent to
disburse the Escrow Fund to the Purchaser or (ii) accept an assignment of the
Seller’s insurance proceeds payable on account of such damage or destruction and
purchase the Property in accordance with the terms hereof without diminution of
the Purchase Price, except the amount of any deductible under the Seller’s
insurance policy, which shall be credited to the Purchaser.  Notwithstanding the
provisions of the preceding sentence, the Seller may negate any such notice of
termination in the case of a substantial damage or destruction by giving the
Purchaser notice of the Seller’s intent to restore or replace the portions of
the Property so damaged or destroyed and if such portions of the Property are
restored or replaced by the Closing Date (which the Seller may adjourn up to
sixty (60) days to effect), then the Property shall be conveyed in accordance
with the terms hereof without diminution of the Purchase Price.  If such
restoration or replacement is not completed by the Closing Date (as the same may
have been adjourned), then the Purchaser may terminate this Agreement and, as
its sole remedy, either (a) receive payment of the Escrow Fund or (b) purchase
the Property in accordance with the terms of this Agreement without diminution
of the Purchase Price (except for insurance deductibles) and with Seller’s
assignment of all insurance proceeds with respect to such damage or destruction.

 

14.  Escrow.

 

14.01       (a)   The Escrow Agent shall deposit the Contract Deposit in an
interest-bearing account with a bank or other institution reasonably
satisfactory to the Seller and the Purchaser, but the Escrow Agent shall be
under no duty to maximize the rate of return on the Escrow Fund or to insure
against any reduction in the value of the Escrow Fund by reason of any loss in
value of any security in which the Escrow Fund is invested.  Any decrease in the
value of the Escrow Fund shall be at the Purchaser’s risk.

 

(b)   If the Property is conveyed to the Purchaser in accordance with the terms
of this Agreement or if this Agreement shall be terminated for any reason other
than the default of the Seller, Seller’s inability (through no fault of the
Purchaser) or unwillingness to convey the Property to the Purchaser in
accordance with the terms of this Agreement or the Purchaser’s termination
hereof pursuant to Section 8.03, then the Escrow Fund and Due Diligence Fee
shall be disbursed to the Seller, except that any interest earned on the
Contract Deposit shall be disbursed to the Purchaser.  If the Property is not
conveyed to the Purchaser in accordance with the terms of this Agreement and
this Agreement shall be terminated due to the default of the Seller or its
inability (through no fault of the Purchaser) or unwillingness to convey

 

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Acceptable Title to the Real Property or if the Purchaser terminates this
Agreement pursuant to Section 8.03, then the Escrow Fund shall be disbursed to
the Purchaser.  Notwithstanding the foregoing, if the Purchaser shall have
delivered one or more letters of credit pursuant to Section 3.07, then at
Closing, the Purchaser shall pay to the Seller in immediately available funds
the principal amount(s) of such letter(s) of credit and the letter(s) of credit
shall be returned to the Purchaser.

 

(c)   Prior to delivering the Escrow Fund to the Seller or the Purchaser
pursuant to paragraph (b) above (except at the Closing or pursuant to Section
8.03), the Escrow Agent shall deliver to the Seller and the Purchaser notice of
the Escrow Agent’s intention to deliver the Escrow Fund.  If, within five (5)
Business Days after tendering such notice, the Escrow Agent shall not have
received a notice from either party instructing the Escrow Agent not to deliver
the Escrow Fund as specified in the Escrow Agent’s notice, the Escrow Agent
shall deliver the Escrow Fund to the party so specified.  If, however, the
Escrow Agent receives within such five (5) Business Day period written
instructions from either party that the Escrow Agent should not so deliver the
Escrow Fund, the Escrow Agent shall continue to hold the Escrow Fund (subject to
the Escrow Agent’s right to commence an action by way of interpleader, in which
case the Escrow Fund shall be delivered to the Clerk of the Supreme Court of the
State of New York, New York County) until it receives a notice executed by the
Seller and the Purchaser instructing the Agent to whom the Escrow Fund should be
disbursed or delivery of a copy of any final judicial order to the Escrow Agent,
whereupon the Escrow Agent shall disburse the Escrow Fund as provided in such
joint instructions or order.  The Seller and the Purchaser hereby agree to
submit themselves to the jurisdiction of the courts of the State of New York
sitting in New York County, and service upon them may be effected by the Escrow
Agent in any way provided by statute.  If the Escrow Fund (or portion thereof)
is represented by one or more letters of credit, and the Escrow fund is to
continue to be held by the Escrow Agent is not authorized to release the Escrow
Fund, then the Purchaser shall substitute cash in lieu of such letter(s) of
credit within five (5) Business Days of notice to do so again by the Purchaser
and if cash is not so substituted, then the Escrow Agent shall forthwith, and
hereby is irrevocably instructed to, deliver the letter(s) of credit to the
Seller.

 

14.02       (a)   The Escrow Agent has agreed not to charge a fee for performing
its duties hereunder.  The Seller and the Purchaser shall jointly and severally
indemnify and hold the Escrow Agent harmless from all expenses, including legal
fees and charges (including legal fees and charges at the Escrow Agent’s
standard fees and charges if the Escrow Agent shall elect to represent itself,
either with or without outside counsel) and other liabilities incurred by the
Escrow Agent arising out of this Agreement, except to the extent that such
expenses or liabilities result from the Escrow Agent’s willful misconduct.  The
provisions of this Article 14 shall survive the delivery of the Conveyancing
Instruments at the Closing or the termination of this Agreement.

 

(b)   The Escrow Agent may resign upon ten (10) days’ prior notice to each of
the Seller and the Purchaser and (i) depositing the Escrow Fund with the Clerk
of the County of Fairfax, Virginia or (ii) transferring the Escrow Fund to a
bank or other institution acceptable to the Seller and the Purchaser which shall
have assumed in writing the obligations of the Escrow Agent pursuant to this
Agreement.  Upon the effective date of such resignation, the Escrow Agent shall
have no further obligations arising hereunder and shall be released from all
liability arising out of this Agreement, except its willful misapplication of
any portion of the Escrow Fund.

 

(h)   The Escrow Agent shall have no liability for its failure to perform any
obligation hereunder, except arising by reason of its willful misconduct. 
Notwithstanding the foregoing, the Escrow Agent is hereby released from
liability for any act performed or omitted to be performed in good faith in its
performance of its duties hereunder.  The Escrow Agent shall not be required to
inquire into the authority of any person purporting to give a notice on behalf
of the Seller or the Purchaser and may assume that all signatures are genuine. 
It is understood and agreed that the persons and firms referred to in Article 18
as counsel for each of the Seller and the Purchaser are authorized to give
notices to the Escrow Agent pursuant to this Article 14.

 

(i)    The Seller and the Purchaser acknowledge that the Escrow Agent is acting
solely as a stakeholder hereunder and not the agent of either party in
connection with its escrow obligations

 

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hereunder.  The escrow created hereunder and the obligations of the Escrow Agent
as an escrow agent hereunder are for the benefit of the parties to this
Agreement only, and no other person shall have any rights hereunder nor shall
the Escrow Agent have any obligations or duties to any other person other than a
party to this Agreement by reason or arising out of this Article 14.

 

14.03       The Escrow Agent is executing this Agreement solely for the purpose
of agreeing to the terms of this Article 14, Section 7.08, and Section 8.03. 
The provisions of Section 14.02 shall apply to the conduct of the Escrow Agent
pursuant to Section 7.08 and Section 8.03.

 

14.04       The Escrow Agent shall be a beneficiary of the terms of this Article
14.

 

15.  Default; Conditions to Closing.

 

15.01       If the Purchaser shall default hereunder, the parties agree that the
Seller shall sustain damages that shall be difficult or impossible to measure. 
The parties agree that the Seller shall retain the Escrow Fund as liquidated
damages as its exclusive remedy if the Purchaser defaults hereunder and that
such amount represents a fair and reasonable estimation of the damages to Seller
from such default.

 

15.02       If the Seller shall be unable to perform (i.e., fails to perform for
reasons beyond the Seller’s control) any of its material obligations hereunder
or if any representation made by the Seller, subject to the foregoing provisions
of Article 7, shall be proven to be untrue and incomplete (as understood
pursuant to Article 7), the Purchaser’s sole remedy shall be to terminate this
Agreement and be paid the proceeds in the Escrow Fund, the cost of the
Purchaser’s examination of title at the rate imposed by the Purchaser’s title
insurance company for performing such examination without issuing a title
insurance policy and up to $75,000 for the costs of the Purchaser’s due
diligence.  If the Seller shall default (i.e., willfully and intentionally fails
to perform notwithstanding that it is within the Seller’s power to do so) in its
obligation hereunder to convey the Property as herein required, the Purchaser’s
sole remedy shall be (i) to bring an action for specific performance or (ii) at
Purchaser’s election, to receive the sum of five hundred thousand  ($500,000)
dollars as liquidated damages (it being difficult or impossible to measure the
Purchaser’s damage and such amount representing a fair and reasonable estimation
of the Purchaser’s damages from such a default) and the return of the Escrow
Fund.  The Purchaser hereby waives the right to attach or lien any property
(real or personal) of the Seller or to file a lis pendens (or equivalent
attachment) against any portion of the Real Property, the Personal Property, or
any other asset of the Seller, for any purpose under this Agreement, including
any enforcement of any right or remedy arising out of any claimed breach of this
Agreement by the Seller, except in connection with any proper action for
specific performance permitted hereunder.

 

15.03       The obligation of the Purchaser to consummate the transaction
hereunder shall be subject to the fulfillment on or before the Closing Date of
all of the following conditions, any or all of which may be waived by the
Purchaser in its sole discretion:

 

(a)   The Seller shall have delivered to the Purchaser all of the items required
to be delivered to the Purchaser pursuant to the terms of this Agreement,
including but not limited to, those provided for in Section 4.2 hereof;

 

(b)   All of the representations and warranties of the Seller contained in this
Agreement shall be true in all material respects (but shall be deemed to have
been made on the Closing Date with appropriate modifications permitted under
this Agreement);

 

(c)   The Seller shall have performed and observed, in all material respects,
all covenants and agreements of this Agreement to be performed and observed by
the Seller as of the Closing Date, including, without limitation, conveying to
the Purchaser Acceptable Title to the Real Property;

 

(d)   No material change has occurred in (i) the zoning designation applicable
to the Real Property or (ii) the status of any approval, license or permit
applicable to the Real Property; and

 

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(e)   No governmental action (such as but not limited to the imposition of a
sewer or water moratorium or permit allocation scheme) shall have been taken, by
any applicable governmental authority, which would prevent the occupancy or use
of the apartments or condominium units comprising or to comprise the Real
Property.

 

15.04       The obligation of the Seller to consummate the transaction hereunder
shall be subject to the fulfillment on or before the Closing Date of all of the
following conditions, any or all of which may be waived by the Seller in its
sole discretion:

 

(a)   The Seller shall have received the Purchase Price as adjusted as provided
herein, pursuant to and payable in the manner provided for in this Agreement;

 

(b)   The Purchaser shall have delivered to the Seller all of the items required
to be delivered to the Seller pursuant to the terms of this Agreement;

 

(c)   All of the representations and warranties of the Purchaser contained in
this Agreement shall be true and correct in all material respects as of the
Closing Date as if made on the Closing Date; and

 

(d)   The Purchaser shall have performed and observed, in all material respects,
all covenants and agreements of this Agreement to be performed and observed by
the Purchaser as of the Closing Date.

 

15.05       Except in connection with (a) a failure to tender (i) funds required
hereunder or (ii) documents required hereunder for Closing or (b) where a cure
period is already provided for herein, neither party shall be in breach or
default hereunder, nor shall the remedies in this Section 15 be exercised by
either party, until written notice of the alleged breach or default has been
provided to the other party, and such party has failed to cure such breach or
default within five (5) days; provided, however, that if the alleged breach or
default is of a nature that it cannot be cured by exercise of reasonable
diligence within such five (5) day period, then the foregoing cure period shall
be extended for the period of time reasonably necessary to cure such alleged
breach or default not to exceed sixty (60) days.

 

16.  No Assignment.

 

Neither this Agreement nor any of the rights or obligations of the Purchaser
under this Agreement may be assigned by the Purchaser to any party not
affiliated with the Purchaser without the prior written consent of the Seller. 
The transfer, directly or indirectly, of the record or beneficial ownership of a
majority of the equity interests of the Purchaser, whether in a single
transaction or a series of transactions shall constitute an assignment of this
Agreement.

 

17.  Brokers.

 

The Seller and the Purchaser hereby each mutually represents and warrants to the
other that Eastdil is the sole broker instrumental in negotiating and/or
effecting this Agreement.  The Seller agrees to pay any commission Eastdil may
have earned pursuant to separate agreements between the Seller and Eastdil.  The
Purchaser shall indemnify and hold the Seller harmless from and against any
claim, action, cause of action or other liability or expense (including, without
limitation, attorneys’ fees) that the Seller may incur by reason of any claim
for a commission in connection herewith by any person or entity other than
Eastdil with whom the Purchaser may have dealt.  The provisions of this Article
17 shall not constitute a third-party beneficiary contract.  The provisions of
this Article 17 shall survive the Closing or the sooner termination of this
Agreement.

 

18.  Notices.

 

All notices and other communications required to be given under this Agreement
shall be in writing, signed by the party (or such party’s counsel) serving the
notice or other communication, and sent by reputable overnight courier service
(such as Federal Express, DHL, United Parcel Service) or facsimile transmission,
to the address of the party to whom given as set forth below or to such other
address as either

 

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party may designate in writing in the manner herein prescribed, and all such
notices and other communications shall be deemed effective on (i) the Business
Day following such notice as communication having been delivered to such
overnight courier or (ii) upon the receipt of a facsimile transmission, provided
that such transmission is received by 5:00 p.m. (local time at such addressee’s
office) at the addressee’s offices as set forth below and if not so received,
shall be effective as of the Business Day next following the successful
transmission thereof.  Addresses (offices) to which notices shall be sent are as
follows:

 

To the Seller:

 

Fair Oaks Penderbrook Apartments L.L.C.

c/o W&M Properties, L.L.C.

60 East 42nd Street

New York, New York  10165-0015

Attention:  Vincent M. Sultana

Telefax Number:  (212) 986-7679

 

with a copy to counsel:

 

Wien & Malkin LLP

60 East 42nd Street – 48th Floor

New York, New York  10165-0015

Attention:  Jack K. Feirman

Telefax Number:  (212) 986-8795

 

To the Purchaser:

 

Comstock Penderbrook, L.C.

c/o Comstock Homes, Inc.

11465 Sunset Hills Road, Suite 510

Reston, Virginia 20190

Attention:  Christopher Clemente

Telefax Number:  (703) 760-1520

 

with a copy to:

 

Comstock Penderbrook, L.C.

c/o Comstock Homes, Inc.

11465 Sunset Hills Road, Suite 510

Reston, Virginia 20190

Attention:  Jubal Thompson, Esq.

Telefax Number:  (703) 760-1520

 

with a copy to counsel:

 

Hunton & Williams, LLP

1751 Pinnacle Drive, Suite 1700

McLean, Virginia 22102

Attention:  Sean H. Curtin, Esq.

Telefax Number:  (703) 714-7410

 

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To the Escrow Agent:

 

8221 Old Courthouse Road

Suite 300

Vienna, Virginia 22182

Attention: Julie Grant

Telefax Number:  (      )           -            

 

19.  Exchange Provisions.

 

19.01       The Seller intends, for the benefit of the Seller, that the
conveyance of the Real Property may be a part of a tax deferred exchange
pursuant to §1031 of the Internal Revenue Code of 1986, as amended, and the
Regulations promulgated thereunder, at no cost to the Purchaser.  In connection
with such tax deferred exchange, the Seller shall have the right to assign the
right, title and interest of the Seller in and to this Agreement to a “qualified
intermediary” (as defined in Reg. §1.1031(k)-1(g)(4)(iii)).  If the Seller shall
so assign this Agreement, the Purchase Price (or any portion as prescribed by
the Seller) shall be paid to such qualified intermediary.

 

19.02       The Purchaser shall cooperate with the Seller in connection with
effecting such tax-deferred exchange and shall execute such documents (including
an assignment of this Agreement) as the Seller, the Seller’s counsel, the
qualified intermediary, and such qualified intermediary’s counsel (or any of
them) shall deem necessary or desirable to consummate such exchange transaction;
provided that (i) the Purchaser shall be reimbursed by the Seller for any costs
and expenses which the Purchaser would not otherwise have incurred but for its
participation in such exchange program by reason of this Section; (ii) the
Purchaser shall not be required to incur any liability, risk, cost or expense in
connection with the exchange including, but not limited to, attorneys’ fees and
recordation costs, or taking title to any property; (iii) the exchange does not
delay Closing; and (iv) any assignment of this Agreement to the qualified
intermediary is done pursuant to a written agreement, which expressly permits
the Purchaser to pursue the original Seller hereunder for defaults and breaches
hereunder.  The Seller shall indemnify and hold the Purchaser harmless from and
against all costs, expenses, and liabilities that the Purchaser may incur by
reason of its participation in such exchange program.

 

20.  Miscellaneous.

 

20.1         Confidentiality.     The Purchaser has heretofore executed a
confidentiality agreement with respect to the dissemination of information
respecting the Real Property and other matters which may be or may have been
learned in connection with the Purchaser’s extending an offer to purchase the
same and in connection with its due diligence.  Such confidentiality agreement
continues to be in full force and effect and shall remain so during the Contract
Period, and any default thereunder shall constitute a material default under
this Agreement.  In this respect, any information not in the public domain
respecting any of the Property or the Seller or its members or agents hereafter
acquired by the Purchaser or any representative of the Purchaser by reason of
any inspection of any portion of the Premises, the Buildings and Other
Improvements to any person or entity shall be deemed to be confidential and
shall not be disseminated to any person or entity without the consent of the
Seller, except as expressly permitted under paragraph (a) of Section 8.02 prior
to Closing.  The Purchaser shall not release or suffer the release of any
information regarding the execution of this Agreement, the terms hereof or any
other publicity or information to any person, except as specifically permitted
by this Agreement.  The obligations under this Section 20.01 shall survive the
termination of this Agreement without the occurrence of a Closing.

 

20.2         Captions and Headings.     Article and Section captions and
headings are inserted only as a matter of convenience and for reference and they
shall not be construed to define, limit or describe the scope of this Agreement
nor the intent of any provision hereof.

 

20.3         Parties Bound.     The covenants, conditions and agreements
contained in this Agreement bind and inure to the benefit of the Seller and the
Purchaser and their respective legal representatives, successors, and, except as
otherwise provided in this Lease, their assigns.

 

20.4        No Recording.     Neither this Agreement nor any memorandum or short
form hereof may be recorded.

 

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20.5         Entire Agreement.     This Agreement contains the entire agreement
between the parties and all prior negotiations and agreements are merged into
this Agreement.

 

20.6         No Oral Modifications.     This Agreement may not be changed,
modified, terminated or discharged, in whole or in part, except by a writing,
executed by the party against whom enforcement of the change, modification,
termination or discharge is to be sought.

 

20.7         Partial Invalidity.      If any term, covenant, condition or
provision of this Agreement, or the application thereof to any person or
circumstance, shall ever be held to be invalid or unenforceable, then in each
such event the remainder of this Agreement or the application of such term,
covenant, condition or provision to any other person or any other circumstance
(other than those as to which it shall be invalid or unenforceable) shall not be
thereby affected, and each term, covenant, condition and provision hereof shall
remain valid and enforceable to the fullest extent permitted by law.

 

20.8         Submission of Agreement.     It is understood and agreed that this
Agreement is being submitted to the Purchaser on the understanding that it shall
not be considered an offer and shall not bind the Seller in any way until (i)
the Purchaser has duly executed and delivered duplicate originals hereof to the
Seller and the Contract Deposit to the Escrow Agent and (ii) the Seller has
executed and delivered one of said originals to the Purchaser.

 

20.9         Survival of Obligations.     Notwithstanding anything herein set
forth to the contrary, the termination or cancellation of this Agreement
pursuant to any provision hereof or by operation of law shall not be construed
to include any obligation specifically stated to survive the termination or
cancellation of this Agreement.

 

20.10       Governing Law.     This Agreement shall be construed in accordance
with and governed by the laws of the Commonwealth of Virginia without regard to
the application of conflicts of laws doctrines.

 

20.11       Counterparts.     This Agreement may be executed in any number of
counterparts each of which when executed and delivered shall constitute an
original, and all such counterparts, when taken together shall be deemed to be
but one and the same Agreement.

 

20.12       Facsimile Counterparts.     The exchange of counterparts of this
Agreement among the parties by means of facsimile transmissions which shall
contain accurate reproductions of the signatures hereto shall constitute a valid
exchange of this Agreement and it shall be binding upon the parties hereto.

 

 

IN WITNESS WHEREOF, the Seller and the Purchaser have respectively executed this
Lease as of the day and year first above written.

 

 

FAIR OAKS PENDERBROOK APARTMENTS L.L.C.

 

By:

Malkin Penderbrook L.L.C., Managing Member

 

 

 

 

By:

/s/ Peter Malkin

 

 

 

 

Name: Peter L. Malkin

 

 

 

Title: Managing Member

 

 

 

 

 

 

By:

/s/ Anthony Malkin

 

 

 

 

Name: Anthony E. Malkin

 

 

 

Title: Managing Member

 

 

 

 

 

 

Taxpayer/Employer Identification No: *******

 

25

--------------------------------------------------------------------------------

 

 

COMSTOCK HOMES, INC.

 

 

 

 

By:

/s/ Christopher Clemente

 

 

 

 

Name:    Christopher Clemente

 

 

 

Title: Chief Executive Officer

 

 

 

 

 

 

 

Taxpayer/Employer Identification No: *********

 

 

 

Solely as to the Article 14 and Section 8.03 escrow provisions:

 

 

 

PREMIER TITLE

 

 

 

 

 

 

By:

 

 

 

 

 

Name:

 

 

 

Title:

 

26

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SCHEDULE A

to

Purchase and Sale Agreement, dated as of November 9, 2004

between

Fair Oaks Penderbrook Apartments L.L.C., Seller,

and

Comstock Penderbrook, L.C., Purchaser

 

 

Metes and Bounds Description of the Premises

 

 

Beginning at a point on the Easterly R/W line of West Ox Road, Route 608 said
point marking the P.C. of a 55 foot radius return at the Southeasterly
intersection of the said West Ox Road and Penderbrook Drive, as dedicated in
D.B. 6613 at Pg. 963 on the land records of Fairfax County, Virginia; thence
with the said return a curve to the right whose chord is N 43° 10’ 00” E, 81.21
feet, an arc distance of 91.36 feet to a point on a Southerly R/W line of the
said Penderbrook Drive; thence with the said R/W line of the said Penderbrook
Drive the following courses: with a curve to the right whose radius is 729.95
feet (and whose chord is S 64° 26’ 02” E, 612.64 feet) an arc distance of 632.22
feet; S 39° 37’ 20” E, 395.59 feet with a curve to the left whose radius is
576.00 feet (and whose chord is S 57° 32’ 30” E, 354.44 feet) an arc distance of
360.29 feet to a point marking the P.C. of a 25 foot radius return at the
Southwesterly intersection of the said Penderbrook Drive and South Penderbrook
Drive; thence with the said return a curve to the right whose chord is S 33° 24’
42” E, 33.49 feet, an arc distance of 36.69 feet to a point on the Westerly R/W
line of the said South Penderbrook Drive; thence with the said R/W line of South
Penderbrook Drive with a curve to the left whose radius is 476.00 feet (and
whose chord is S 02° 16’ 57” E, 180.35 feet) an arc distance of 181.45 feet and
S 13° 12’ 10” E, 483.33 feet to a point marking the Northeasterly corner of the
Fairfax County Housing Authority; thence running with the Northerly and Westerly
lines of the property of the Fairfax County Housing Authority the following
courses: with a curve to the left whose radius is 28.50 feet (and whose chord is
N 68° 08’ 37” W, 18.32 feet) an arc distance of 18.65 feet; with a curve to the
right whose radius is 121.50 feet (and whose chord is N 78° 32’ 30” W, 35.28
feet) an arc distance of 35.40 feet; N 70° 11’ 36” W, 43.08 feet; N 84° 49’ 33”
W, 73.50 feet; N 71° 38’ 22” W, 36.91 feet with a curve to the right whose
radius is 936.00 feet (and whose chord is N 67° 19’ 29” W, 93.69 feet) an arc
distance of 93.72 feet and S 28° 55’ 50” W, 188.50 feet to a point on a
Northerly Boundary of Penderbrook LTD.; thence with the said Boundary of
Penderbrook LTD. N 84° 32’ 18” W, 122.85 feet and with a curve to the right
whose radius is 300.00 feet (and whose cord is N 74° 16’ 20” W, 106.93 feet) an
arc distance of 107.51 feet to a point on an Easterly Boundary of the property
of the Fairfax County Board of Supervisors; thence with the Easterly and
Northerly boundaries of the said Board of Supervisors N 13° 09’ 12” W, 885.23
feet and S 62° 09’ 05” W, 236.69 feet to a point on the aforementioned R/W line
of West Ox Road; thence with the said R/W line of West Ox Road the following
courses:  with a curve to the left whose radius is 2919.79 feet (and whose chord
is N 28° 55’ 18” W, 83.50 feet) and arc distance of 83.50 feet; N 29° 44’ 27” W,
251.91 feet with a curve to the right whose radius is 899.93 feet (and whose
chord is N 18° 01’ 27” W, 365.50 feet) an arc distance of 368.06 feet and N 06°
15’ 00” W, 29.66 feet to the point of beginning.

 

--------------------------------------------------------------------------------

 

SCHEDULE B

to

Purchase and Sale Agreement, dated as of November 9, 2004

between

Fair Oaks Penderbrook Apartments L.L.C., Seller,

and

Comstock Penderbrook, L.C., Purchaser

 

 

Permitted Title Exceptions

 

 

1.               Restrictive Covenants appearing of record in Deed Book 6808 at
Page 1704, Deed Book 6836 at Page 1792 and in Deed Book 6912 at Page 1925, but
omitting any restrictions based on race, color, religion or national origin.

 

2.               Easements granted unto Virginia Electric and Power Company by
instrument recorded in Deed Book 990 at Page 507; Deed Book 6558 at Page 1013;
Deed Book 6795 at Page 1752; Deed Book 6828 at Page 987; Deed Book 6828 at Page
1023 and in Deed Book 6953 at Page 1976.

 

3.               Easement granted unto Fairfax County Water Authority by
instrument recorded in Deed Book 6783 at Page 718.

 

4.               Easement granted unto Chesapeake and Potomac Telephone Company
by instrument recorded in Deed Book 6857 at Page 771.

 

5.               Easement granted unto Fairfax County Water Authority and
Fairfax County Board of Supervisors by instrument recorded in Deed Book 6613 at
Page 955.

 

6.               Easement granted unto Fairfax County Board of Supervisors
granted in Deed Book 6905 at Page 819.

 

7.               Easements and agreements to and with Penderbrook Community
Association, Inc., in Deed Book 7116 at Page 595.

 

8.               Storm water detention agreement recorded in Deed Book 6607 at
Page 1553.

 

9.               Cable service and telecom agreements, if any.

 

--------------------------------------------------------------------------------

 

SCHEDULE C

to

Purchase and Sale Agreement, dated as of November 9, 2004

between

Fair Oaks Penderbrook Apartments L.L.C., Seller,

and

Comstock Penderbrook, L.C., Purchaser

 

 

Rent Roll

 

 

Rent Roll follows this page.

 

--------------------------------------------------------------------------------

 

SCHEDULE D

to

Purchase and Sale Agreement, dated as of November 9, 2004

between

Fair Oaks Penderbrook Apartments L.L.C., Seller,

and

Comstock Penderbrook, L.C., Purchaser

 

 

Contracts

 

 

Contracts follow this page.

 

--------------------------------------------------------------------------------

 

SCHEDULE E

to

Purchase and Sale Agreement, dated as of November 9, 2004

between

Fair Oaks Penderbrook Apartments L.L.C., Seller,

and

Comstock Penderbrook, L.C., Purchaser

 

 

[Intentionally Omitted]

 

--------------------------------------------------------------------------------

 

SCHEDULE F

to

Purchase and Sale Agreement, dated as of November 9, 2004

between

Fair Oaks Penderbrook Apartments L.L.C., Seller,

and

Comstock Penderbrook, L.C., Purchaser

 

 

Employees

 

 

Schedule of Employees follows this page.

 

--------------------------------------------------------------------------------

 

SCHEDULE G

to

Purchase and Sale Agreement, dated as of November 9, 2004

between

Fair Oaks Penderbrook Apartments L.L.C., Seller,

and

Comstock Penderbrook, L.C., Purchaser

 

 

Insurance Coverage for the Buildings and other Improvements

 

 

Schedule of Insurance follows this page.

 

--------------------------------------------------------------------------------

 

SCHEDULE H

to

Purchase and Sale Agreement, dated as of November 9, 2004

between

Fair Oaks Penderbrook Apartments L.L.C., Seller,

and

Comstock Penderbrook, L.C., Purchaser

 

 

Personal Property

 

 

Schedule of Personal Property follows this page.

 

--------------------------------------------------------------------------------

 

SCHEDULE I

to

Purchase and Sale Agreement, dated as of November 9, 2004

between

Fair Oaks Penderbrook Apartments L.L.C., Seller,

and

Comstock Penderbrook, L.C., Purchaser

 

 

Unpaid Tenant Improvement Costs

 

 

None

 

--------------------------------------------------------------------------------

 

SCHEDULE J

to

Purchase and Sale Agreement, dated as of November 9, 2004

between

Fair Oaks Penderbrook Apartments L.L.C., Seller,

and

Comstock Penderbrook, L.C., Purchaser

 

 

Brokerage Commissions Owed

 

 

None

 

--------------------------------------------------------------------------------

 

SCHEDULE K

to

Purchase and Sale Agreement, dated as of November 9, 2004

between

Fair Oaks Penderbrook Apartments L.L.C., Seller,

and

Comstock Penderbrook, L.C., Purchaser

 

 

1.               The Survey;

 

2.               Log (together with reasonable back-up information) of all work
orders and tenant complaints relating to the Property for the past two (2)
years; and

 

3.               Zoning and residential use permits information

 

--------------------------------------------------------------------------------

 

EXHIBIT 1

to

Purchase and Sale Agreement, dated as of November 9, 2004

between

Fair Oaks Penderbrook Apartments L.L.C., Seller,

and

Comstock Penderbrook, L.C., Purchaser

 

 

Deed to the Real Property

 

--------------------------------------------------------------------------------