Exhibit 10.40

EXECUTION VERSION

PURCHASE AND SALE AGREEMENT

between

WRIT-NVIP, L.L.C., a Virginia limited liability company

as Seller

and

AP AG PORTFOLIO LLC, a Delaware limited liability company

as Purchaser

As of August 5, 2011

 

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TABLE OF CONTENTS

 

             Page  

I.

  DEFINITIONS AND INTERPRETIVE PRINCIPLES      1      1.1   General Interpretive
Principles      1      1.2   Definitions      2   

II.

  SALE AND PURCHASE OF PROPERTY      10      2.1   Purchase of Property      10
     2.2   Purchase Price and Terms of Payment      10      2.3   Assumption of
the Contracts      10      2.4   Assumption of the Leases      11      2.5  
Assumed Liabilities      11   

III.

  ESCROW      11      3.1   Escrow      11      3.2   Deposit of Funds      11
  

IV.

  TITLE AND PROPERTY CONDITION      12      4.1   Title to the Real Property   
  12      4.2   Reserved      13      4.3   Inspection      14      4.4  
Condition of the Property      16   

V.

  CLOSING      19      5.1   Closing Date      19      5.2   Action Prior to the
Closing Date by Seller      19      5.3   Action Prior to the Closing Date by
Purchaser      21      5.4   Recording of Deeds      22      5.5   Prorations   
  22      5.6   Closing Costs      26      5.7   Distribution of Funds and
Documents Following Closing      27      5.8   Possession      27   

VI.

  ADDITIONAL COVENANTS AND INDEMNITIES      27      6.1   TC Seller Covenants   
  27   

VII.

  REPRESENTATIONS AND WARRANTIES      29      7.1   Purchaser’s Representations
and Warranties      29      7.2   Sellers’ Representations and Warranties     
30      7.3   Representations and Warranties Deemed Modified      32      7.4  
Seller’s Knowledge      33   

VIII.

  CONDITIONS PRECEDENT TO CLOSING      33      8.1   Conditions to Seller’s
Obligations      33   

 

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  8.2   Conditions to Purchaser’s Obligations      33      8.3   Failure of
Conditions to Closing      34   

IX.

  REMEDIES FOR PRE-CLOSING AND POST-CLOSING DEFAULTS; LIQUIDATED DAMAGES      34
     9.1   Default by Purchaser Prior to Closing      34      9.2   Default by
Seller Prior to Closing      35      9.3   Adverse Effect; Material Adverse
Effect      36      9.4   Limitations of Purchaser’s Post-Closing Claims      37
     9.5   Other Limitations of Purchaser’s Claims      37      9.6   Survival
of Purchaser’s Claims      38      9.7   Survival of Seller’s Claims      38   
  9.8   Limitations on Liability      39      9.9   Indemnification      39     
9.10   Survival      40   

X.

  BROKERS      40   

XI.

  NOTICES      40   

XII.

  MISCELLANEOUS      42      12.1   Governing Law      42      12.2  
Professional Fees and Costs      43      12.3   Exhibits and Schedules a Part of
This Agreement      43      12.4   Executed Counterparts      43      12.5  
Assignment      43      12.6   IRS - Form 1099-S      44      12.7   Successors
and Assigns      44      12.8   Time is of the Essence      44      12.9  
Entire Agreement      44      12.10   Further Assurances      44      12.11  
Waiver      44      12.12   Headings      45      12.13   Risk of Loss      45
     12.14   Construction of Agreement      46      12.15   Bulk Transfers     
46      12.16   Covenants, Representations and Warranties      47      12.17  
Press Releases; Confidentiality      47      12.18   No Third-Party
Beneficiaries      47      12.19   Facsimile Signatures      48      12.20  
Severability      48      12.21   Cumulative Remedies      48      12.22  
Consents and Approvals      48      12.23   WAIVER OF JURY TRIAL      48     
12.24   1031 Exchange      48   

XIII.

  EXECUTION      S-1   

 

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SCHEDULE OF EXHIBITS

 

Exhibit “A-1”

   Legal Description of the Property

Exhibit “A-2”

   Allocation of the Property’s Purchase Price between Real Property and
Personal Property

Exhibit “B”

   Form of Escrow Agreement for Earnest Money Deposit

Exhibit “C”

   Assumed Contracts

Exhibit “D-1”

   Lease Schedule

Exhibit “D-2”

   TI Obligations, Rent Abatements and other Concessions

Exhibit “D-3”

   Leasing Commissions and Brokerage Agreements

Exhibit “D-4”

   Certain Lease Expenses to be Paid by Purchaser

Exhibit “D-5”

   Antenna and Access Agreements to be Assigned to Purchaser

Exhibit “E”

   Operating Statements

Exhibit “F”

   Form of Deed

Exhibit “G”

   Form of Bill of Sale

Exhibit “H”

   Form of Assignment of Intangibles

Exhibit “I”

   Form of Assignment and Assumption of Contracts

Exhibit “J”

   Form of Assignment and Assumption of Leases

Exhibit “K”

   Form of FIRPTA Certificate

Exhibit “L”

   Form of Notice to Tenants

Exhibit “M”

   Pending Litigation and Violation Notices

Exhibit “N”

   Form of Owner’s Affidavit

Exhibit “O”

   Environmental Reports

Exhibit “P”

   Reserved

Exhibit “Q”

   Reserved

Exhibit “R”

   Assignment and Assumption of Purchase Agreement

Exhibit “S”

   Liens to be Cured

Exhibit “T-1”

   Form of Tenant Estoppel Certificate

Exhibit “T-2”

   Form of Seller Estoppel Certificate

Exhibit “U”

   Certain Covenants, Conditions, Restrictions and Easements

 

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PURCHASE AND SALE AGREEMENT

THIS PURCHASE AND SALE AGREEMENT (“Agreement”) is dated as of this 5th day of
August, 2011 (the “Effective Date”), and is made by and between WRIT-NVIP,
L.L.C., a Virginia limited liability company (“Seller”), and AP AG PORTFOLIO
LLC, a Delaware limited liability company (“Purchaser”).

RECITALS

A. Seller is the owner of the Property on Exhibit “A-1” hereto.

B. Purchaser desires to purchase and acquire from Seller the Property owned by
Seller on the terms and conditions set forth in this Agreement.

C. Seller desires to sell and convey to Purchaser the Property owned by Seller
on the terms and conditions set forth in this Agreement.

D. All capitalized terms used in this Agreement and not otherwise defined shall
have the meanings ascribed to such terms in Article I.

AGREEMENT

NOW, THEREFORE, for valuable consideration, including the promises, covenants,
representations and warranties hereinafter set forth, the receipt and adequacy
of which are hereby acknowledged, the parties, intending to be legally and
equitably bound, agree as follows:

I.

DEFINITIONS AND INTERPRETIVE PRINCIPLES

1.1 General Interpretive Principles.

1.1.1 All references to sections, schedules, exhibits, recitals or the preamble
are to sections, schedules, exhibits or recitals of, or the preamble to, this
Agreement, unless otherwise specified.

1.1.2 Unless otherwise specified, the words “hereof”, “herein” and “hereunder,”
and words of similar import, refer to this Agreement as a whole and not to any
particular provision of this Agreement.

1.1.3 If the context requires, the use of any gender will also refer to any
other gender, and the use of either number will also refer to the other number.

1.1.4 Reserved.

1.1.5 The word “including” is not exclusive.

 

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1.1.6 Accounting terms used but not specifically defined herein have the
meanings determined by reference to generally accepted accounting principles.

1.1.7 Any provision of this Agreement referring to a particular time of day
shall be interpreted in accordance with the local time in Washington, D.C.

1.2 Definitions. As used in this Agreement:

“Additional Rent” shall mean all reimbursements of Operating Expenses and
administrative charges, common area maintenance charges, reimbursements of real
estate taxes, rent escalations based on increases in the consumer price index or
any other measures of inflation, retroactive rent escalations, insurance cost
reimbursements, parking charges, antenna rents, license fees and all other
amounts and charges payable by a Tenant to Seller, as landlord, under such
Tenant’s Lease (other than Basic Rent), but shall not include Security Deposits.

“Affiliate” means, with respect to any Person, (i) a Person that, directly or
indirectly, controls, is controlled by, or is under common control with, such
Person; or (ii) a Person that, directly or indirectly, owns, is owned by or is
under common ownership with, such Person.

“Agreement” has the meaning set forth in the preamble hereof.

“Assignment of Contracts” has the meaning set forth in Section 5.2.4 hereof.

“Assignment of Intangibles” has the meaning set forth in Section 5.2.3 hereof.

“Assignment of Leases” has the meaning set forth in Section 5.2.5 hereof.

“Assumed Contracts” means the Contracts listed on Exhibit “C”.

“Basic Rent” means all base rent or basic rent payable in fixed installments and
fixed amounts for stated periods by Tenants under their Leases.

“Bill of Sale” has the meaning set forth in Section 5.2.2 hereof.

“Books and Records” means, with respect to the Property, all documentation,
third party reports and studies, land surveys, land use applications, land use
permits and approvals, operating permits and other documents in printed or
electronic form (but excluding software which is proprietary to Seller, its
Affiliates or any third party, or is licensed from third parties by Seller or
its Affiliate) that is in the possession or under the control of Seller or its
Affiliate and that pertains to the use, operation, ownership or condition of the
Property, including (i) all correspondence, billing, and other files, (ii) all
environmental assessments or audits, architectural drawings and engineering,
geophysical, soils, seismic, geologic, environmental (including with respect to
the impact of materials used in the construction or renovation of the
Improvements) and architectural reports, studies and certificates pertaining to
the Property, and (iii) all financial statements and other accounting, tax,
financial, and other books and records relating to the use, maintenance, and
operation of the Property, but excluding (x) any Excluded Documents and
(y) those items that are consolidated with items from other facilities owned,
leased or managed by Seller or its Affiliate and not being conveyed to
Purchaser.

 

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“Broker” has the meaning set forth in Article X hereof.

“Cap Amount” has the meaning set forth in Section 9.4 hereof.

“Casualty” has the meaning set forth in Section 12.13.1 hereof.

“Casualty Notice” has the meaning set forth in Section 12.13.1 hereof.

“Casualty Renovation Cost” has the meaning set forth in Section 12.13.1 hereof.

“Claim Notice” has the meaning set forth in Section 9.6 hereof.

“Claims” means, collectively, damages, claims (including without limitation, any
claim for damage to property of others or injury to or death of any persons),
penalties, obligations, liabilities, fines, losses, causes of action, fees,
injuries, liens, encumbrances, proceedings, judgments, actions, rights, demands,
costs and expenses (including without limitation, reasonable attorneys’ fees
(whether or not legal proceedings are instituted) and court and litigation
costs), except to the extent that any of the foregoing allege or constitute
indirect, special, consequential or punitive damages (or would constitute
indirect, special, consequential or punitive damages if ordered by a court).

“Closing” means the sale and assignment of the Property to Purchaser on the
Closing Date, and the performance by each party of the obligations on its part
then to be performed under and in accordance with this Agreement.

“Closing Date” has the meaning set forth in Section 5.1 hereof.

“Closing Documents” has the meaning set forth in Section 9.4 hereof.

“Closing Instructions” has the meaning set forth in Section 3.1 hereof.

“Closing Payment” has the meaning set forth in Section 2.2.2 hereof.

“Closing Statement” has the meaning set forth in Section 5.2.12 hereof.

“Commitment Letter” has the meaning set forth in Section 7.1.5 hereof.

“Contracts” means, with respect to the Property, all equipment leases, and all
contracts, Work Agreements, management agreements and other agreements relating
to the ownership and/or operation of the Property.

“CTIC Title Commitment” has the meaning set forth in Section 4.1.1 hereof.

“Cure” means, with respect to a Lien or an Encumbrance, to cause the Title
Company to issue the Title Policies without exception for such Lien or
Encumbrance, either by Discharging such Lien or Encumbrance or by providing an
indemnification, a bond or another arrangement reasonably satisfactory to
Purchaser, Seller and the Title Company.

 

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“Deeds” has the meaning set forth in Section 5.2.1 hereof.

“Designated Seller Breach” has the meaning set forth in Section 9.2.1 hereof.

“Discharge” means, (i) with respect to a Lien, (a) to cause the party secured by
such Lien to release and discharge the same of record; or (b) to cause the Title
Company to issue the Title Policies without exception for such Lien by paying
the indebtedness it secures (the amount thereof having been previously specified
for the applicable payoff date by the secured party) into Escrow at Closing, or
(ii) with respect to an Encumbrance, to cause the parties benefitted by such
Encumbrance to discharge and terminate such Encumbrance of record.

“Discharge Amount” has the meaning set forth in Section 4.1.2.

“Due Diligence Materials” has the meaning set forth in Section 4.3.1 hereof.

“Earnest Money Deposit” has the meaning set forth in Section 2.2.1 hereof.

“Effective Date” has the meaning set forth in the preamble hereof.

“Encumbrance” means (i) any covenant, condition, restriction, easement, right of
way or other matter affecting title to the Property, and (ii) any encroachment,
violation, easement, right of way or other matter that would be disclosed by an
accurate and complete survey satisfying the Survey Standards; provided, however,
that “Encumbrances” do not include Liens.

“Environmental Damages” has the meaning set forth in Section 4.4(g) hereof.

“Environmental Reports” means the reports listed on Exhibit “O.”

“Environmental Requirements” has the meaning set forth in Section 4.4(h) hereof.

“Escrow” has the meaning set forth in Section 3.1 hereof.

“Escrow Agent” means the Title Company, when acting in its capacity as escrow
holder or closing agent hereunder or under any Closing Document.

“Escrow Agreement” has the meaning set forth in Section 3.1 hereof.

“Excluded Assets” means, with respect to the Property, the Excluded Documents,
all computer hardware and software used by Seller or its Affiliate or in
connection with the Property, cash, cash equivalents, checks and other funds,
including, without limitation, notes, securities and other evidence of
indebtedness held at the Property as of the Closing, and balances on deposit to
the credit of Seller with banking institutions, all of which shall be retained
by Seller. For the avoidance of doubt, Seller or its Affiliate shall be solely
responsible at its own cost and expense to cause the Excluded Assets to be
removed from the Property in a good and workmanlike manner, and to prevent or
promptly repair any damage to the Property in connection with such removal.

 

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“Excluded Documents” means, with respect to the Property, all (a) Proprietary
Information, (b) Intellectual Property Rights, (c) all insurance policies owned
or obtained by Seller on behalf or in connection with Seller’s business at the
Property, (d) the corporate minute books and stock registers of Seller or its
Affiliates, (e) internal memoranda, correspondence, analyses, documents or
reports prepared by or for Seller or its Affiliates in connection with the sale
of the Property, including, without limitation, tax returns or financial
statements of Seller (exclusive of operating statements and the general ledger
of the Property and any supporting information which shall be available for
review by Purchaser) for or in connection with its ownership or operation of the
Property, (f) communications between Seller or any Affiliate and their
respective attorneys, (g) appraisals, assessments or other valuations of the
Property in the possession or control of Seller, (h) property condition reports
conducted at the time of acquisition of the Property, and (i) original bills,
invoices, receipts and checks relating to expenses incurred prior to the
Closing.

“Good Funds” means a cashier’s check, certified funds, or confirmed wire
transfer of funds.

“GSA” means the General Services Administration, an instrumentality of the U.S.
federal government.

“Hazardous Materials” has the meaning set forth in Section 4.4(i) hereof.

“Improvements” means, with respect to the Property, the buildings, structures,
fixtures, and other permanent improvements located on the Property’s Land,
including, without limitation, electrical distribution systems, HVAC systems,
walkways, driveways, parking lots, plumbing, lighting, and mechanical equipment
and fixtures installed thereon.

“Indemnify” means to indemnify a Person and to hold such Person harmless with
respect to a Claim (except to the extent of any indirect, special, consequential
or punitive damages of any kind) and, where necessary, to defend such Person
against a Claim using counsel reasonably satisfactory to such Person, all at the
sole cost and expense of the indemnifying Person.

“Intangible Property” means, with respect to the Property, (a) local telephone
and facsimile exchange numbers identified exclusively with the Property,
(b) transferable certificates (including the Certificate of Occupancy for the
Property), licenses, permits (including the Permits) and warranties now in
effect, (c) all general intangibles relating to design, development, operation
and use of the Property, all rights and work product under construction,
service, consulting, engineering, architectural, design and construction
agreements, if any, that are assigned to Purchaser at Closing as Assumed
Contracts, and plans and specifications of any portion of the Property, and all
development rights and goodwill related to any portion of the Property, and
(d) all other intangible property used by Seller exclusively in connection with
the ownership and operation of the Property, but excluding the Excluded Assets.

 

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“Intellectual Property Rights” means, with respect to the Property, all patents,
copyrights, trade secrets, trademarks, trade names, service marks, confidential
information and other know-how owned by Seller or its Affiliates or used
by Seller or its Affiliates in managing the Property, including but not limited
to (a) marketing and management intangibles, (b) all proprietary computer
software developed and owned by Seller or its Affiliates, and (c) all
proprietary manuals, instructions, policies, procedures and directives issued
by Seller or its Affiliates to its employees at the Property, except for those
manuals, policies and instructions that related solely to the operation of the
Property. The term “Intellectual Property Rights” excludes the Proprietary Marks
and the specific data and information stored or maintained on the Intellectual
Property Rights for the Property that uniquely pertains to the Property or those
served at the Property, except that the Intellectual Property Rights include
such data and information to the extent confidential or proprietary to
Seller. The term “Proprietary Marks” means all trademarks, service marks, trade
names, trade dress, symbols, logos, slogans, designs, insignia, emblems,
devices, domain names, distinctive designs of signs, or any other source
identifying feature, or combinations thereof, which are used to identify the
Property, or which are used in connection with the operation of the Property by
Seller or its Affiliates. For the avoidance of doubt, Intangible Property
includes the Proprietary Marks and the specific data and information stored or
maintained on the Intellectual Property Rights that uniquely pertains to the
Property or those served at the Property, except that the Intellectual Property
Rights include such data and information to the extent confidential or
proprietary to Seller.

“Involuntary Lien” means a Lien that arises after the effective date of the
Title Commitment prepared for the Property and that (i) is not a Tenant Lien,
and (ii) is not created by an affirmative act of Seller.

“Land” means, the real property included in the Property and described on
Exhibit “A-1,” together with all easements, rights-of-way, rights of ingress and
egress, strips, zones, licenses, transferable hereditaments, privileges,
tenements and appurtenances in any way belonging to or appertaining to such real
property, and any right or interest in any open or proposed highways, streets,
roads, avenues, alleys, easements, strips, gores and rights-of-way in, across,
in front of, contiguous to, abutting or adjoining such real property.

“Landlord Work” means any renovation, build-out, demolition or other work that
Seller is required to conduct for the benefit of a certain Tenant pursuant to
the terms of such Tenant’s Lease.

“Lease” means a written agreement (other than a License) pursuant to which a
party other than Seller has the right to use or occupy a portion of the
Property, together with all amendments, modifications, supplements, renewals,
and extensions thereof.

“Leased Space” means the total amount of gross rentable area at the Property,
taken together, and is conclusively agreed to by the parties for purposes of
this Agreement to be 570,357 square feet.

“Lease Schedule” means the list of Leases attached hereto as Exhibit “D-1.”

 

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“Leasing Commission” means a commission or fee payable to a broker or other
third party in connection with a Lease or the expansion or renewal of a Lease.

“Legal Requirement” means any applicable federal, state, local or municipal
constitution, law, ordinance, rule, order, regulation or statute of any
governmental authority bearing on the construction, alteration, rehabilitation,
maintenance, use, operation, sale, transfer or any other aspect of all or any
portion of the Property.

“Licensee” means a Person who is entitled to use or occupy any portion of the
Property pursuant to a License.

“License” means a utility license or access agreement, a right-of way agreement,
an antenna license agreement, or a similar agreement pursuant to which a Person
other than Seller is entitled to use or occupy a portion of the Property.

“Lien” means any mortgage, deed of trust or other consensual lien, a mechanic’s
or any materialman’s lien, a judgment lien, a lien for delinquent real property
taxes or assessments, any other tax or statutory lien, in each case to the
extent the same affects the Property and is prior or senior to, or otherwise
encumbers the interest of Seller in the Property, excluding, liens for real
estate taxes or assessments or other sums not yet due, and excluding any liens
arising out of any activity of Purchaser.

“Minor Lease” means a Lease to a Tenant that is not a Required Tenant.

“Multi-Property Contract” has the meaning set forth in Section 4.3.4 hereof.

“New Lien” has the meaning set forth in Section 4.1.2 hereof.

“Non-Foreign Affidavit” has the meaning set forth in Section 5.2.6 hereof.

“Non-Performing Party” has the meaning set forth in Section 9.8.1 hereof.

“Notice” has the meaning set forth in Article XI hereof.

“Notice to Tenants” has the meaning set forth in Section 5.2.14 hereof.

“Official Records” means the filing office of the circuit court or other
depository in the jurisdiction where the Property is located, established under
such jurisdiction’s laws, as of the Closing Date, for the purpose of imparting
constructive knowledge of matters relating to real property.

“Owner’s Affidavit” has the meaning set forth in Section 5.2.8 hereof.

“Pending Claim” has the meaning set forth in Section 9.6 hereof.

“Permits” means, with respect to the Property, the licenses and permits,
approvals, entitlements, and other governmental authorizations (including
certificates of occupancy) issued by a governmental or administrative agency or
authority (whether federal, state or local) in Seller’s possession or control in
connection with the ownership, operation, planning, development, constructions,
use, or maintenance of the Property.

 

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“Permitted Exceptions” means (a) Liens securing payment of any and all general,
special, supplementary or retroactive property taxes or assessments, to the
extent such taxes or assessments are not due as of the Closing Date; (b) any
Encumbrances that are referenced (as exceptions, requirements or otherwise) in
the Title Commitment in their respective forms as of the Effective Date; (c) any
Liens or Encumbrances that become Permitted Exceptions pursuant to another
provision of this Agreement; (d) any Liens or Encumbrances that are expressly
approved in writing by Purchaser; (e) rights of third parties as tenants under
Leases, or under equipment leases (if any) relating to Personal Property;
(f) Legal Requirements, including, without limitation, zoning ordinances (and
amendments and additions relating thereto) and the Americans with Disabilities
Act of 1990, as amended; (g) any exceptions created by Purchaser or its agents,
employees and/or contractors, including without limitation, any exceptions
arising by reason of the entry on the Real Property by Purchaser or by its
agents, employees and/or contractors.

“Person” means a natural person, an agency or body of federal, state or local
government, a corporation, a general or limited partnership, a limited liability
company, a trust, or any other entity recognized under applicable law as having
authority to own property, to conduct business, to sue or to be sued.

“Personal Property” means, with respect to the Property, all personal property,
including the following items, that is owned by Seller and used by Seller
exclusively in connection with the ownership, maintenance, and operation of the
Property: (a) keys and combinations to all doors, cabinets, enclosures and other
locks on or about the Property, (b) furniture, equipment, televisions, telephone
systems; mechanical systems, fixtures and equipment; electrical systems,
fixtures and equipment; heating fixtures, systems, and equipment; air
conditioning fixtures, systems and equipment; plumbing fixtures, systems, and
equipment; security systems and equipment; carpets, drapes, artwork and other
furnishings; refrigerators, microwaves, ovens, stoves, and all other appliances;
vehicles, office equipment, furniture and fixtures not considered improvements,
spare parts, supplies and other physical assets, machinery, tools, trade
fixtures, utensils, china and glassware; (c) copies of files maintained or
generated by Seller in the course of the operation of the Property (excluding
the Excluded Documents) which are located at the Property or at WRIT’s
headquarters in Rockville, MD; and (d) the Books and Records, but excluding,
however, any the Excluded Assets.

“Property” means the real property consisting of the Land described on Exhibit
“A-1,” the Improvements located on such Land, the Personal Property located on
such Land or in such Improvements, and the Intangible Property, Assumed
Contracts and Leases, excluding, however, any of the foregoing that are Excluded
Assets.

“Proprietary Information” has the meaning set forth in Section 12.17 hereof.

“Purchase Price” has the meaning set forth in Section 2.2 hereof.

“Purchaser” has the meaning set forth in the preamble hereof.

 

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“Purchaser Closing Documents” has the meaning set forth in Section 9.7 hereof.

“Real Property” means, with respect to the Property, the Property’s Land and
Improvements, collectively.

“Releases” has the meaning set forth in Section 4.2.1 hereof.

“Security Deposit” means a cash deposit, or a letter of credit or similar
evidence of indebtedness held by Seller under a Lease as security for the
obligations of the Tenant under such Lease.

“Seller” has the meaning set forth in the preamble hereof.

“Seller’s Title Company” means Chicago Title Insurance Company, acting through
its Washington, D.C. Commercial Center located at 2000 M Street N.W., Suite 610,
Washington, DC 20036.

“Surveyor” means, Dominion Surveyors, Inc.

“Survey” has the meaning set forth below in Section 4.1.1 hereof.

“Survey Standards” means the Minimum Standard Detail Requirements for ALTA/ACSM
Land Title Surveys in effect as of the Effective Date.

“Survival Date” has the meaning set forth in Section 9.6 hereof.

“Tenant” means the tenant or lessee under a Lease.

“Tenant Estoppel Certificate” has the meaning set forth in Section 6.1.3 hereof.

“Tenant Lien” means a Lien that encumbers only a Tenant’s leasehold interest in
the Property, and that does not secure indebtedness or other obligations
voluntarily created or assumed by Seller.

“TI Obligation” means an obligation, if any, of Seller, as landlord under a
Lease, to pay for tenant improvements, whether such tenant improvements are to
be constructed by a Tenant or by Seller.

“Threshold Amount” has the meaning set forth in Section 9.4 hereof.

“Title Commitment” has the meaning set forth below in Section 4.1.1 hereof.

“Title Company” means First American Title Insurance Company, acting through its
Washington, D.C. National Commercial Services division located at 1825 Eye
Street, N.W., Suite 302, Washington, DC 20006, Attn: Michael F. Hillman.

“Title Policy” has the meaning set forth in Section 4.1.4 hereof.

 

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“Utility Deposits” means, with respect to the Property, all deposits made by
Seller in connection with providing water, sewer, gas, electricity, telephone
and other public utilities to the Property.

“Voluntary Lien” means a Lien that arises after the effective date of the Title
Commitment prepared for the Property and that is not an Involuntary Lien or a
Tenant Lien.

“Work Agreements” means any agreements between Seller and a contractor or other
third party relating to the conduct of Landlord Work.

“WRIT” means Washington Real Estate Investment Trust.

II.

SALE AND PURCHASE OF PROPERTY

2.1 Purchase of Property. On the Closing Date, and subject to the terms and
conditions of this Agreement, Seller shall sell, assign, convey, transfer and
deliver to Purchaser, and Purchaser shall purchase and acquire from Seller, all
of Seller’s right, title and interest in and to the Property owned by Seller,
free and clear of Liens and Encumbrances that are not Permitted Exceptions, at
the purchase price provided in Section 2.2 hereof.

2.2 Purchase Price and Terms of Payment. The aggregate purchase price for the
Property (the “Purchase Price”) shall be Forty-Four Million Five Hundred
Fifty-Four Thousand Two Hundred Thirty-Three Dollars ($44,554,233.00), and shall
consist of and be payable as follows:

2.2.1 Earnest Money Deposit. Simultaneously with execution and delivery of this
Agreement by the parties, Purchaser shall deliver to Escrow Agent, in Good
Funds, Two Million Five Hundred Sixty-Six Thousand Four Hundred Thirty-Five and
66/100 Dollars ($2,566,435.66), which amount, together with all interest accrued
thereon, is referred to herein as the “Earnest Money Deposit.” The Earnest Money
Deposit shall be non-refundable to Purchaser except as expressly provided
herein. If the Closing occurs, the Earnest Money Deposit shall be applied to the
Purchase Price on the Closing Date.

2.2.2 Balance of Purchase Price. Not later than 2:00 p.m. on the Closing Date,
Purchaser shall deposit with Escrow Agent, in Good Funds, the balance of the
Purchase Price, reduced or increased by such amounts as are required to take
into account any prorations, credits, costs or other adjustments to be made at
Closing under this Agreement. The amount to be paid under this Section 2.2.2 is
referred to in this Agreement as the “Closing Payment.”

2.3 Assumption of the Contracts. As additional consideration, Purchaser shall,
on and as of the Closing Date, at its sole cost and expense, assume and agree to
pay all sums and perform, fulfill and comply with all other covenants and
obligations which are to be paid, performed and complied with by Seller under
the Assumed Contracts, to the extent such obligations first arise or accrue on
or after the Closing Date.

 

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2.4 Assumption of the Leases. As additional consideration, Purchaser shall on
and as of the Closing Date, at its sole cost and expense, assume and agree to
perform, fulfill and comply with all covenants and obligations which are to be
performed and complied with by Seller under the Leases, to the extent such
obligations first arise or accrue on or after the Closing Date.

2.5 Assumed Liabilities. Except as expressly set forth herein, Purchaser shall
not assume, in connection with the transactions contemplated hereby, any other
liability or obligation of Seller whatsoever for or in respect of periods prior
to the Closing Date, and Seller shall retain responsibility for all liabilities
and obligations accrued or incurred prior to Closing with respect to the
ownership or operation of the Property.

III.

ESCROW

3.1 Escrow. The parties have established or will establish an escrow (“Escrow”)
with Escrow Agent by depositing with Escrow Agent the Earnest Money Deposit and
having three (3) copies of the Escrow Agreement in the form attached hereto as
Exhibit “B” duly executed by Seller, Purchaser and Escrow Agent (the “Escrow
Agreement”). The Earnest Money Deposit shall be held by Escrow Agent in
accordance with the terms of the Escrow Agreement. In the event of any conflict
between this Agreement and the Escrow Agreement, the terms of this Agreement
shall control. The Escrow shall include both the Escrow Agent’s handling of the
Earnest Money Deposit and Escrow Agent’s handling of any other documents and
deliveries deposited with Escrow Agent at any time up to, and including, the
Closing Date. At Closing, Purchaser, Escrow Agent and Seller shall prepare and
execute separate escrow instructions, consistent with this Agreement, confirming
the parties’ understanding with respect to the Escrow Agent’s handling of the
Escrow for matters other than the Earnest Money Deposit (the “Closing
Instructions”).

3.2 Deposit of Funds. Except as otherwise provided in this Agreement, all funds
deposited into the Escrow by Purchaser shall be immediately deposited by Escrow
Agent into an interest bearing account, subject to the control of Escrow Agent
in a bank or savings and loan association, or such other institution approved by
Purchaser and Seller, or such other investment as may be approved by Purchaser
and Seller; provided, however, that such funds must be readily available as
necessary to comply with the terms of this Agreement and the Escrow Agreement,
and for the Escrow to close within the time specified in Section 5.1 of this
Agreement. Except as may be otherwise specifically provided herein, interest on
amounts placed by Escrow Agent in any such investments or interest bearing
accounts shall accrue to the benefit of Purchaser, and Purchaser shall promptly
provide to Escrow Agent Purchaser’s Tax Identification Number.

 

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IV.

TITLE AND PROPERTY CONDITION

4.1 Title to the Real Property.

4.1.1 Acceptance of Title as of the Effective Date. Seller acknowledges and
agrees that the Commitment for Title Insurance by Chicago Title Insurance
Company, dated December 19, 2010 (CTIC order number 2480-11010) (the “CTIC Title
Commitment”), is the entire title insurance commitment, and all revisions
thereto, issued by the Seller’s Title Company on or before the Effective Date.
Purchaser acknowledges and agrees that the Commitment for Title Insurance by the
Title Company, dated July 10, 2011 (FATIC title commitment no.
NCS-496515-9-DC72) (together with the CTIC Title Commitment, the “Title
Commitment”), is the entire title insurance commitment, and all revisions
thereto, issued by the Title Company on or before the Effective Date. Purchaser
acknowledges and agrees that it has received and reviewed a copy of each of the
exceptions and other documents affecting title and disclosed in the Title
Commitment. The parties acknowledge and agree that Purchaser has received the
ALTA/ACSM Land Title Survey by Dominion Surveyors, Inc., dated May 24, 2011 (the
“Survey”), for the Property, which complies with the Survey Standards.
Notwithstanding anything to the contrary, Purchaser hereby acknowledges and
agrees that Purchaser has no right to object to any Liens or Encumbrances
disclosed in the Title Commitment or the Survey, and that Seller shall not be
obligated to Cure any of such Liens or Encumbrances except as provided in clause
(ii) of the first sentence of Section 4.1.2(a) below.

4.1.2 Liens Arising After the Effective Date. Seller agrees to Cure, prior to or
at Closing, (i) all Voluntary Liens; and (ii) the Involuntary Liens, if any,
listed on Exhibit “S.” If Seller or Purchaser becomes aware after the Effective
Date of an Involuntary Lien not designated on Exhibit S, Seller or Purchaser, as
applicable, shall promptly give notice to the other of such Involuntary Lien. An
Involuntary Lien of which Seller or Purchaser receives notice pursuant to the
preceding sentence is referred to herein as a “New Lien.” The cost to Discharge
a New Lien, or the aggregate cost to Discharge two or more New Liens, is
referred to in this Section 4.1.2 as the “Discharge Amount” for such New Lien,
or New Liens. If the Discharge Amount for all New Liens does not exceed
$200,000, Seller shall be obligated to Cure such New Liens prior to or at
Closing, at Seller’s sole cost and expense. If the Discharge Amount for all New
Liens exceeds $200,000, then unless the Purchaser has the right to terminate
this Agreement in accordance with the next sentence and does in fact terminate
this Agreement pursuant to this Section 4.1.2, Seller shall be obligated to
Discharge or otherwise Cure, in whole or in part, one or more of such New Liens
such that the Discharge Amount of the New Liens at Closing is reduced by
$200,000. If the Discharge Amount for all New Liens exceeds $400,000, and if
Seller does not agree in writing to Cure such New Liens in a manner satisfactory
to Purchaser, then Purchaser shall have the right to terminate this Agreement by
written notice to Seller delivered within five (5) Business Days after Seller
either sends or receives notice of a New Lien that would cause the Discharge
Amount for all New Liens to exceed $400,000. Upon such termination the Earnest
Money Deposit shall be returned to Purchaser, this Agreement shall terminate and
neither party shall have any obligation to the other party hereunder except for
obligations that expressly survive termination of this Agreement. If Seller
breaches an obligation to Cure, in whole or in part, one or more New Liens
pursuant to this Section 4.1.2 then the condition set forth in Section 8.2.3
shall be deemed not to have been satisfied regardless whether such failure has a
Material Adverse Effect. If the Closing occurs, any New Liens of which Purchaser
had knowledge prior to the Closing Date shall be Permitted Exceptions.

 

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4.1.3 Encumbrances Arising After the Effective Date. Seller agrees not to create
or subject the Property to any Encumbrance after the Effective Date, without the
prior written consent of the Purchaser. If either Seller or Purchaser becomes
aware that an Encumbrance has arisen after the Effective Date, or if an update
of title after the Effective Date reveals an Encumbrance prior to the Effective
Date but not previously disclosed in the Title Commitment (in either case, a
“New Encumbrance”), Purchaser or Seller, as applicable, shall promptly give
notice to the other of such New Encumbrance. If Purchaser objects to such New
Encumbrance, Purchaser shall give notice to Seller of its objection within five
(5) Business Days after discovering such New Encumbrance or receiving notice of
such New Encumbrance pursuant to the preceding sentence. If Purchaser does not
timely object to it, such New Encumbrance shall be a Permitted Exception. If
Purchaser timely objects to such New Encumbrance, Seller shall give notice to
Purchaser, within five (5) Business Days of Purchaser’s objection notice, as to
whether Seller agrees to Cure such New Encumbrance. If Seller declines to Cure
such New Encumbrance, then the following shall apply: (a) if the cost to Cure
such New Encumbrance, together with the cost to Cure all other New Encumbrances
to which Purchaser has timely objected and Seller has declined to Cure, does not
exceed $500,000, then such New Encumbrance shall be a Permitted Exception;
(b) if the cost to Cure such New Encumbrance, together with the cost to Cure all
other New Encumbrances to which Purchaser has timely objected and which Seller
has declined to Cure, exceeds $500,000, then Purchaser shall be entitled to
terminate this Agreement; and (c) if Seller agrees to cure a New Encumbrance to
which Purchaser timely objects pursuant to this Section 4.1.3, Seller shall use
commercially reasonable efforts to Cure such New Encumbrance at or before
Closing. If Purchaser terminates this Agreement pursuant to clause (b) of the
preceding sentence, the Earnest Money Deposit shall be returned to Purchaser,
this Agreement shall terminate and neither party shall have any obligation to
the other party hereunder except for obligations that expressly survive
termination of this Agreement.

4.1.4 Title Policies. If the Closing occurs, (i) the Title Company shall issue
for the Property an ALTA 2006 Owner’s Title Insurance Policy (or if not
available, the local equivalent) (each, a “Title Policy”), insuring that
Purchaser is vested with the estate or interest disclosed in Schedule A of the
applicable Title Commitment for the Property, with the initial amount of
insurance for such Title Policy equal to the Purchase Price for the Property,
and taking exception only for Permitted Exceptions. Purchaser shall have the
right, at Purchaser’s sole cost and expense, to request from the Title Company
such endorsements to the Title Policies and/or such additional liability
protection as Purchaser may elect to obtain; provided, however, that Purchaser’s
ability to obtain such title endorsements and/or such additional liability
protection shall not be a condition precedent to Purchaser’s obligations
hereunder and shall not extend or delay Closing. Purchaser shall be solely
responsible for negotiating with the Title Company with respect to the Title
Policy and/or with respect to such title endorsements and/or such additional
liability protection as may be requested by Purchaser, if any.

4.2 Reserved.

 

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4.3 Inspection.

4.3.1 Prior to the date hereof, Seller made available to Purchaser the
information, documents, agreements and reports in Seller’s possession or control
relating to the Property (collectively, the “Due Diligence Materials”) without
representation or warranty of any kind or nature, whether express or implied.
The parties acknowledge that Purchaser has had the opportunity to review and
inspect the Due Diligence Materials and the Property prior to the date hereof.
By executing this Agreement, Purchaser acknowledges that it has completed its
inspections and studies of the Property and it has no remaining contingencies to
Closing nor rights to object to any due diligence matters except as expressly
provided below in this Section 4.3.1, and is agreeing to proceed in accordance
with the terms hereof (including without limitation, the terms of Section 4.4
below). Notwithstanding such prior inspections, Seller shall cooperate and
provide Purchaser with reasonable and continuing access to the Real Property
included in the Property upon commercially reasonable Notice to Seller for the
purpose of Purchaser’s inspection; provided, however, that Purchaser shall not
perform any invasive testing of any Real Property without Seller’s prior written
consent in each instance, which may be granted or withheld in Seller’s sole and
absolute discretion (unless such invasive testing has been required in writing
by Purchaser’s lender as a condition to Purchaser’s financing, in which case
Seller shall grant or withhold such consent in Seller’s reasonable discretion).
Purchaser may meet with any on-site employees at the Property upon commercially
reasonable Notice to Seller but, if required by Seller, only in the presence of
Seller’s representative. Seller shall have the right to have a representative of
Seller present during all inspections or examinations of Seller’s Real Property
by Purchaser.

4.3.2 Prior to any entry by Purchaser or any of Purchaser’s designees onto the
Property, Purchaser shall: (i) if Purchaser does not then have such a policy in
force, procure a policy of commercial general liability insurance, issued by an
insurer reasonably satisfactory to Seller, covering all of Purchaser’s
activities at the Property, with a single limit of liability (per occurrence and
aggregate) of not less than $2,000,000.00; and (ii) deliver to Seller a
Certificate of Insurance, evidencing that such insurance is in force and effect,
and evidencing that Seller has been named as an additional insured thereunder
with respect to any of Purchaser’s activities. Such insurance shall be written
on an “occurrence” basis, and shall be maintained in force until the earlier of
(x) the termination of this Agreement and the conclusion of all of Purchaser’s
activities, or (y) the Closing Date.

4.3.3 Purchaser, at all times, will conduct all inspections and reviews in
compliance with all Legal Requirements, and in a manner so as to not cause
damage, loss, cost or expense to Seller, the Property or Tenants of the
Property, and without unreasonably interfering with or disturbing any Tenants or
employees at the Property; provided, however, that Purchaser shall not be so
liable for the mere discovery by Purchaser or its agents or contractors of any
existing condition at the Property. Prior to Closing, the results of or any
other information acquired pursuant to Purchaser’s inspections shall be subject
to the terms and conditions of Section 12.17 below. Purchaser will promptly
restore any damage to the Property caused by Purchaser’s inspection to its
condition immediately preceding such inspections and examinations and will keep
the Property free and clear of any mechanic’s liens or materialmen’s liens in
connection with such inspections and examinations.

4.3.4 Purchaser shall assume all of the Assumed Contracts on the Closing Date.
Purchaser acknowledges and agrees that some or all of the Assumed Contracts are
Multi-Property Contracts and will be assigned only in part, with the portion of
each Multi-Property Contract that does not relate to the Property being retained
by the Seller. Each Multi-Property

 

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Contract shall be omitted from the Assignment of Contracts and the foregoing
partial assignment with respect to such Multi-Property Contract shall be
evidenced by one or more separate assignment documents in the form required by
the other party to such Multi-Property Contract and reasonably satisfactory to
the parties. For purposes of this Agreement, “Multi-Property Contract” means an
Assumed Contract pursuant to which services are rendered to one or more
properties that are not included in the Property. The Multi-Property Contracts
are designated as such on Exhibit “C.”

4.3.5 The cost of the inspections and tests undertaken pursuant to this
Section 4.3 shall be borne solely by Purchaser.

4.3.6 Purchaser covenants and agrees that, until the Closing Date, all
information and materials disclosed and/or delivered to it by Seller, or
Seller’s agents, employees and representatives (including without limitation,
the Due Diligence Materials), are confidential and proprietary information, and
that Purchaser shall hold the same in accordance with the terms and conditions
of Section 12.17 below. Purchaser also agrees that, in the event the
transactions contemplated in this Agreement are not consummated as provided
herein, Purchaser shall promptly return to Seller or destroy (and confirm in a
notice to Seller that Purchaser has returned or destroyed) all such information
and documentation, and all copies thereof, together with copies of all third
party reports and studies obtained by Purchaser that do not include information
confidential or proprietary to Purchaser.

4.3.7 Except as expressly provided herein, the Seller makes no representations
or warranties as to the truth, accuracy or completeness of any materials, data
or other information, if any, supplied to Purchaser in connection with
Purchaser’s inspection of any of the Property (except that Seller represents and
warrants that it has not knowingly omitted any material content from the
information provided to Purchaser prior to the Effective Date). Except for
Purchaser’s reliance on any representation and warranties expressly provided
herein, it is the parties’ express understanding and agreement that any such
materials are to be provided only for Purchaser’s convenience in making its own
examination and determination as to whether it wishes to purchase the Property,
and, in doing so, Purchaser shall rely exclusively on its own independent
investigation and evaluation of every aspect of the Property and not on any
materials supplied by Seller. Except for Purchaser’s reliance on any
representation and warranties expressly provided herein with respect to any such
materials, Purchaser expressly disclaims any intent to rely on any such
materials provided to it by Seller in connection with its inspection and agrees
that it shall rely solely on its own independently developed or verified
information.

4.3.8 The obligations of Purchaser under this Section 4.3 (including its
indemnification obligations) shall survive Closing or the termination of this
Agreement indefinitely.

 

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4.4 Condition of the Property. THE FOLLOWING PROVISIONS IN THIS SECTION 4.4 ARE
SUBJECT TO THE EXPRESS REPRESENTATIONS, WARRANTIES, COVENANTS, AGREEMENTS, AND
OTHER PROVISIONS OF THIS AGREEMENT (INCLUDING WITHOUT LIMITATION THE
REPRESENTATIONS AND WARRANTIES SET FORTH IN SECTION 7.2) AND THE CONVEYANCE
DOCUMENTS:

(a) BY ENTERING INTO THIS AGREEMENT, PURCHASER REPRESENTS AND WARRANTS THAT IT
HAS PERFORMED (AND PURCHASER REPRESENTS AND WARRANTS TO SELLER THAT PURCHASER IS
CAPABLE OF PERFORMING) AN INDEPENDENT INVESTIGATION, ANALYSIS AND EVALUATION OF
THE PROPERTY. PRIOR TO THE EFFECTIVE DATE, PURCHASER HAS DETERMINED, SUBJECT TO
THE TERMS AND CONDITIONS OF THIS AGREEMENT, THAT THE PROPERTY IS ACCEPTABLE TO
PURCHASER. PRIOR TO THE EFFECTIVE DATE, PURCHASER HAS CONDUCTED ITS OWN THOROUGH
AND INDEPENDENT INSPECTION, INVESTIGATION, ANALYSIS AND EVALUATION OF ALL
INSTRUMENTS, RECORDS AND DOCUMENTS WHICH PURCHASER DETERMINED TO BE APPROPRIATE
OR ADVISABLE TO REVIEW IN CONNECTION WITH PURCHASER’S ACQUISITION OF THE
PROPERTY AND THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT.

(b) PURCHASER FURTHER ACKNOWLEDGES AND AGREES THAT PURCHASER HAS SUBSTANTIAL
EXPERIENCE WITH REAL PROPERTY AND ITS OPERATIONS, AND THAT PURCHASER WILL
ACQUIRE THE PROPERTY IN “AS IS, WHERE IS, WITH ALL FAULTS” CONDITION, AND SOLELY
IN RELIANCE ON PURCHASER’S OWN INSPECTION AND EXAMINATION AND SELLER’S
REPRESENTATIONS AND WARRANTIES EXPRESSLY CONTAINED HEREIN.

(c) EXCEPT AS TO THOSE REPRESENTATIONS AND WARRANTIES EXPRESSLY SET FORTH IN
THIS AGREEMENT AND THE CONVEYANCE DOCUMENTS, IT IS EXPRESSLY UNDERSTOOD AND
AGREED THAT SELLER MAKES NO REPRESENTATIONS, WARRANTIES OR GUARANTIES OF ANY
KIND, NATURE OR SORT, EXPRESS OR IMPLIED, WITH RESPECT TO THE PHYSICAL
CONDITION, PAST, PRESENT OR FUTURE OPERATION AND/OR PERFORMANCE, OR VALUE, OF
THE PROPERTY AND THAT SELLER CONVEYS THE PROPERTY TO PURCHASER “AS IS AND WHERE
IS, WITH ALL FAULTS,” AND PURCHASER ACKNOWLEDGES THAT SELLER MAKES NO
REPRESENTATIONS, GUARANTIES OR WARRANTIES WHATSOEVER, EXPRESS OR IMPLIED, AS TO
THE QUALITY, CHARACTER, EXTENT, PERFORMANCE, CONDITION OR SUITABILITY OF THE
PROPERTY FOR ANY PURPOSE.

(d) PURCHASER’S INSPECTION, INVESTIGATION AND SURVEY OF THE PROPERTY SHALL BE IN
LIEU OF ANY NOTICE OR DISCLOSURE REQUIRED BY ANY APPLICABLE HEALTH AND SAFETY
CODE, OR BY ANY OTHER PROVISION OF APPLICABLE LAW, RULE OR REGULATION,
INCLUDING, WITHOUT LIMITATION, LAWS REQUIRING DISCLOSURE BY SELLER OF FLOOD,
FIRE, MOLD, SEISMIC HAZARDS, LEAD PAINT, LANDSLIDE AND LIQUEFACTION, OTHER
GEOLOGICAL HAZARDS, RAILROAD AND OTHER UTILITY ACCESS, SOIL CONDITIONS AND OTHER
CONDITIONS WHICH MAY AFFECT THE USE OF ANY OF THE REAL PROPERTY, AND PURCHASER
HEREBY WAIVES ANY REQUIREMENT FOR A

 

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NOTICE PURSUANT TO THOSE PROVISIONS AND HEREBY ACKNOWLEDGES AND AGREES THAT IT
WILL CONDUCT ITS OWN INSPECTIONS AND REVIEWS WITH RESPECT TO ALL MATTERS COVERED
THEREBY, AND HEREBY RELEASES SELLER FROM LIABILITY IN CONNECTION WITH ANY SUCH
MATTERS THAT ARE NOT THE SUBJECT OF ANY OF SELLER’S REPRESENTATIONS AND
WARRANTIES.

(e) PURCHASER ALSO ACKNOWLEDGES AND AGREES THAT, ALTHOUGH SELLER HAS PROVIDED
THE DUE DILIGENCE MATERIALS TO PURCHASER, SELLER HAS NOT VERIFIED THE ACCURACY
THEREOF AND SELLER MAKES NO REPRESENTATIONS OR WARRANTIES REGARDING THE MATTERS
SET FORTH THEREIN EXCEPT AS MAY BE EXPRESSLY SET FORTH HEREIN, IT BEING THE
RESPONSIBILITY OF PURCHASER TO VERIFY THE ACCURACY OF SUCH MATERIALS. WITHOUT
LIMITING THE FOREGOING, SELLER MAKES NO REPRESENTATION OR WARRANTY REGARDING THE
COMPLETENESS OR ACCURACY, AS OF ANY DATE, OF THE TITLE COMMITMENT, THE SURVEY OR
THE ENVIRONMENTAL REPORT, PURCHASER HEREBY ACKNOWLEDGING AND ASSUMING THE RISK
OF ANY ERRORS OR OMISSIONS IN THE TITLE COMMITMENT, THE SURVEY OR THE
ENVIRONMENTAL REPORT, ALL OF WHICH HAVE BEEN ORDERED BY SELLER AND DELIVERED TO
THE PURCHASER SOLELY AS A CONVENINENCE TO THE PURCHASER. PURCHASER ACKNOWLEDGES
THAT NONE OF THE PARTIES WHO PREPARED THE SURVEY, THE TITLE COMMITMENT OR THE
ENVIRONMENTAL REPORT IS AFFILIATED WITH SELLER.

(f) FURTHERMORE, EXCEPT AS TO THOSE REPRESENTATIONS AND WARRANTIES EXPRESSLY SET
FORTH IN THIS AGREEMENT AND THE CONVEYANCE DOCUMENTS, PURCHASER ACKNOWLEDGES
THAT SELLER DOES NOT MAKE NOR HAS IT MADE ANY REPRESENTATIONS OR WARRANTIES IN
CONNECTION WITH THE PRESENCE OR INTEGRATION OF HAZARDOUS MATERIALS UPON OR
WITHIN ANY OF THE REAL PROPERTY. IN THAT REGARD, PURCHASER HAS, PRIOR TO THE
EFFECTIVE DATE, CONDUCTED ITS OWN INVESTIGATIONS TO DETERMINE IF ANY OF THE REAL
PROPERTY CONTAINS ANY HAZARDOUS MATERIALS OR TOXIC WASTE, MATERIALS, DISCHARGE,
DUMPING OR CONTAMINATION, WHETHER SOIL, GROUNDWATER OR OTHERWISE, WHICH VIOLATES
ANY FEDERAL, STATE, LOCAL OR OTHER GOVERNMENTAL LAW, REGULATION OR ORDER OR
REQUIRES REPORTING TO ANY GOVERNMENTAL AUTHORITY.

EXCEPT AS TO THOSE REPRESENTATIONS AND WARRANTIES EXPRESSLY SET FORTH IN THIS
AGREEMENT AND THE CONVEYANCE DOCUMENTS, PURCHASER, FOR ITSELF AND ITS OWNERS,
SUCCESSORS AND ASSIGNS, HEREBY RELEASES AND FOREVER DISCHARGES SELLER, AND
SELLER’S PAST, PRESENT AND FUTURE MEMBERS, PARTNERS, AFFILIATES, EMPLOYEES,
AGENTS, ATTORNEYS, ASSIGNS, AND

 

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SUCCESSORS-IN-INTEREST, FROM ALL PAST, PRESENT AND FUTURE CLAIMS, DEMANDS,
OBLIGATIONS, LOSSES AND CAUSES OF ACTION OF ANY NATURE WHATSOEVER, WHETHER NOW
KNOWN OR UNKNOWN, DIRECT OR INDIRECT, FORESEEN OR UNFORESEEN, SUSPECTED OR
UNSUSPECTED, WHICH ARE BASED UPON OR ARISE OUT OF OR IN CONNECTION WITH THE
CONDITION OF THE PROPERTY AND, WITH RESPECT TO THE PRESENCE OF ANY HAZARDOUS
MATERIALS, ANY ENVIRONMENTAL DAMAGES OR ENVIRONMENTAL REQUIREMENTS, INCLUDING,
WITHOUT LIMITATIONS, THE PHYSICAL, STRUCTURAL, GEOLOGICAL, MECHANICAL AND
ENVIRONMENTAL (SURFACE AND SUBSURFACE) CONDITION OF ANY OF THE REAL PROPERTY
(INCLUDING THE IMPROVEMENTS THEREON) OR ANY LAW OR REGULATION RELATING TO
HAZARDOUS MATERIALS (PROVIDED THAT NOTHING HEREIN SHALL ABRIDGE ANY RIGHT OF
PURCHASER TO ASSERT A DEFENSE IN A TORT CLAIM MADE BY A THIRD PARTY AGAINST
PURCHASER TO THE EFFECT THAT PURCHASER DID NOT OWN THE PROPERTY PRIOR TO
CLOSING). WITHOUT LIMITING THE FOREGOING, THIS RELEASE SPECIFICALLY APPLIES TO
ALL LOSSES AND CLAIMS ARISING UNDER THE COMPREHENSIVE ENVIRONMENTAL RESPONSE,
COMPENSATION AND LIABILITY ACT OF 1980, AS AMENDED, THE SUPERFUND AMENDMENTS AND
REAUTHORIZATION ACT OF 1986, (42 U.S.C. SECTIONS 9601 ET SEQ.), THE RESOURCES
CONSERVATION AND RECOVERY ACT OF 1976, (42 U.S.C. SECTIONS 6901 ET SEQ.), THE
CLEAN WATER ACT, (33 U.S.C. SECTIONS 466 ET SEQ.), THE SAFE DRINKING WATER ACT,
(14 U.S.C. SECTION 1401-1450), THE HAZARDOUS MATERIALS TRANSPORTATION ACT, (49
U.S.C. SECTIONS 1801 ET SEQ.), THE TOXIC SUBSTANCE CONTROL ACT, (15 U.S.C.
SECTIONS 2601-2629), AND ANY OTHER FEDERAL, STATE OR LOCAL LAW OF SIMILAR
EFFECT, AS WELL AS ANY AND ALL COMMON LAW CLAIMS.

BY INITIALING THIS CLAUSE BELOW, PURCHASER ACKNOWLEDGES THAT THIS SECTION HAS
BEEN READ AND FULLY UNDERSTOOD, AND THAT PURCHASER HAS HAD THE CHANCE TO ASK
QUESTIONS OF ITS COUNSEL ABOUT ITS MEANING AND SIGNIFICANCE.

 

               /s/ H.H.                   PURCHASER’S INITIALS   

(g) “Environmental Damages” means all claims, judgments, damages, losses,
penalties, fines, liabilities (including strict liability), encumbrances, liens,
costs, and expenses of investigation and defense of any claim, whether or not
such claim is ultimately defeated, and of any good faith settlement of judgment,
of whatever kind or nature, contingent or otherwise matured or unmatured,
foreseeable or unforeseeable, including without limitation reasonable attorneys’
fees and disbursements and consultants’ fees, any of which are incurred at any
time as a result of the existence of Hazardous Materials upon, about or beneath
any Real Property or migrating to or from any Real Property, or the existence of
a violation of Environmental Requirements pertaining to any Real Property,
regardless of whether the existence of such Hazardous Materials or the violation
of Environmental Requirements arose prior to the present ownership or operation
of such Real Property.

 

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(h) “Environmental Requirements” means all applicable present and future
statutes, regulations, rules, ordinances, codes, licenses, permits, orders,
approvals, plans, authorizations, concessions, franchises, and similar items, of
all governmental agencies, departments, commissions, boards, bureaus, or
instrumentalities of the United States, states and political subdivisions
thereof and all applicable judicial, administrative, and regulatory decrees,
judgments, and orders relating to Hazardous Materials.

(i) “Hazardous Materials” means any substance (i) the presence of which requires
investigation or remediation under any federal, state or local statute,
regulation, ordinance or policy; or (ii) which is defined as a “hazardous waste”
or “hazardous substance” under any federal, state or local statute, regulation
or ordinance, including without limitation the Comprehensive Environmental
Response, Compensation and Liability Act (42 U.S.C. Section 9601 et seq.) and
the Resource Conservation and Recovery Act (42 U.S.C. Section 6901 et seq.) and
amendments thereto and regulations promulgated thereunder; or (iii) which is
toxic, explosive, corrosive, infectious or otherwise hazardous or is regulated
by any federal, state or local governmental authority; or (iv) without
limitation which contains polychlorinated biphenyls (PCBs), asbestos or urea
formaldehyde.

The provisions of this Section 4.4 shall survive Closing indefinitely.

V.

CLOSING

5.1 Closing Date. The “Closing Date” for purposes of this Agreement shall be
October 3, 2011, subject to the following provisions of this Section 5.1 and
subject also to the Sellers’ and Purchaser’s rights to extend the Closing Date
as set forth in Sections 9.2, and 12.13 herein. Purchaser may accelerate the
Closing Date to a date earlier than October 3, 2011 (but in no event earlier
than September 26, 2011), so long as Purchaser delivers notice of the
accelerated Closing Date to the Sellers not later than five (5) Business Days
prior to such accelerated Closing Date.

5.2 Action Prior to the Closing Date by Seller. Seller agrees that, provided
Purchaser has complied with its obligations under Section 5.3 hereof, on or
before 10:00 a.m. on the Closing Date, Seller will deposit with Escrow Agent the
following items and instruments (executed and acknowledged, if appropriate):

5.2.1 A special warranty deed in the form attached hereto as Exhibit “F”,
properly prepared, executed and acknowledged by Seller before a Notary Public in
the manner provided under the laws of the Commonwealth of Virginia, evidencing
the sale and transfer to Purchaser of the Real Property and the Improvements
comprising the Property (the “Deed”), subject only to those Permitted Exceptions
applicable to the Property;

 

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5.2.2 Two (2) duplicate originals of a Bill of Sale, in the form and content
attached hereto as Exhibit “G”, prepared and executed by Seller, assigning,
conveying and transferring to Purchaser the Personal Property owned by Seller
(“Bill of Sale”);

5.2.3 Two (2) duplicate originals of an Assignment of Intangible Property, in
the form and content attached hereto as Exhibit “H”, prepared and executed by
Seller, assigning and conveying to Purchaser, at no cost or expense to Seller,
and without representation or warranty (other than as expressly set forth
herein), all of Seller’s right, title and interest in the Intangible Property
(“Assignment of Intangibles”);

5.2.4 Two (2) duplicate originals of an Assignment and Assumption of Contracts,
in the form and content attached hereto as Exhibit “I”, prepared and executed by
Seller, assigning and conveying to Purchaser, at no cost or expense to Seller,
and without representation or warranty (other than as expressly set forth
herein), all of Seller’s right, title and interest under the Assumed Contracts
(“Assignment of Contracts”);

5.2.5 Two (2) duplicate originals of an Assignment and Assumption of Leases, in
the form and content attached hereto as Exhibit “J”, prepared and executed by
Seller, assigning and conveying to Purchaser, at no cost or expense to Seller,
and without representation or warranty (other than as expressly set forth
herein), all of Seller’s right, title and interest under the Leases (including
any refundable cash Security Deposits thereunder) (“Assignment of Leases”);

5.2.6 A non-foreign affidavit signed by Seller, in the form attached hereto as
Exhibit “K” (“Non-Foreign Affidavits”) any state tax withholding affidavits as
applicable, and an IRS Form 1099;

5.2.7 All transfer tax and other tax returns, if any, which Seller is required
by law to execute and acknowledge and to deliver, either individually or
together with Purchaser, to any governmental authority as a result of the sale,
if and to the extent the same are available as of the Closing Date;

5.2.8 Three (3) duplicate originals of an owner’s affidavit, in the form and
content attached hereto as Exhibit “N,” prepared and executed by Seller
(“Owner’s Affidavit”);

5.2.9 All of the plans (including “as built” plans), drawings, blueprints and
specifications relating to the Property where available, which are in Seller’s
possession or control, other than any plans, drawings, blueprints or
specifications that constitute Excluded Documents;

5.2.10 All written warranties in possession or control of Seller, if any, of
manufacturers, suppliers and contractors in effect on the Closing Date;

5.2.11 All keys to the Property in the possession or control of Seller (which
will be available at the Property);

5.2.12 (a) A closing statement prepared by the Escrow Agent, reasonably approved
by Seller and Purchaser and executed by Seller setting forth, among other
things, all prorations, credits, costs or other adjustments to be made at
Closing under this Agreement (the “Closing Statement”);

 

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5.2.13 All affidavits, gap indemnity agreements and other documents consistent
with the express provisions of this Agreement and reasonably required by the
Title Company (including without limitation, evidence reasonably satisfactory to
the Title Company that all necessary authorizations of the transaction
contemplated hereby have been obtained by Seller), each in form and substance
reasonably acceptable to Seller;

5.2.14 A notice to the Tenants of the Property, in the form and content attached
hereto as Exhibit “K,” prepared and executed by Seller (collectively, the
“Notices to Tenants”);

5.2.15 To the extent not previously delivered to Purchaser, and to the extent
within the possession or control of Seller or its Affiliates, originals (or
copies, if originals are not available) of the Due Diligence Materials relating
to the Property (including, to the extent available, originals of all Leases,
Assumed Contracts, and Permits and copies of all Tenant correspondence and
billing files and records relating to the Property), which Due Diligence
Materials may be made available at the Property;

5.2.16 A certificate executed by Seller certifying that Seller’s representations
and warranties contained herein remain true and accurate in all respects except
as noted in such certificate;

5.2.17 Such other instruments or documents as may be reasonably necessary to
effect or carry out the covenants and obligations to be performed by Seller
pursuant to this Agreement.

5.3 Action Prior to the Closing Date by Purchaser. Purchaser agrees that on or
before 10:00 a.m. on the Closing Date, Purchaser will deposit with Escrow Agent
the Closing Payment and, in addition, the following items and instruments
(executed and acknowledged, if appropriate):

5.3.1 To the extent that applicable law requires that the Deed, transfer tax or
other tax forms, or recording forms be executed by the grantee, such
instruments, executed by Purchaser and acknowledged in the presence of a Notary
Public in accordance with the laws of the Commonwealth of Virginia;

5.3.2 Two (2) fully executed duplicate originals of the applicable Assignment of
Contracts, executed by Purchaser;

5.3.3 Two (2) fully executed duplicate originals of the applicable Assignment of
Leases, executed by Purchaser;

5.3.4 An executed counterpart of the Closing Statement;

5.3.5 Two (2) fully executed duplicate originals of the applicable Assignment of
Intangibles, executed by Purchaser;

 

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5.3.6 Two (2) fully executed duplicate originals of the applicable Bill of Sale,
executed by Purchaser;

5.3.7 Reserved.

5.3.8 Such other funds, instruments or documents as may be reasonably necessary
to effect or carry out the covenants and obligations to be performed by
Purchaser pursuant to this Agreement; and

5.3.9 All affidavits, gap indemnity agreements and other documents consistent
with the express provisions of this Agreement and reasonably required by the
Title Company (including without limitation, evidence reasonably satisfactory to
the Title Company that all necessary authorizations of the transaction
contemplated hereby have been obtained by the Purchaser), each in form and
substance reasonably acceptable to the Purchaser.

5.4 Recording of Deeds. Subject to Section 8.3 below, Escrow Agent will cause
the Deed to be dated as of the Closing Date and recorded in the Official
Records, and all other conveyance documents deposited with Escrow Agent to be
dated as of the Closing Date, when (but in no event after the Closing Date)
Escrow Agent (i) is prepared to issue the Title Policies to be issued to
Purchaser as contemplated in this Agreement, and (ii) holds for the account of
Seller and Purchaser all items and funds (if any) to be delivered to Seller and
Purchaser through the Escrow, after payment of costs, expenses, disbursements
and prorations chargeable to Seller or Purchaser pursuant to the provisions of
this Agreement.

5.5 Prorations.

5.5.1 Taxes. All non-delinquent real estate and personal property general and
special taxes and assessments for the Property for the current assessment year
of the applicable taxing authority in which the Closing Date occurs shall be
prorated as of the Closing Date. If the exact amount of taxes is not known at
Closing, the proration will be based on an amount equal to 105% of the prior
assessment year’s taxes and shall be adjusted once actual figures become
available after Closing, as part of the Final Closing Adjustment. It is
understood that any supplemental property tax bill issued as a result of the
sale of the Property pursuant to the provisions of this Agreement shall be borne
by Purchaser. Notwithstanding anything to the contrary in this Agreement,
(i) Seller shall retain all right, title and interest in and to any and all
property tax (both real property and personal property) refunds and claims for
refunds for any period prior to the Closing Date, and (ii) Seller is responsible
for all taxes due and payable for the Property prior to the Closing Date. Seller
shall have the right to continue and control any contest of any taxes or
assessments for the Property due and payable during all tax years prior to the
tax year in which Closing occurs. Purchaser shall have the right to control any
contest of any taxes or assessments for the Property due and payable during the
current tax year in which Closing occurs, if any, and all tax years thereafter.
Seller and Purchaser shall each reasonably cooperate with the other in
connection with such contests. Purchaser and Seller shall be equally responsible
for, and shall pay equal portions of, all sales, use and other transfer taxes
imposed in connection with the sale and transfer of the Personal Property and
the Intangible Property (i.e., Purchaser shall pay 50% and Seller shall pay
50%).

 

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5.5.2 Utility Service. To the extent commercially reasonable and practicable,
Seller and Purchaser shall obtain billings and meter readings as of the Business
Day preceding the Closing Date to aid in the proration of charges for gas,
electricity and other utility services which are not the direct responsibility
of Tenants. If such billings or meter readings as of the Business Day preceding
the Closing Date are obtained, adjustments for any costs, expenses, charges or
fees shown thereon shall be made in accordance with such billings or meter
readings. If such billings or meter readings as of the Business Day preceding
the Closing Date are not available for a utility service, the charges therefor
shall be adjusted at the Closing on the basis of the per diem charges for the
most recent prior period for which bills were issued and shall be further
adjusted at the Final Closing Adjustment on the basis of the actual bills for
the period in which the Closing takes place. Seller shall receive a credit at
Closing for the Utility Deposits, if any, that are transferred or made available
to Purchaser and that are held by applicable utility companies for the account
of Seller in respect of services provided to the Property. Purchaser shall
arrange for placing all utility services and bills in its own name as of the
Closing Date.

5.5.3 Security Deposits. Purchaser shall be credited with and Seller shall be
charged with an amount equal to all cash Security Deposits being held by Seller,
Seller’s managing agent or any other Person under the Leases. Seller shall be
entitled to retain all Security Deposits or other such credits due Tenants for
which Purchaser receives credit and Seller are charged pursuant to this
Section 5.5.3. Seller agrees not to apply any Security Deposits held as of the
Effective Date under Leases on account of arrearages existing as of the Closing
Date. Seller shall use commercially reasonable efforts to cause the issuer of
any letters of credit or other instruments held by Seller in lieu of a cash
Security Deposit to transfer such letters of credit or other instruments to the
Purchaser at or promptly after Closing.

5.5.4 Intentionally Omitted.

5.5.5 Miscellaneous Permits and Taxes. Except as covered by the terms of
Section 5.5.1 above, all water and sewer charges, taxes (other than ad valorem
property taxes), including license taxes or fees for licenses which are
assignable or transferable without added cost and have a value which will
survive Closing, and any unpaid taxes payable in arrears, shall be prorated as
of the Closing Date. Seller will be credited for that portion of taxes and fees
paid by Seller allocable to the period after the Closing Date.

5.5.6 Assumed Contracts. All payments and receipts, as applicable, under the
Assumed Contracts shall be prorated between Purchaser and Seller as of the
Closing Date. Seller shall receive a credit for all prepayments and deposits
thereunder.

5.5.7 Leasing Commissions, Tenant Improvements, Rental Abatements.

(a) Each Seller shall pay prior to the Closing Date, or shall give Purchaser a
credit at Closing, for (i) Leasing Commissions and TI Obligations (but not free
rent) to which such Seller has committed under the terms of a Lease or a Lease
modification, extension or renewal entered into prior to June 27, 2011; and
(ii) Leasing Commissions, TI Obligations, free rent and other concessions (all
of the foregoing, collectively, “Lease Expenses”) due in connection with a Lease
or a Lease modification, extension or renewal that was executed on or after the
Effective Date and with respect to which the Purchaser’s approval was required
by the terms of this Agreement but was not obtained pursuant to the terms of
this Agreement (such Lease being a “Non-Approved Lease”).

 

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(b) Purchaser shall pay for (i) Lease Expenses to which such Seller has
committed under the terms of a Lease or a Lease modification, extension or
renewal entered into on or after June 27, 2011 but prior to the Effective Date
(all of which are listed on Exhibit “D-4”), and (ii) Lease Expenses with respect
to any Lease or Lease modification, extension or renewal entered into on or
after the Effective Date (other than Non-Approved Leases).

(c) Effective as of the Closing Date, Purchaser shall honor and assume all
covenants and obligations to be performed by each Seller as landlord under the
Leases, including any Lease Expenses. For the avoidance of doubt, the foregoing
shall not be deemed to affect any rights of Purchaser hereunder resulting by
reason of a breach by any Seller of its representations and warranties in
Section 7.2.4(g) above. Purchaser shall reimburse the Sellers at Closing for any
payments made prior to Closing by any Seller toward Lease Expenses that
Purchaser is obligated to pay under this Section 5.5.7.

5.5.8 Other Income. All income not specifically addressed in this Section 5.5
and derived by Seller from the Property, to the extent such income accrues
before the Closing Date, shall be paid to Seller. All income not specifically
addressed in this Section 5.5 and derived by Seller from the Property accruing
or relating to the period on and after the Closing Date shall be paid to
Purchaser.

5.5.9 Other Expenses. All expenses and obligations not otherwise specified in
this Section 5.5, incurred in the ownership or operation of the Property and
constituting an assumed liability or arising under any agreement or other matter
included in the Property to be conveyed hereunder shall be prorated between
Seller and Purchaser as of the Closing Date.

5.5.10 Rent. Rent shall be prorated at the Closing in accordance with the
following provisions:

(a) Basic Rent. Subject to Section 5.5.10(c), Basic Rent shall be prorated
between Seller and Purchaser as of the Closing Date based on the actual number
of days in the month during which the Closing Date occurs. Seller shall be
entitled to all Basic Rent which accrues before the Closing Date and Purchaser
shall be entitled to all Basic Rent which accrues on and after the Closing Date.

(b) Additional Rent. Subject to Section 5.5.10(c), monthly or other payments
made by Tenants in advance based upon projected or estimated Additional Rent
shall be prorated between Seller and Purchaser as of the Closing Date based on
the actual Additional Rent collected as of the Closing and the actual number of
days in the monthly or other period for which the advance payment is made. Such
proration shall be made separately for each Tenant which is obligated to pay
Additional Rent on the basis of the fiscal year set forth in the Tenant’s Lease
for the determination and payment of Additional Rent. Each payment of Additional
Rent that is prorated pursuant to this Section 5.5.10(b), and the applicable
Tenant’s payments of Additional Rent made prior to or after such prorated
payment for the same calendar year or other fiscal period during which a
year-end reconciliation of Additional Rent is required by the applicable Lease,
shall be adjusted as part of the Final Closing Adjustment as provided below in
Section 5.5.12.

 

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(c) Delinquent Rent. Delinquent Rent (including delinquent Additional Rent)
shall not be prorated at Closing and shall be paid by Purchaser to Seller if, as
and when actually collected by Purchaser after the Closing, it being understood
and agreed that Purchaser shall use commercially reasonable efforts to collect
Delinquent Rent on behalf of Seller. Purchaser hereby agrees that Seller or its
agents may attempt to collect Delinquent Rent at Seller’s expense, including by
commencing litigation to collect such Delinquent Rent, but Seller agrees that it
shall not initiate any action that would terminate a Tenant’s Lease or affect a
Tenant’s right to occupy the premises leased under its Lease. Rent collected
after the Closing Date shall be applied first to Rent currently due, then to
Delinquent Rent. Non-delinquent rent for the period after Closing collected by
Seller shall be promptly remitted to Purchaser. Unpaid and delinquent rent
collected by Seller or Purchaser after the date of Closing shall be delivered as
follows: (i) if Seller collects any unpaid or delinquent rent for the Property,
Seller shall, within fifteen (15) days after the receipt thereof, deliver to
Purchaser any such rent which Purchaser is entitled to hereunder relating to the
date of Closing and any period thereafter, and (ii) if Purchaser collects any
unpaid or delinquent rent from the Property, Purchaser shall, within fifteen
(15) days after the receipt thereof, deliver to Seller any such rent which
Seller is entitled to hereunder relating to the period prior to the date of
Closing. Anything herein to the contrary notwithstanding, Seller and Purchaser
agree that all rents received by Seller or Purchaser after the date of Closing
shall be applied first to current rentals and then to delinquent rentals, if
any, in inverse order of maturity.

5.5.11 Reserved.

5.5.12 Final Closing Adjustment. No later than one (1) year following the
Closing Date, Seller and Purchaser shall make a final adjustment to the
prorations made pursuant to this Section 5 (the “Final Closing Adjustment”). The
Final Closing Adjustment shall be made in the following manner:

(a) General. All adjustments or prorations which could not be determined at the
Closing because of the lack of actual statements, bills or invoices for the
current period, the year-end reconciliation of Additional Rent, or any other
reason, shall be made as a part of the Final Closing Adjustment. Any net
adjustment in favor of Purchaser shall be paid in cash by Seller to Purchaser no
later than thirty (30) days after the Final Closing Adjustment. Any net
adjustment in favor of Seller shall be paid in cash by Purchaser to Seller no
later than thirty (30) days after the Final Closing Adjustment. Without limiting
the foregoing, the parties shall correct any manifest error in the prorations
and adjustments made at Closing promptly after such error is discovered.

(b) Additional Rent Adjustment. Seller and Purchaser shall prorate the actual
amount of Additional Rent paid by each Tenant at the Property for such Tenant’s
applicable fiscal year (“Tenant’s Fiscal Year”) as follows:

(i) Seller shall be entitled to the portion of the actual amount of Additional
Rent paid by the Tenant equal to the product obtained by multiplying such amount
by a fraction, the numerator of which is the number of days in the Tenant’s
Fiscal Year preceding the Closing Date and the denominator of which is the total
number of days in the Tenant’s Fiscal Year; and

 

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(ii) Purchaser shall be entitled to the balance of the Additional Rent paid by
the Tenant.

(iii) If the sum of all interim payments of Additional Rent collected and
retained by Seller from the Tenant for the Tenant’s Fiscal Year (reduced by the
pro-rated portion of the interim payment on account of Additional Rent paid for
the month or quarter in which the Closing Date occurs for which Purchaser is
given credit pursuant to Section 5.5.10(b)) exceeds the amount of such
Additional Rent to which Seller is entitled with respect to such Tenant pursuant
to subparagraph (i) above, Seller shall pay such excess to Purchaser. If the sum
of all interim payments of such Additional Rent collected and retained by
Purchaser from each Tenant for the Tenant’s Fiscal Year (increased by a
pro-rated portion of the interim payment on account of Additional Rent paid for
the month or quarter in which the Closing Date occurs for which Purchaser is
given credit pursuant to Section 5.5.10(b)) exceeds the amount of Additional
Rent to which Purchaser is entitled with respect to such Tenant pursuant to
subparagraph (ii) above, Purchaser shall pay the excess to Seller. The
adjustment of interim payments received and actual Additional Rent paid shall be
made separately for each Tenant and for each type of Additional Rent.

(c) No Further Adjustments. Except for: (i) additional or supplemental real
estate taxes, real estate tax credits or rebates, or other adjustments to real
estate taxes due to back assessments, corrections to previous tax bills or real
estate tax appeals or contests, (ii) any item of Additional Rent which may be
contested by a Tenant or (iii) manifest errors, the Final Closing Adjustment
shall be conclusive and binding upon Seller and Purchaser, and Seller and
Purchaser hereby waive any right to contest after the Final Closing Adjustment
any prorations, apportionments or adjustments to be made pursuant to this
Section 5.

5.5.13 General Provisions. Except as otherwise expressly provided in this
Agreement, all apportionments and adjustments shall be made in accordance with
generally accepted accounting principles. The computation of the adjustments
shall be jointly prepared by Seller and Purchaser. In the event any prorations
or apportionments made under this Section 5.5 shall prove to be incorrect for
any reason, then any party shall be entitled to an adjustment to correct the
same in accordance with the remaining terms of this Section 5.5.13. For
proration purposes, the day that falls on the Closing Date shall be charged to
Purchaser.

5.5.14 Survival. The provisions of this Section 5.5 shall survive Closing
indefinitely.

5.6 Closing Costs. Purchaser shall bear the cost of (i) the title searches and
preparation of the title commitment prepared by the Title Company, and the
premium for the Title Policy and any and all endorsements to the Title Policy
requested by Purchaser or its lender; (ii) the Survey for the Property;
(iii) one-half (1/2) of the documentary transfer taxes and the recording fee for
the Deed; (iv) one-half (1/2) of all escrow and closing fees relating to the
sale of the Property; (v) all escrow and closing fees relating to Purchaser’s
financing; (vi) any

 

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mortgage taxes or recording fees for any mortgages securing Purchaser’s
financing; and (vii) the fees and charges of third parties in connection with
the Environmental Reports (which shall be credited to Seller to the extent that
Seller has already paid such third parties). Seller shall bear the cost of
(i) any commission due to Broker (as defined in Article X); (ii) one-half
(1/2) of the documentary transfer taxes and the recording fee for the Deed;
(iii) and one-half (1/2) of all escrow and closing fees relating to the sale of
the Property (but not in connection with any financing by Purchaser, which shall
be paid solely by Purchaser); and (iv) the costs of the title commitment
prepared by the Seller’s Title Company. Each party shall pay its own attorneys’
fees pertaining to the sale of the Property. All other costs pertaining to the
sale of the Property shall be allocated as is customary for real estate
transactions where the Property is located. The parties agree to cooperate in
all reasonable respects to minimize all such costs, premiums, taxes, and fees.

5.7 Distribution of Funds and Documents Following Closing. The conditions to the
closing of Escrow shall be Escrow Agent’s receipt of funds and documents
described in Sections 5.2 and 5.3 above, and written authorization from Seller
and Purchaser to proceed with the Closing in accordance with the Closing
Instructions. Upon satisfaction of the above conditions, Escrow Agent shall
distribute the documents described in Sections 5.2 and 5.3 above in accordance
with the Closing Instructions and shall take all other actions authorized by the
Escrow Agreement upon closing.

5.8 Possession. Purchaser shall be entitled to sole possession of the Property
on the Closing Date, subject to the Permitted Exceptions.

VI.

ADDITIONAL COVENANTS AND INDEMNITIES

6.1 Seller Covenants. Seller covenants to Purchaser as follows:

6.1.1 Continued Care and Maintenance. Prior to Closing, Seller agrees: (i) to
continue its care, maintenance and operation of the Property on substantially
the same standards as employed by Seller to date; (ii) not to terminate, change,
amend or modify materially any Assumed Contract; (iii) not to make any
substantial alterations or changes to the Property, other than ordinary and
necessary maintenance and repairs, without Purchaser’s prior approval (provided,
however, Seller may make any alterations or changes to the Property that are
required by any Lease or by applicable law without Purchaser’s prior approval);
and (iv) to maintain in effect all policies of casualty and liability insurance
or similar policies of insurance, with no less than the limits of coverage now
carried. Nothing contained herein shall prevent Seller from acting to prevent
loss of life, personal injury or property damage in emergency situations, or
prevent Seller from performing any act which may be required by any Lease,
applicable law, rule or governmental regulations, provided that Seller shall
notify Purchaser of any emergency situations as soon as reasonably possible
thereafter.

6.1.2 Leasing of the Property. Prior to the execution of any new Leases for the
Property or the renewal, modification or extension of any existing Leases for
the Property, Seller shall give notice of its intent to do so to Purchaser. Such
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space involved, the length of the lease term, the proposed financial terms
thereof (including any rent abatement periods or other concessions), the amount
of any Leasing Commission, any TI Obligations, and a copy of the form of Lease,
Lease amendment or other document to be executed. Purchaser shall have five
(5) days after receipt of such notice to notify Seller of its objections, if
any, to any such proposed Lease or extension or renewal of any existing Lease.
Seller shall not enter into any new Lease or any modification, extension or
renewal of any existing Lease without Purchaser’s prior written consent, which
consent may be granted or withheld in Purchaser’s sole discretion. Purchaser’s
failure to object to a proposed Lease or the modification, extension or renewal
of any existing Lease within the five (5)-day period described above shall be
deemed an approval by Purchaser. Notwithstanding the foregoing (a) Purchaser’s
consent shall not be required for new Leases and renewals or extensions of
existing Leases evidencing or reflecting the exercise by Tenants of any rights
or options, the terms of which are fixed or determinable as of June 27, 2011,
under existing Leases; and (b) Purchaser acknowledges and agrees that the Leases
and the extensions, modifications or renewals of Leases (if any) listed on
Exhibit “D-1” have been approved by Purchaser. Nothing in this Agreement shall
be interpreted to require Seller to lease any additional space in its Property
as a condition to the sale of the Property, and Seller shall not have any
obligation to enter into or to seek any Leases for the Property prior to the
Closing Date.

6.1.3 Tenant Estoppel Certificates. Prior to Closing, Seller shall use
commercially reasonable efforts to obtain and deliver to Purchaser from the
Tenant under each Lease of Seller’s Property an estoppel certificate in
substantially the form attached hereto as Exhibit “T-1” or, if any Lease
requires a different form, in the form required by such Lease, all dated no more
than thirty (30) days prior to the Closing Date (each, a “Tenant Estoppel
Certificate”). The statements made by the tenants in such Tenant Estoppel
Certificates shall not disclose any material defaults under such Lease and shall
not disclose any information that is materially inconsistent with the
information disclosed with respect to such Lease on Exhibits “D-1” through
“D-3.” Purchaser shall have the right to approve the form of Estoppel
Certificate to be delivered to a tenant for signature prior to such delivery.
Seller shall not be in default for failure to obtain any Tenant Estoppel
Certificates. If the Property includes a Lease under which the Tenant is the
GSA, Seller shall use commercially reasonable efforts to obtain a novation
agreement with respect to such Lease before Closing and, if such novation
agreement is not obtained as of the Closing, Seller shall continue to use
commercially reasonable efforts to obtain such novation agreement as soon as is
practicable after Closing. With respect to any such Lease to a GSA Tenant, the
term “Tenant Estoppel Certificate” as used herein shall mean a statement of
lease in form reasonably satisfactory to the GSA Tenant thereunder. The
provisions of this Section 6.1.3 pertaining to novation agreements shall
expressly survive the Closing.

6.1.4 Subordination and Attornment Agreements. If Purchaser’s lender requests
that a Tenant agree in writing to subordinate its Lease to a mortgage lien
securing Purchaser’s acquisition financing, or to attorn to such lender or its
designee or successor in title in connection with the exercise of such lender’s
remedies under its acquisition financing lien, then Seller shall do the
following, in each case only upon written request by the Purchaser: (a) Seller
shall request in writing that the applicable Tenant execute a subordination
and/or attornment agreement in favor of the Purchaser’s lender, in a form
provided by Purchaser’s lender; (b) Seller shall follow up with the applicable
Tenant in writing to determine whether such Tenant will comply with the request
made in the foregoing clause (a); and (c) Seller shall take reasonable

 

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steps requested by Purchaser to enforce the obligations of such Tenant under its
Lease (to the extent such obligations are referenced in the Purchaser’s request)
with respect to the execution of the agreement provided to such Tenant pursuant
to the foregoing clause (a), subject to any conditions in such Tenant’s lease,
including that the requested agreement contain non-disturbance language in favor
of such Tenant. For the avoidance of doubt, it shall not be a condition to
Purchaser’s obligation to proceed with the Closing that the Purchaser or its
lender obtain any one or more of the subordination or attornment agreements
requested from Tenants pursuant to this Section 6.1.4, and Seller shall not have
any obligation to provide any certificate, agreement or other undertaking in
lieu or a subordination or attornment agreement not obtained from a Tenant, or
to take any action with respect to such agreements except as expressly set forth
in this Section 6.1.4.

6.1.5 Covenants, Conditions and Restrictions of Record. If the Purchaser or the
Purchaser’s lender requests that a third party execute a document certifying as
to the status of the rights, obligations and/or performance of Seller, or of
such third party, under the Covenants, Conditions Restrictions, Easements or
other matters of record specifically identified on Exhibit U, Seller shall do
the following, in each case only upon request by the Purchaser: (a) Seller shall
request in writing that the applicable third party execute such certificate, in
a form provided by Purchaser or Purchaser’s Lender; (b) Seller shall follow up
with the applicable third party in writing to determine whether such third party
will comply with the request made in the foregoing clause (a); and (c) Seller
shall take reasonable steps requested by Purchaser to enforce the obligations of
such third party under any covenants, conditions, restrictions, easements or
other matters of record (to the extent such obligations are referenced in the
Purchaser’s request) with respect to the execution of the certificate provided
to such third party pursuant to the foregoing clause (a), subject to any
conditions in the applicable documents of record. Notwithstanding the foregoing,
in no event shall Seller be obligated to request a certificate from any owner of
a single-family lot, a residential unit in a condominium or cooperative regime,
or any other owner of a residential dwelling. For the avoidance of doubt, it
shall not be a condition to Purchaser’s obligation to proceed with the Closing
that the Purchaser obtain any one or more of the certificates requested from
third parties pursuant to this Section 6.1.5, and Seller shall not have any
obligation to provide any certificate regarding the matters set forth in this
Section 6.1.5, or to take any other action with respect to such certificates
except as expressly set forth in this Section 6.1.5.

VII.

REPRESENTATIONS AND WARRANTIES

7.1 Purchaser’s Representations and Warranties. Purchaser represents and
warrants to Seller that as of the date hereof and as of the Closing Date:

7.1.1 Organization and Standing. Purchaser is a limited liability company duly
organized, validly existing, and in good standing under the laws of the State of
Delaware, is, or on the Closing Date will be, duly qualified to do business in
each state where such qualification is necessary with respect to all of the
Property, and has the full power and authority to enter into this Agreement and
to carry out the transactions contemplated hereby to be carried out by it.

 

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7.1.2 Due Authorization. The performance of this Agreement and the transactions
contemplated hereunder by Purchaser have been duly authorized by all necessary
action on the part of Purchaser, and this Agreement is binding on and
enforceable against Purchaser in accordance with its terms. Purchaser shall, on
or prior to the Closing Date, furnish to Seller certified resolutions evidencing
that Purchaser has been duly authorized to enter into and perform this Agreement
and the transactions contemplated hereunder. No further consent of any
shareholder, creditor, board of directors, governmental authority or other party
to such execution, delivery and performance hereunder is required. The person(s)
signing this Agreement, and any document pursuant hereto on behalf of Purchaser,
has full power and authority to bind Purchaser.

7.1.3 Lack of Conflict. Neither the execution of this Agreement nor the
consummation of the transactions contemplated hereby will violate any
restriction, court order, judgment, law, regulation, charter, bylaw, instrument
or agreement to which Purchaser is subject.

7.1.4 Solvency/Bankruptcy. Purchaser has not (i) made any general assignment for
the benefit of creditors, (ii) filed any voluntary petition in bankruptcy or
suffered the filing of an involuntary petition in bankruptcy by Purchaser’s
creditors, (iii) suffered the appointment of a receiver to take possession of
all, or substantially all, of Purchaser’s assets, (iv) suffered the attachment
or other judicial seizure of all, or substantially all, of Purchaser’s assets,
(v) admitted in writing its inability to pay its debts as they come due, or
(vi) made any offer of settlement, extension or compromise to its creditors
generally. Furthermore, Purchaser has not taken against it any such actions.

7.1.5 ERISA. Purchaser does not hold the assets of any employee benefit plan
within the meaning of 29 CFR 2501.3-101(a)(2).

7.2 Sellers’ Representations and Warranties. Seller represents and warrants to
Purchaser as follows:

7.2.1 Organization and Standing. Seller is (i) a limited liability company,
(ii) duly organized under the laws of the Commonwealth of Virginia, is validly
existing, and in good standing under the laws of the Commonwealth of Virginia,
(iii) qualified or registered to do business in the Commonwealth of Virginia,
and (iv) has the full power and authority to enter into this Agreement and to
carry out the transactions contemplated hereby to be carried out by it.

7.2.2 Due Authorization. (a) the performance of this Agreement and the
transactions contemplated hereunder by Seller have been duly authorized by all
necessary action on the part of Seller, and this Agreement is binding on and
enforceable against Seller in accordance with its terms; and (b) no further
consent of any member, manager, creditor, governmental authority or other party
to such execution, delivery and performance hereunder is required.

 

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7.2.3 Representations and Warranties Regarding Legal Matters:

(a) Neither the execution of this Agreement nor the consummation of the
transactions contemplated herein will itself cause or constitute a violation of
any court order, judgment, law, regulation, charter, bylaw or operating
agreement to which Seller is subject.

(b) Seller is not a foreign seller as defined in the “Foreign Investment in Real
Property Tax Act.”

(c) Neither Seller nor any general partner or managing member of Seller has
(i) made any general assignment for the benefit of creditors, (ii) filed any
voluntary petition in bankruptcy or suffered the filing of an involuntary
petition in bankruptcy by Seller’s or such general partner’s or managing
member’s creditors, (iii) suffered the appointment of a receiver to take
possession of all, or substantially all, of Seller’s or such general partner’s
or managing member’s assets, or (iv) suffered the attachment or other judicial
seizure of all, or substantially all, of Seller’s or such general partner’s or
managing member’s assets.

7.2.4 Representations and Warranties Regarding the Property:

(a) Neither the execution of this Agreement nor the consummation of the
transactions contemplated herein will itself cause or constitute a violation of
any restriction, court order, judgment, law, regulation, instrument, or
agreement to which the Property (or any portion thereof) are subject.

(b) Except as listed on Exhibit “M” attached hereto, to Seller’s actual
knowledge, there are no demands, complaints, actions, suits, arbitrations,
governmental investigations or other proceedings pending or threatened against
or affecting Seller and the Property or any portion thereof (any of the
foregoing, a “Proceeding”) and Seller has not received written notice of any
such Proceeding.

(c) To Seller’s actual knowledge, Seller has not received written notice of any
material default in respect of its obligations under any of the Assumed
Contracts or the Leases.

(d) To Seller’s actual knowledge, Seller holds good title to, and the entire
right, title, and interest in and to, the Personal Property owned by it, free
and clear of any and all Liens and Encumbrances other that Permitted Exceptions.

(e) To Seller’s actual knowledge, Seller has delivered to Purchaser or made
available as part of the Due Diligence Materials true, correct, and complete (to
the extent in Seller’s possession) copies of the Due Diligence Materials;
provided, however, that Seller is not providing any representation or warranty
as to the accuracy of the information or materials provided or prepared by a
third party.

(f) Exhibit “D-1” contains a true, correct and complete list of all Leases in
existence on the Effective Date for the Property, including the name of each
Tenant, the date of each Tenant’s Lease and all amendments, if any, thereto, the
expiration date of each Lease, and the amount of any Security Deposit paid by
the Tenant under each Lease. The copies

 

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of such Leases provided to Purchaser by Seller are true, correct and complete
copies of such Leases, including all amendments thereto. To Seller’s knowledge,
there are no Leases or other tenancies for any space in the Property as of the
Effective Date other than those set forth on Exhibit “D-1.” There are no letters
of credit or other similar financial instruments held in lieu of Security
Deposits under any of the Leases, except as set forth on Exhibit D-1. Seller
does not warrant or represent that any particular Lease will be in effect on the
Closing Date, provided that Seller agrees to provide prompt written notice to
Purchaser if any such Lease is no longer in effect prior to the Closing Date.

(g) Except as set forth on Exhibit “D-2,” there are no TI Obligations, rent
abatements or other concessions under any Lease applicable to the Property that
are not fully performed and paid for, to the extent such performance or payment
is currently due.

(h) To Seller’s knowledge, as of the Effective Date there do not exist any
agreements pursuant to which Seller will or may be required to pay a leasing or
brokerage commission (a “Leasing Commission”) with respect to space covered by
the Leases, or as to any other space in the Property, other than the agreements
listed on Exhibit “D-3” and the brokerage agreement pursuant to which Cassidy
Turley provides leasing services for the Property, which brokerage agreement
will be terminated effective as of the Closing Date. Except as set forth on
Exhibit “D-3,” no Leasing Commissions are either due as of the Closing Date, or
shall become payable after the Closing Date with respect to any portion of the
Property, and none will be due as of Closing or shall become payable after the
Closing Date, whether by reason of the exercise by any Tenant on or before the
Effective Date of any expansion, renewal or extension option, or otherwise.

(i) To Seller’s actual knowledge, the Environmental Reports include all of the
phase I and phase II environmental reports related to the Property and in the
possession or control of Seller. Seller has not received a written notice from
any governmental authority in which it is alleged that the Property are not in
compliance with Environmental Requirements, other than such notices as have been
provided to the Purchaser.

(j) Except as listed on Exhibit “M” attached hereto, Seller has not received
written notice (a “Violation Notice”) from any government agency or any employee
or official thereof alleging that the construction of the Property or the
operation or use of the same fails to comply with any Legal Requirement, or that
any investigation has been commenced or is contemplated respecting any such
possible failure of compliance, and Seller and has no actual knowledge of any
such failure of compliance.

(k) As of the Closing Date, no Contracts will remain in effect other than
Assumed Contracts.

7.3 Representations and Warranties Deemed Modified. If the Closing occurs:
(a) each of the representations and warranties made by Purchaser herein shall be
deemed modified if and to the extent necessary to reflect and be consistent with
any facts or circumstances of which Seller has actual knowledge as of the
Closing Date; and (b) each of the representations and warranties made by Seller
herein shall be deemed modified if and to the extent necessary to reflect and be
consistent with any facts or circumstances of which Purchaser has actual
knowledge as of the Closing Date.

 

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7.4 Seller’s Knowledge. Wherever the phrase “to Seller’s actual knowledge” or
any similar phrase stating or implying a limitation on the basis of knowledge
appears in this Agreement in respect of Seller, such phrase shall mean only the
present actual knowledge of Michael Daugard of WRIT, without any duty of
inquiry, any imputation of the knowledge of another, or independent
investigation of the relevant matter by any individual(s), and without any
personal liability. Wherever the phrase “in Seller’s possession”, “in the
possession of Seller” or similar phrase appears in this Agreement, such phrase
shall be deemed to mean only to the extent the material or other item referred
to by such phrase is located at the Property or in the Seller’s offices in
Rockville, Maryland.

VIII.

CONDITIONS PRECEDENT TO CLOSING

8.1 Conditions to Seller’s Obligations. The obligation of Seller to close the
transaction contemplated hereunder shall be subject to the satisfaction of each
of the following conditions precedent:

8.1.1 Each of Purchaser’s representations and warranties set forth in this
Agreement shall be correct in all material respects as of the Closing Date as if
made on and as of such date.

8.1.2 Purchaser shall have performed all of its obligations under this Agreement
required at or prior to Closing, in all material respects.

The foregoing conditions contained in this Section 8.1 are intended solely for
the benefit of Seller. Seller shall at all times have the right to waive any
condition precedent, provided that such waiver is in writing and delivered to
Purchaser and Escrow Agent.

8.2 Conditions to Purchaser’s Obligations. The obligations of Purchaser to close
the transaction contemplated hereunder shall be subject to the satisfaction of
each of the following conditions precedent, and Purchaser shall have no right to
terminate this Agreement or delay the Closing for any other reason:

8.2.1 Seller’s representations and warranties set forth in this Agreement shall
be correct in all material respects as of the Closing Date as if made on and as
of such date, except as would not, individually or in the aggregate, have a
Material Adverse Effect;

8.2.2 Seller shall have deposited the documents and instruments specifically
listed in Section 5.2 hereof with Escrow Agent on or before the Closing Date;

8.2.3 Seller shall have performed all of Seller’s obligations under this
Agreement required to be performed at or prior to Closing (other than those
listed in Section 8.2.2), except as would not, individually or in the aggregate,
have a Material Adverse Effect.

 

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8.2.4 The Title Company shall be prepared to issue the Title Policies to
Purchaser.

8.2.5 Seller shall have delivered to Purchaser Tenant Estoppel Certificates from
sufficient Tenants so that there shall have been obtained, in the aggregate,
Tenant Estoppel Certificates covering not less than 75% of the Leased Space that
is not leased to the GSA or to any other instrumentality of the U.S. federal
government (for example, if the total Leased Space were 125 square feet, and if
the GSA and other U.S. federal government tenants leased 25 square feet of the
Leased Space, the required threshold pursuant to this Section 8.2.5 would be 75
square feet, or 75% of 100 square feet). Notwithstanding the foregoing, with
respect to any Minor Lease, Seller shall have the right (but shall not be
obligated to) substitute an estoppel certificate executed by Seller (a “Seller
Estoppel Certificate”) containing the information set forth in the form of the
Seller’s Estoppel Certificate attached hereto as Exhibit “T-2” with respect to
such Minor Lease, and such estoppel certificate shall have the same effect under
this Section 8.2.5 as an estoppel certificate executed by the Tenant; provided,
however, that Seller Estoppel Certificates shall not be permitted to cover
either (x) a Lease of more than 30,000 square feet or (y) more than 10% of the
Leased Space that is not leased to the GSA or to any other instrumentality of
the U.S. federal government. If the applicable Tenant shall thereafter provide a
Tenant Estoppel Certificate to Purchaser, then Seller’s Estoppel Certificate
shall thereupon be null and void and of no further force or effect. For purposes
of this Section 8.2.5 only, the term “Leased Space” shall not include any space
leased by the GSA or another instrumentality of the U.S. federal government.

The foregoing conditions contained in this Section 8.2 are intended solely for
the benefit of Purchaser. Purchaser shall at all times have the right to waive
any condition precedent, provided that such waiver is in writing and delivered
to Seller and Escrow Agent.

8.3 Failure of Conditions to Closing. Seller and Purchaser shall use
commercially reasonable efforts to satisfy the conditions to Closing set forth
herein. If the Closing does not occur because of the failure of one of the
conditions set forth in Section 8.1, Seller shall have the remedies set forth in
Section 9.1. If the Closing does not occur because of the failure of one of the
Conditions set forth in Section 8.2, the Purchaser shall have the remedies set
forth in Section 9.2.

IX.

REMEDIES FOR PRE-CLOSING AND POST-CLOSING DEFAULTS; LIQUIDATED DAMAGES

9.1 Default by Purchaser Prior to Closing. If (a) any of the representations or
warranties made by Purchaser herein is inaccurate as of the Closing Date in any
material respect, (b) after all of the conditions to Purchaser’s obligations to
proceed with the Closing have been satisfied or, in lieu thereof, waived by
Purchaser, Purchaser fails to deposit the Closing Payment and the documents and
instruments specifically listed in Section 5.3 hereof with Escrow Agent on the
Closing Date, or (c) Purchaser fails or refuses to perform any of Purchaser’s
other material covenants or agreements to be performed by Purchaser under this
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before Closing (any of the foregoing circumstances being referred to herein as a
“Purchaser Default”), then Seller’s sole remedy shall be to terminate this
Agreement, whereupon the Earnest Money Deposit shall be delivered to Seller and
neither party shall have any further rights or obligations hereunder, each to
the other, except for any obligations or rights that expressly survive
termination of this Agreement, and the right of Seller to collect such
liquidated damages from Purchaser and Escrow Agent. If the Closing does not
occur because of a Purchaser Default, Purchaser and Seller agree that it would
be impractical and extremely difficult to estimate the damages which Seller may
suffer. Therefore, Purchaser and Seller hereby agree that, in the event of a
Purchaser Default, in addition to attorneys’ fees and costs pursuant to
Section 12.2 hereof, a reasonable estimate of the total damages that Seller
would suffer from a Purchaser Default is and shall be an amount equal to the
Earnest Money Deposit. Said amount shall be the full, agreed and liquidated
damages for the Purchaser Default, and the recovery of such amount, together
with attorneys’ fees and costs pursuant to Section 12.2 hereof, shall be the
Seller’s sole remedy at law or in equity as a result of a Purchaser Default. All
of the claims to damages or other remedies as a result of a Purchaser Default
are expressly waived by Seller.

 

  /s/ G.F.M.       /S/ H.H.   SELLERS’ INITIALS       PURCHASER’S INITIALS

9.2 Default by Seller Prior to Closing .

9.2.1 If (a) the condition to Closing set forth in Section 8.2.1 is not
satisfied as of the Closing Date, (b) after all of the conditions to Seller’s
obligations to proceed with the Closing have been satisfied or, in lieu thereof,
waived by Seller, Seller fails to deposit the documents and instruments
specifically listed in Section 5.2 hereof with Escrow Agent on the Closing Date,
or (c) the condition to Closing set forth in Section 8.2.3 is not satisfied as
of the Closing Date, (any of the foregoing circumstances being referred to
herein as a “Seller Default”), then Purchaser’s sole remedy shall be: (i) solely
in the case of a Seller Default referred to in Clause (b) of this Section 9.2.1,
to pursue an action against Seller for specific performance, provided that such
action must be initiated within ninety (90) days following the date on which the
Closing should have occurred in accordance with this Agreement; or (ii) in the
case of Clause (a), (b) or (c) of this Section 9.2.1, to terminate this
Agreement as and when permitted pursuant to Section 9.2.3, and thereupon to
receive the Earnest Money Deposit and reimbursement from Sellers when and to the
extent provided below in Section 9.2.3. All other claims to damages or other
remedies in connection with a Seller Default are expressly waived by Purchaser.
The refund of the Earnest Money Deposit and the payment of the expenses as set
forth in Section 9.2.3 is not intended as a forfeiture or penalty, but is
intended to constitute liquidated damages to Purchaser.

9.2.2 Notwithstanding the foregoing or any other provision of this Agreement to
the contrary, if Purchaser would otherwise have the right to terminate this
Agreement because of a Seller Default, then Purchaser and (except as provided in
this Section 9.2.2 with respect to a Designated Seller Breach) Seller shall each
have the right to postpone the Closing Date in accordance with this
Section 9.2.2 (the “Delayed Closing Right”). If a Seller Default has occurred,
Purchaser shall deliver notice to Seller on or prior to the Closing Date (a
“Default Notice”), indicating whether or not Purchaser will exercise the Delayed
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Purchaser has not elected to exercise the Delayed Closing Right, Seller shall
have the right, by written notice to the Purchaser delivered within five
(5) Business Days after the intended Closing Date, to exercise the Delayed
Closing Right to cure any Seller Default (other than a Designated Seller
Breach). If either Seller or Purchaser elects to exercise the Delayed Closing
Right, then the following provisions shall apply: (a) the Closing Date shall be
postponed until a date that is not later than seventy-five (75) days after the
Closing Date, and (b) if Seller cures the Seller Default within such
seventy-five (75) days, Purchaser shall be obligated to purchase the Property
promptly after such cure is completed. As used herein, the term “Designated
Seller Breach” means an intentional beach by Seller of any of the following, in
each case if such breach (or, if more than one such breach occurs, all of such
breaches) has an Adverse Effect: (x) the obligation to deposit with Escrow Agent
the documents and instruments specifically listed in Section 5.2 hereof, on or
before the Closing Date; (y) the fourth (4th) sentence of Section 6.1.2; or
(z) the first sentence of Section 4.1.3 (if such breach is due to an Encumbrance
executed by Seller).

9.2.3 If neither Seller nor the Purchaser elect to exercise the Delayed Closing
Right to allow for the cure of a Seller Default as provided above in
Section 9.2.2, then the Purchaser shall be entitled to terminate this Agreement
in its entirety by written notice to Seller given on or before the date that is
fifteen (15) Business Days after the Closing Date. If the Closing Date is
postponed as to the Property as provided above in Section 9.2.2, but if the
Seller Default remains uncured at the end of the seventy-five (75) day period
set forth therein, then the Purchaser shall have the right to terminate this
Agreement, by written notice to Seller within five (5) Business Days after the
end of such seventy-five (75) day period. Upon the termination of this Agreement
by the Purchaser pursuant to this Section 9.2.3: (a) the Earnest Money Deposit
shall be returned to Purchaser; (b) Seller shall reimburse Purchaser for
third-party out-of-pocket costs and expenses actually incurred by Purchaser in
connection with the transaction contemplated by this Agreement, up to a maximum
reimbursement amount of One Hundred Thousand Dollars ($100,000); and (c) neither
party shall have any further rights or obligations hereunder, each to the other,
except any indemnification obligations, the rights of Seller and Purchaser that
survive as provided herein, except for the right of Purchaser to collect such
reimbursement from Seller by clause (b) of this sentence, and except for rights
or obligations relating to the Property or Property, if any, as to which this
Agreement remains in effect.

 

  /S/ G.F.M.       /s/ H.H.   SELLERS’ INITIALS       PURCHASER’S INITIALS

9.3 Adverse Effect; Material Adverse Effect.

9.3.1 For purposes of this Agreement, “Material Adverse Effect” means a material
adverse effect on the assets comprising the Property, the Purchaser’s title to
the Property after Closing, or the results of operations or financial condition
of the Property caused by any event, circumstance, development, condition,
occurrence, state of facts, change or effect, and in each case excluding the
impact of any event, circumstance, development, condition, occurrence, state of
facts, change or effect caused by Purchaser or any Person acting on Purchaser’s
behalf. For purposes of determining the existence of a Material Adverse Effect,
any single adverse effect, or combination of adverse effects, caused by one or
more events, circumstances, developments, conditions, occurrences, states of
fact, changes or effects (including, without

 

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limitation, Proceedings, Liens and Violation Notices) shall not be considered a
Material Adverse Effect unless and until the Liquidated Amount with respect to
such single adverse effect or combination of adverse effects exceeds two percent
(2%) of the Purchase Price.

9.3.2 For purposes of this Agreement, “Adverse Effect” means a material adverse
effect on the Property, the Purchaser’s title to the Property after Closing, or
the results of operations or financial condition of the Property caused by any
event, circumstance, development, condition, occurrence, state of facts, change
or effect, in each case excluding the impact of any event, circumstance,
development, condition, occurrence, state of facts, change or effect caused by
Purchaser or any Person acting on Purchaser’s behalf. For purposes of
determining the existence of an Adverse Effect, any single adverse effect, or
combination of adverse effects, caused by one or more events, circumstances,
developments, conditions, occurrences, states of fact, changes or effects
(including, without limitation, Proceedings, Liens and Violation Notices) shall
not be considered an Adverse Effect unless and until the Liquidated Amount with
respect to such single adverse effect or combination of adverse effects exceeds
two percent (2%) of the Property’s Purchase Price.

9.3.3 If it is necessary to determine the potential exposure, the cost to
Discharge or remediate, or the unpaid amount of any event, circumstance,
development, condition, occurrence, state of facts, change or effect
(collectively, the “Liquidated Amount”) in order to apply the provisions of
Section 9.3.1 or Section 9.3.2, Seller and Purchaser shall mutually agree on
such determination(s), each acting in good faith and in a commercially
reasonable manner.

9.4 Limitations of Purchaser’s Post-Closing Claims. Notwithstanding any
provision to the contrary herein or in any document or instrument (including any
deeds, bill of sale or assignments) executed by Seller and delivered to
Purchaser at or in connection with the Closing (collectively, “Closing
Documents”), Seller shall not have (and Seller is exculpated and released from)
any Claim or liability whatsoever with respect to, and Purchaser shall be
forever barred from making or bringing any Claims or asserting any liability
against Seller with respect to (i) any of the representations and warranties,
covenants or indemnities contained in this Agreement or in any Closing Document
made by Seller, unless and until (and only to the extent) that the aggregate
amount of all losses actually incurred by the Purchaser for a breach of the
representations and warranties, covenants and indemnities made and undertaken in
this Agreement by Seller exceeds the Threshold Amount; and (ii) any of the
representations and warranties, covenants and indemnities made and undertaken in
this Agreement by Seller, if and to the extent that the total liability of
Seller for breaches of any of the foregoing would otherwise exceed the Cap
Amount. As used herein: (i) “Threshold Amount” means an amount equal to One
Hundred Thousand Dollars ($100,000), and (ii) the “Cap Amount” means an amount
equal to 1.4% of the Purchase Price.

9.5 Other Limitations of Purchaser’s Claims. Purchaser shall not make any Claim
or bring any proceeding to enforce the liability of Seller unless Purchaser
believes, in good faith, that it would be entitled to recover all or a portion
of the alleged damages or other liability notwithstanding the limitations on
Seller’s liability set forth above in Section 9.4. In no event shall Seller be
liable for indirect, special, consequential or punitive damages of any kind, and
Purchaser shall be barred from and hereby waives any Claim for the same.

 

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9.6 Survival of Purchaser’s Claims. Except as otherwise specifically set forth
in this Agreement, the representations and warranties, covenants and indemnities
of Seller contained herein or in any Closing Document shall survive only until
the date that is nine (9) months after the Closing Date (the “Survival Date”).
Any permitted Claim that Purchaser may have at any time against Seller for
breach of any such representation, warranty, covenant or indemnity (other than a
representation, warranty, covenant or indemnity that survives indefinitely
pursuant to an express provision of this Agreement), whether known or unknown,
with respect to which a written notice providing specific details of the alleged
breach (a “Claim Notice”) has not been delivered to Seller on or prior to the
Survival Date, shall not be valid or effective and the party against whom such
Claim is asserted shall have no liability with respect thereto. Any Claim that
Purchaser may have at any time against Seller for a breach of any such
representation or warranty, or its covenants and indemnities whether known or
unknown, with respect to which a Claim Notice has been delivered to Seller on or
prior to the Survival Date (a “Pending Claim”) may be the subject of subsequent
litigation brought by Purchaser against Seller. For the avoidance of doubt, on
the Survival Date, Seller shall be fully discharged and released (without the
need for separate releases or other documentation) from any liability or
obligation to Purchaser and/or its successors and assigns with respect to any
Claims or any other matter relating to this Agreement or any Closing Document,
except for those matters that are then the subject of the pending Claim Notice
delivered by Purchaser to Seller that is still pending on the Survival Date, and
except for liabilities with respect to any representation, warranty, covenant or
indemnity that survives indefinitely pursuant to an express provision of this
Agreement.

9.7 Survival of Seller’s Claims. Except as otherwise specifically set forth in
this Agreement, the representations and warranties, covenants and indemnities of
Purchaser contained herein or in any document or instrument executed by
Purchaser and delivered to Seller at or in connection with the Closing
(collectively, “Purchaser Closing Documents”) shall survive only until the
Survival Date. Any Claim that Seller may have any time against Purchaser for
breach of any such representation, warranty, covenant, or indemnity (other than
a representation, warranty, covenant or indemnity that survives indefinitely
pursuant to an express provision of this Agreement), whether known or unknown,
with respect to which a Claim Notice has not been delivered to Purchaser on or
prior to the Survival Date, shall not be valid or effective and the party
against whom such Claim is asserted shall have no liability with respect
thereto. Any Claim that Seller may have at any time against Purchaser for a
breach of any such representation or warranty, covenants and indemnities whether
known or unknown, with respect to which a Claim Notice has been delivered to
Purchaser on or prior to the Survival Date may be the subject of subsequent
litigation brought by Seller against Purchaser. For the avoidance of doubt, on
the Survival Date, Purchaser shall be fully discharged and released (without the
need for separate releases or other documentation) from any liability or
obligation to Seller and/or their successors and assigns with respect to any
Claims or any other matter relating to this Agreement or any Purchaser Closing
Document, except for those matters that are then the subject of the pending
Claim Notice delivered by Seller to Purchaser that is still pending on the
Survival Date, and except for liabilities with respect to any representation,
warranty, covenant or indemnity that survives indefinitely pursuant to an
express provision of this Agreement.

 

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9.8 Limitations on Liability.

9.8.1 The parties hereto confirm and agree that in each instance herein where a
party or its Affiliates is entitled to payment or reimbursement for damages,
costs or expenses pursuant to the terms and conditions of this Agreement, any
payment or reimbursement made to such party shall be conclusively deemed to be
for the account of both such party and its Affiliates, it being acknowledged and
agreed that a payment or reimbursement made to such party for damages, costs or
expenses shall be sufficient to satisfy all claims for payment or reimbursement
of such party and its Affiliates. The parties further confirm and agree that no
party hereto (a “Non-Performing Party”) will be deemed to be in default
hereunder or be liable for any breach of its representations and warranties
under this Agreement if its failure to perform an obligation hereunder is based
solely on the non-performance of another party to this Agreement (which other
party is not an Affiliate of the Non-Performing Party) or where all conditions
precedent to the obligation of such Non-Performing Party to consummate the
Closing have not been fulfilled. In no event will either party be liable to the
other for any indirect, special, consequential or punitive damages of any kind.

9.8.2 To the maximum extent permitted by applicable law, no shareholder,
director, officer or employee of any party to this Agreement shall have any
personal liability with respect to the liabilities or obligations of such party
under this Agreement or any document executed by such party pursuant to this
Agreement.

9.9 Indemnification

9.9.1 Subject to any express provisions of this Agreement to the contrary, and
subject to the limitations set forth in this Article IX (including the
provisions of Sections 9.4 through 9.6), from and after Closing, Seller hereby
agrees to Indemnify Purchaser, Purchaser’s Affiliates and their respective
members, partners, shareholders, officers, directors, employees, agents, and
representatives, and the successors of any of the foregoing (collectively,
“Purchaser Indemnified Parties”) with respect to any Claims arising from (i) any
obligations with respect to which Seller receives a credit at Closing (to the
extent of such credit), (ii) any material breach by Seller of its
representations, warranties and covenants contained in this Agreement, and
(iii) liabilities to any third party for personal injury, death or damage to
personal property that accrue prior to Closing and are based upon any matter
relating to the use, maintenance or operation of the Property (except to the
extent any such Claim, or the liability of Seller with respect to such Claims,
is waived or released by Purchaser pursuant to Section 4.4 above or any other
provision of this Agreement). The foregoing indemnification shall be the sole
and exclusive remedy of the Purchaser and the Purchaser Indemnified Parties for
any Claims arising out of the matters set forth in the foregoing clauses (i),
(ii) and (iii).

9.9.2 Subject to any express provisions of this Agreement to the contrary, and
subject to the limitations set forth in this Article IX (including the
provisions of Section 9.7), from and after Closing, Purchaser hereby agrees to
Indemnify Seller, Seller’s Affiliates and their respective members, partners,
shareholders, officers, directors, employees, agents, and representatives, and
the successors of any of the foregoing (collectively, “Seller Indemnified
Parties”) with respect to any Claims arising from (i) any obligations with
respect to which Purchaser receives a credit at Closing (to the extent of such
credit), (ii) any material breach by

 

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the Purchaser of its representations, warranties and covenants contained in this
Agreement, and (iii) liabilities to any third party for personal injury, death
or damage to personal property that accrue from and after the Closing and are
based upon any matter relating to the use, maintenance or operation of the
Property (except to the extent any such Claim, or the liability of Purchaser
with respect to such Claims, is waived or released by Seller pursuant to another
provision of this Agreement). The foregoing indemnification shall be sole and
exclusive remedy of Seller and the Seller Indemnified Parties for any Claims
arising out of the matters set forth in the foregoing clauses (i), (ii) and
(iii).

9.10 Survival. Article IX shall survive the Closing.

X.

BROKERS

Seller represents and warrants to Purchaser, and Purchaser represents and
warrants to Seller, that except for Cassidy Turley (“Broker”), no broker or
finder has been engaged by Seller, Purchaser or their affiliates, respectively,
in connection with the transaction contemplated by this Agreement or to its
knowledge is in any way connected with this transaction. Purchaser shall be
responsible for the payment of any commission, finder’s fee or other sum
initiated by any broker, commission agent or other person engaged or retained by
Purchaser in connection with the transaction contemplated by this Agreement.
Seller shall be responsible for the payment of any commission, finder’s fee or
other sum initiated by any broker, commission agent or other person engaged or
retained by Seller in connection with the transaction contemplated by this
Agreement, including without limitation, Broker. Seller and Purchaser (except
with respect to the commission which shall be paid by Seller to Broker) each
agree to Indemnify the other with respect to Claims for payment of any
commission, finder’s fee or other sum initiated by any broker, commission agent
or other person which such party or its representatives has engaged or retained
or with which it has had discussions concerning or which shall be based upon any
statement or agreement alleged to have been made by such party, in connection
with the transaction contemplated by this Agreement or the sale of all of the
Property by Seller. The provisions of this Article X shall survive the Closing.

XI.

NOTICES

Except as otherwise expressly provided in this Agreement, all notices, requests,
demands and other communications hereunder (each, a “Notice”) shall be in
writing and shall be deemed delivered by (i) hand delivery upon receipt,
(ii) registered mail or certified mail, return receipt requested, postage
prepaid, upon delivery to the address indicated in the Notice, or
(iii) overnight courier (next business day delivery) on the next business day at
12:00 noon, whichever shall occur first, as follows:

 

If to Seller:

  

6100 Executive Boulevard

Suite 800

Rockville, Maryland 20852

 

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Attention:     George F. McKenzie

President and Chief Executive Officer

E-Mail:         gmckenzie@WRIT.com

         - and -   

Attention:     Michael Daugard,

Director, Acquisitions

E-Mail:         mdaugard@writ.com

         - and -   

Attention:     Thomas Morey,

Senior Vice President and General Counsel

E-Mail:         tmorey@writ.com

   with a copy to:   

Michael H. Leahy, Esq.

Arent Fox LLP

1050 Connecticut Avenue, N.W.

Washington, D.C. 20036

Telecopier No: (202) 857-6395

If to Purchaser:

  

c/o AREA Property Partners

2 Manhattanville Road

Purchase, New York 10577

Attn: Peter Kalambokas

E-Mail: pkalambokas@areaprop.com

   -and-   

c/o AREA Property Partners

60 Columbus Circle

New York, NY 10023

Attn: Steve Wolf and General Counsel

E-Mail: swolf@areaprop.com

srohrbach@areaprop.com

   -and-   

Value Enhancement Fund VII, L.P.

3340 Peachtree Road, NE, Suite 1660

Atlanta, Georgia 30326

Attn: Howard C. Huang

E-Mail: HHuang@areaprop.com

 

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   -and-   

Adler Group Inc.

1400 NW 107th Avenue

Miami, FL 33172

Attention: Matthew L. Adler

mladler@adlergroup.com

   with a copy to:   

Richard F. Levin, Esq.

Grossberg, Yochelson, Fox & Beyda LLP

2000 L Street, N.W.

Washington, D.C. 20036

E-Mail: levin@gyfb.com

If to Escrow Agent:

  

First American Title Insurance Company

National Commercial Services

1825 Eye Street, N.W.

Suite 302

Washington, DC 20006

Attn: Michael F. Hillman

E-mail: mhillman@firstam.com

with a copy to Seller or to Purchaser, as applicable.

Any correctly-addressed Notice that is refused, unclaimed or undelivered because
of an act or omission of the party to be notified shall be considered to be
effective as of the first day that the Notice was refused, unclaimed or
considered undeliverable by the postal authorities, messenger or overnight
delivery service. The parties hereto shall have the right from time to time, and
at any time, to change their respective addresses and each shall have the right
to specify as its address any other address within the United States of America,
by giving to the other party at least ten (10) days prior Notice thereof, in the
manner prescribed herein; provided, however, that to be effective, any such
change of address must be actually received (as evidenced by a return receipt).
Telephone numbers, email addresses and facsimile numbers, if listed, are listed
for convenience purposes only and not for the purposes of giving Notice pursuant
to this Agreement. Any Notice that is required or permitted to be given by
either party to the other under this Agreement may be given by such party or its
legal counsel, who are hereby authorized to do so on the party’s behalf.

XII.

MISCELLANEOUS

12.1 Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Maryland. If any legal action is
necessary to enforce the terms and conditions of this Agreement, the parties
hereby agree that the courts in the State of Maryland shall be the sole
jurisdiction and venue for the bringing of the action.

 

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12.2 Professional Fees and Costs. If a lawsuit, arbitration or other proceedings
are instituted by any party to enforce any of the terms or conditions of this
Agreement against any other party hereto, the prevailing party in such
litigation, arbitration or proceedings shall be entitled, as an additional item
of damages, to such reasonable attorneys’ and other professional fees and costs
(including, but not limited to, witness fees), court costs, arbitrators’ fees,
arbitration administrative fees, travel expenses, and other reasonable, actual,
out-of pocket expenses or costs of such other proceedings, which amount shall be
determined by any court of competent jurisdiction, arbitrator or other judicial
or quasi-judicial body having jurisdiction thereof, whether or not such
litigation or proceedings proceed to a final judgment or award. For the purposes
of this section, any party receiving an arbitration award or a judgment for
damages or other amounts shall be deemed to be the prevailing party, regardless
of amount of the damage awarded or whether the award or judgment was based on
all or some of such party’s claims or causes of action, and any party against
whom a lawsuit, arbitration or other proceeding is instituted and later
voluntarily dismissed by the instituting party shall be deemed to be the
prevailing party.

12.3 Exhibits and Schedules a Part of This Agreement. The Exhibits and Schedules
attached hereto are incorporated in this Agreement by reference and are hereby
made a part hereof.

12.4 Executed Counterparts. This Agreement may be executed in any number of
counterparts and by different parties hereto in separate counterparts, each of
which when so executed and delivered shall be deemed an original, but all such
counterparts together shall constitute but one and the same instrument;
signature pages may be detached from multiple separate counterparts and attached
to a single counterpart so that all signature pages are physically attached to
the same document. This Agreement shall become effective upon the due execution
and delivery of this Agreement to the parties hereto.

12.5 Assignment. Purchaser may not assign, convey and otherwise transfer all or
any part of its interest or rights herein without the prior written consent of
Seller, which consent may be withheld in Seller’s sole discretion.
Notwithstanding the foregoing, however, Purchaser may (without Seller consent
but with advance written notice to Seller), by not later than five (5) days
prior to Closing, assign and transfer in whole or in part all of its rights and
obligations under this Agreement to one (1) or more wholly owned subsidiary(ies)
or Affiliates of Purchaser, in the form of the Assignment of Purchase Agreement
attached hereto as Exhibit “R”; provided, however, that Purchaser shall not be
released of its obligations under this Agreement as a result of any such
assignment. Any assignment as permitted in the preceding sentence shall be
conditioned upon Purchaser delivering to Seller and Escrow Agent, within
forty-eight (48) hours of the Closing, notice thereof, and copies of the
documents, if any, by or between Purchaser and such assignee authorizing such
assignment. As a further condition to any such permitted assignment, Purchaser
shall cause its assignee to execute an assignment and assumption agreement of
Purchaser’s obligations under this Agreement (in form and content reasonably and
mutually acceptable), and such other documents and instruments as Escrow Agent
may reasonably request. Seller shall upon request consent in writing to any such
assignment that is made in accordance with the terms of this Section. Seller may
not assign or transfer their respective rights or obligations under this
Agreement without the prior written consent of Purchaser (in which event such
transferee shall assume in writing all of the transferor’s obligations
hereunder, but such transferor shall not be released from its obligations
hereunder). No transfer or assignment by either party in violation of the
provisions hereof shall be valid or enforceable.

 

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12.6 IRS - Form 1099-S. For purposes of complying with Section 6045 of the
Internal Revenue Code of 1986, as amended, Escrow Agent shall be deemed the
“person responsible for closing the transaction” and shall be responsible for
obtaining the information necessary to file with the Internal Revenue Service
Form 1099-S, “Statement for Recipients of Proceeds from Real Estate, Broker and
Barter Exchange Transactions.”

12.7 Successors and Assigns. Subject to the provisions of Section 12.5 hereof,
this Agreement shall be binding upon and inure to the benefit of the parties’
respective successors and permitted assigns.

12.8 Time is of the Essence. Time is of the essence of this Agreement.

12.9 Entire Agreement. This Agreement, and Exhibits and Schedules and other
documents and instruments attached to or referenced herein, contain the entire
understanding and agreement between the parties hereto with respect to the
purchase and sale of the Property, and all prior and contemporaneous
understandings, letters of intent, agreements and representations, whether oral
or written, are entirely superseded. Except for any of the following expressly
contained in this Agreement, Seller and Purchaser each expressly disclaim any
reliance on any oral or written representations, warranties, comments,
statements or assurances made by Seller, Purchaser, and any of their respective
affiliates, and their respective agents, employees, representatives, attorneys
or brokers, as an inducement or otherwise, to Purchaser’s and Seller’s
respective execution hereof. No amendment of this Agreement shall be binding
unless in writing and executed by the parties hereto.

12.10 Further Assurances. Whenever and so often as requested by a party, the
other party will promptly execute and deliver or cause to be executed and
delivered all such other and further instruments, documents or assurances, and
promptly do or cause to be done all such other and further things as may be
necessary and reasonably required in order to further and more fully vest in
such requesting party all rights, interests, powers, benefits privileges and
advantages conferred or intended to be conferred upon it by this Agreement, or
to effectuate the termination of this Agreement and cancellation of the Escrow
(if otherwise permitted hereunder). The terms of this section shall survive
Closing and/or termination of this Agreement.

12.11 Waiver. Failure or delay by either party to insist on the strict
performance of any covenant, term, provision or condition hereunder, or to
exercise any option herein contained, or to pursue any claim or right arising
herefrom, shall not constitute or be construed as a waiver of such covenant,
term, provision, condition, option, claim or right (except that if a party
proceeds to Closing, notwithstanding the failure of a condition to its
obligation to close, then such condition shall be deemed waived by virtue of the
Closing). Any waiver by either party shall be effective only if in a writing
delivered to the other party hereto and setting forth, with specificity, the
covenant, term, provision or condition so waived. Any such waiver shall not
constitute or be construed as a continuing waiver of any subsequent default.

 

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12.12 Headings. The headings of this Agreement are for purposes of convenience
only and shall not limit or define the meaning of the provisions of this
Agreement.

12.13 Risk of Loss. The risk of loss shall be as follows:

12.13.1 Risk of Loss. Until the Closing Date, Seller shall bear the risk of loss
resulting from damage to the Property by fire or other casualty (collectively
“Casualty”). If, prior to the Closing Date, the Property shall be damaged by any
Casualty, Seller shall promptly deliver to Purchaser a Notice (“Casualty
Notice”) of such event. Upon Purchaser’s receipt of a Casualty Notice, Seller
and Purchaser shall meet promptly to estimate the cost to repair and restore the
Improvements to good condition and to replace the damaged Personal Property
(“Casualty Renovation Cost”). If the parties are unable to agree on the cost of
restoration, the matter will be submitted to an engineer designated by Seller
and an engineer designated by Purchaser, each licensed to practice in the
jurisdiction in which the Land is located, and the engineers shall resolve the
dispute. If the engineers fail to resolve the dispute, they shall designate a
third engineer, who shall determine such resolution, which determination shall
be binding on Seller and Purchaser. Each party hereto shall bear the costs and
expenses of its own engineer. The cost of a third engineer, if any is appointed
by the parties’ respective engineers, shall be borne one half (1/2) by Seller
and one half (1/2) by Purchaser.

12.13.2 Material Loss. If the Casualty Renovation Cost for the Property exceeds
five percent (5%) of the Property’s Purchase Price, then Purchaser may, at its
option, elect to terminate this Agreement. Such termination right may be
exercised only by Notice to the Seller within ten (10) business days after the
date that the Casualty Renovation Cost for the Property is determined to exceed
the applicable amount stated in the preceding sentence (and if necessary the
Closing Date will be extended to accommodate such ten (10) business day period).
If this Agreement can be terminated pursuant to the preceding provisions of this
Section 12.13.2, but Purchaser does not elect to terminate this Agreement
pursuant to such provision, then the Closing shall take place as provided herein
without reduction of the Purchase Price, and Seller shall assign the insurance
proceeds to Purchaser in the event the Casualty is insured against and Seller
shall pay to Purchaser the amount of any deductible not already otherwise paid
by Seller under applicable insurance policies, or have the Purchase Price
reduced by the Casualty Renovation Cost in the event the Casualty is not fully
insured against (subject to further adjustment for actual restoration costs).

12.13.3 Nonmaterial Loss. If the Casualty Renovation Cost for the Property does
not exceed five percent (5%) of the Property’s Purchase Price then, in any such
event, Purchaser shall not have any right to terminate this Agreement, but the
Closing shall take place as provided herein without reduction of the Purchase
Price, and Seller shall assign the insurance proceeds to Purchaser in the event
the Casualty is insured against and shall pay to Purchaser the amount of any
deductible, under applicable insurance policies, or have the Purchase Price
reduced by the Casualty Renovation Cost in the event the Casualty is not fully
insured against (subject to further adjustment for actual restoration costs).

12.13.4 Eminent Domain. If, prior to the Closing Date, Seller receives notice
that a material portion of the Property (or access or other material rights in
connection therewith) as would, in Purchaser’s reasonable judgment, materially
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Property or uses of the Property is, or has been threatened in writing by a
governmental authority of competent jurisdiction, to be taken by condemnation or
eminent domain, Seller shall promptly notify Purchaser, and at the election of
Purchaser this Agreement shall, upon the giving of Notice of such event or of
the condemning authorities’ intention so to take the Property, terminate. If
Purchaser does not elect to terminate this Agreement prior to the Closing Date,
on the Closing Date all of the proceeds of any award or payment made or to be
made by reason of such taking shall be assigned by Seller to Purchaser, and any
money theretofore received by Seller in connection with such taking shall be
paid over to Purchaser, whereupon Purchaser shall pay the Purchase Price without
abatement by reason of such taking. Seller shall not settle, agree to, or accept
any award or payment in connection with a taking of less than all of the
Property without obtaining Purchaser’s prior written consent in each case, which
consent shall not be unreasonably withheld or delayed. As used in this Section,
“material portion,” “material rights” or “materially adversely affect” shall
mean a taking or condemnation that (a) would reduce available parking below that
required by, or in general cause a violation of, any Legal Requirements or any
Permitted Exceptions that would result in a Material Adverse Effect, or
(b) would result in a condemnation award reasonably estimated to exceed five
percent (5%) of the Property’s Purchase Price.

12.14 Construction of Agreement. The parties hereto have negotiated this
Agreement at length, and have had the opportunity to consult with, and be
represented by, their own competent counsel. This Agreement is, therefore,
deemed to have been jointly prepared. In determining the meaning of, or
resolving any ambiguity with respect to, any word, phrase or provision of this
Agreement, no uncertainty or ambiguity shall be construed or resolved against
any party under any rule of construction, including the party primarily
responsible for the drafting and preparation of this Agreement. The words
“herein,” “hereof,” “hereunder” and words of similar reference shall mean this
Agreement. The words “this Agreement” include the exhibits, schedules addenda
and any future written modifications, unless otherwise indicated by the context.
The words “will,” “shall” and “must” in this Agreement indicate a mandatory
obligation. All dollar amounts set forth in this Agreement are stated in United
States Dollars, unless otherwise specified. The words “day” and “days” refer to
calendar days unless otherwise stated. The words “business day” refer to a day
other than a Saturday, Sunday or Legal Holiday (hereinafter defined). The words
“month” and “months” refer to calendar months unless otherwise stated. The words
“year” and “years” refer to calendar years unless otherwise stated. If any date
herein set forth for the performance of any obligations by Seller or Purchaser
or for the delivery of any instrument or notice as herein provided should fall
on a Saturday, Sunday or Legal Holiday, the compliance with such obligations or
delivery will be deemed acceptable on the next business day following such
Saturday, Sunday or Legal Holiday. As used herein, the term “Legal Holiday” will
mean any local or federal holiday on which post offices are closed in the State
of Maryland.

12.15 Bulk Transfers. Seller and Purchaser specifically waive compliance with
the applicable provisions of the Uniform Commercial Code – Bulk Transfers, with
any similar provision under any similar provisions in the laws of the state,
county, and city in which any of the Property is located, to the extent such
provisions may be waived under the applicable Legal Requirement.

 

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12.16 Covenants, Representations and Warranties. By proceeding with the closing
of the sale transaction, Seller and Purchaser shall be deemed to have waived,
and so covenant to waive, any claims of defaults or breaches by the other party
existing on or as of the Closing Date whether under this Agreement or any other
document or instrument executed by the other party in connection with this
transaction, of which the waiving party was made aware by Notice from the
defaulting or breaching party (and, if applicable, which is described on
Seller’s certification of representations and warranties to be delivered at
Closing) prior to the Closing Date for which the other party shall have no
liability.

12.17 Press Releases; Confidentiality. Either party may issue press releases and
other public communications announcing the transaction contemplated by this
Agreement without the consent of the other party. In addition, Seller and its
affiliates may make such filings with the SEC as are required in connection with
the matters contemplated by this Agreement. Notwithstanding the foregoing, no
such press release or other communication shall include any information (other
than the identification of the parties) that is required to be kept confidential
pursuant to the remaining provisions of this Section 12.17. Purchaser shall
refrain, and shall use reasonable efforts to cause its agents and
representatives to refrain, from disclosing in any manner whatsoever, (a) the
information provided to Purchaser by Seller or its representatives, or (b) any
analyses, compilations, studies or other documents or records prepared by or on
behalf of Purchaser, in connection with Purchaser’s investigation of any of the
Property, without first obtaining the written consent of Seller (collectively,
“Proprietary Information”). The foregoing shall not preclude Purchaser (i) from
discussing the Proprietary Information with any person who is employed by
Purchaser or who, on behalf of Purchaser, is actively and directly participating
in the purchase and sale of the Property, including, without limitation, to
Purchaser’s shareholders, partners, members, existing or prospective lenders,
attorneys, accountants and other consultants and advisors, or (ii) from
complying with all laws, rules, regulations and court orders, including, without
limitation, governmental regulatory, disclosure, tax and reporting requirements;
provided, however, that if Purchaser is required by applicable law or legal
process to disclose any Proprietary Information, Purchaser agrees to furnish
only that portion of the Proprietary Information which Purchaser is legally
compelled to disclose and to use its commercially reasonable efforts to obtain
assurance that, if possible, confidential treatment will be accorded to the
Proprietary Information. Purchaser shall inform its respective representatives
of the confidential nature of the Proprietary Information and shall direct them
to be bound by the terms of this section. In addition to any other remedies
available to Seller, Seller shall have the right to seek equitable relief,
including, without limitation, injunctive relief or specific performance,
against Purchaser in order to enforce the provisions of this section. The
provisions of such confidentiality agreement shall survive any termination of
this Agreement. Except as otherwise expressly provided in this Agreement,
Purchaser agrees not to contact, directly or indirectly, any personnel at any of
the Property prior to the Closing Date, and agrees to be liable for all of
Seller’s damages in the event of any such contact by Purchaser or any of its
agents or representatives.

12.18 No Third-Party Beneficiaries. Except as otherwise expressly provided
herein, Seller and Purchaser agree that there are no third parties who are
intended to benefit from or who are entitled to rely on any of the provisions of
this Agreement. No third party shall be entitled to assert any claims or to
enforce any rights whatsoever pursuant to this Agreement. Except as otherwise
expressly provided herein, the covenants and agreements provided in this
Agreement are solely for the benefit of Seller and Purchaser and their permitted
successors and assigns respectively.

 

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12.19 Facsimile Signatures. The execution of this Agreement and all Notices
given hereunder and all amendments hereto, may be effected by facsimile
signatures, all of which shall be treated as originals; provided, however, that
the party receiving a document with a facsimile signature may, by Notice to the
other, require the prompt delivery of an original signature to evidence and
confirm the delivery of the facsimile signature. Purchaser and Seller each
intend to be bound by its respective facsimile transmitted signature, and is
aware that the other party will rely thereon, and each party waives any defenses
to the enforcement of the Agreement, and documents, and any Notices delivered by
facsimile transmission.

12.20 Severability. If any term or provision of this Agreement or the
application thereof to any person or circumstance shall, to any extent, be
invalid or unenforceable, the remainder of this Agreement, or the application of
such term or provision to persons or circumstances other than those as to which
it is held invalid or unenforceable, shall not be affected thereby, and each
such term and provision of this Agreement shall be valid and be enforced to the
fullest extent permitted by law.

12.21 Cumulative Remedies. No remedy conferred upon a party in this Agreement is
intended to be exclusive of any other remedy herein or by law provided or
permitted, but each shall be cumulative and shall be in addition to every other
remedy given hereunder or now or hereafter existing at law, in equity or by
statute (except as otherwise expressly herein provided).

12.22 Consents and Approvals. Except as otherwise expressly provided herein, any
approval or consent provided to be given by a party hereunder may be given or
withheld in the absolute discretion of such party.

12.23 WAIVER OF JURY TRIAL. THE PARTIES HEREBY IRREVOCABLY WAIVE THEIR
RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR
ARISING OUT OF THIS AGREEMENT. THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT
AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT. IN THE
EVENT OF LITIGATION, THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL
BY THE COURT.

12.24 1031 Exchange. Seller and/or Purchaser (or a parent entity of Seller or
the Purchaser that is recognized as a separate entity for federal income tax
purposes) may consummate the sale of the Property as part of a so-called like
kind exchange (the “Exchange”) pursuant to § 1031 of the Internal Revenue Code
of 1986, as amended (the “Code”), in accordance with the following provisions:

12.24.1 If Seller or Purchaser elects to effectuate an Exchange, and such
Exchange cannot be effected for any reason, Seller and Purchaser shall be
obligated to close the transaction as a purchase and sale pursuant to the terms
of this Agreement.

 

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12.24.2 To exercise its right under this Section 12.24 to exchange, rather than
sell or purchase, as applicable, all or some of the Property, Seller or
Purchaser shall provide the other party with a written statement stating its
intent to enter into an Exchange not later than ten (10) days prior to the
Closing Date.

12.24.3 If Seller or Purchaser exercises its right to exchange, rather than sell
or purchase, as applicable, the Property, Seller may, on or before the Closing
Date, assign its rights under this Agreement to a “qualified intermediary”, as
defined in Treasury Regulation 1.103(k) I (g)(4) (the “Accommodator”) or an
Exchange Accommodation Titleholder (“EAT”), or transfer the Property to the
Accommodator or the EAT, subject to all of Purchaser’s rights and remedies under
this Agreement, including, without limitation, Purchaser’s right to acquire the
Property at the Closing or Purchaser may, on or before the Closing Date, assign
its rights under this Agreement to an Accommodator or an EAT, or direct Seller
to convey such Property to an Accommodator or an EAT at Closing, subject to
Seller’s rights and remedies under this Agreement; provided, however, that
Seller or Purchaser shall notify the other party of the identity of the
Accommodator or EAT within five (5) days after designation of same, and further
provided that the party designating an Accommodator or EAT (the “Designating
Party”) shall remain liable for the performance of all obligations,
representations, warranties and covenants of the Designating Party hereunder. In
any case, all payments that Purchaser is obligated to make to Seller under this
Agreement shall be made to the Accommodator or the EAT and not to Seller.
Purchaser and Seller agree to cooperate with each other and the Accommodator or
EAT in arranging the Exchange. The party which is not the Designating Party (the
“Non-Designating Party”) shall execute any documents reasonably requested by the
Designating Party and the Accommodator or EAT to facilitate the Exchange as a
like-kind exchange under Section 1031 of the Code and the Treasury Regulations
effective thereunder at the time of Closing hereunder, including, but not
limited to, any appropriate amendments to this Agreement and any appropriate
escrow instructions; provided, however, that no such document shall adversely
affect the Non-Designating Party in any respect or change any of the economic
terms and conditions of the transaction with respect to the Non-Designating
Party or modify or limit the Non-Designating Party’s rights and remedies under
this Agreement. The Non-Designating Party shall not be obligated to incur any
costs, expenses, losses, liabilities or damages greater than those the
Non-Designating Party would have incurred had the Designating Party not elected
to effect an exchange. The Designating Party shall reimburse the Non-Designating
Party on demand for all costs and expenses incurred by the Non-Designating Party
in excess of those that would have been incurred if the Designating Party had
not elected to effect an Exchange.

12.24.4 In no event shall the Non-Designating Party be obligated to acquire
title to any other property, in connection with such Exchange. Purchaser’s sole
obligation in connection with any Exchange shall be to acquire the Property from
Seller or its assignee in exchange for the Purchase Price in accordance with the
terms of this Agreement. The Designating Party agrees to defend, indemnify, and
hold the Non-Designating Party free and harmless from all costs, expenses,
losses, damages or liability, including but not limited to reasonable attorney’s
fees and costs of suit, arising out of or in connection with any Exchange and
the Non-Designating Party’s cooperation hereunder. Each party acknowledges that
neither of them is making any representations, and neither of them is relying on
any representations of the other party or the other party’s counsel, with
respect to the federal, state or local income tax treatment of either of them in
connection with this transaction, and neither party shall have any liability in
connection with any tax treatment received by either of them in connection with
this transaction, including, without limitation, any failure of this transaction
to qualify as an exchange under Section 1031 of the Code.

[Signatures are on the following page.]

 

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XIII.

EXECUTION

IN WITNESS WHEREOF, the parties hereto have caused this Purchase and Sale
Agreement to be executed as of the Effective Date.

 

PURCHASER: AP AG PORTFOLIO LLC, a Delaware limited liability company By:   /s/
Howard Huang Name:   Howard Huang Title:   Authorized Representative

SELLER: WRIT-NVIP, L.L.C., a Virginia limited liability company By:   Washington
Real Estate Investment Trust,   a Maryland real estate investment trust,   its
managing member   By:   /s/ George F. McKenzie     George F. McKenzie    
President & Chief Executive Officer

 

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SCHEDULE OF EXHIBITS

 

Exhibit “A-1”

   Legal Description of the Property

Exhibit “A-2”

   Allocation of the Property’s Purchase Price between Real Property and
Personal Property

Exhibit “B”

   Form of Escrow Agreement for Earnest Money Deposit

Exhibit “C”

   Assumed Contracts

Exhibit “D-1”

   Lease Schedule

Exhibit “D-2”

   TI Obligations, Rent Abatements and other Concessions

Exhibit “D-3”

   Leasing Commissions and Brokerage Agreements

Exhibit “D-4”

   Certain Lease Expenses to be Paid by Purchaser

Exhibit “D-5”

   Antenna and Access Agreements to be Assigned to Purchaser

Exhibit “E”

   Operating Statements

Exhibit “F”

   Form of Deed

Exhibit “G”

   Form of Bill of Sale

Exhibit “H”

   Form of Assignment of Intangibles

Exhibit “I”

   Form of Assignment and Assumption of Contracts

Exhibit “J”

   Form of Assignment and Assumption of Leases

Exhibit “K”

   Form of FIRPTA Certificate

Exhibit “L”

   Form of Notice to Tenants

Exhibit “M”

   Pending Litigation and Violation Notices

Exhibit “N”

   Form of Owner’s Affidavit

Exhibit “O”

   Environmental Reports

Exhibit “P”

   Reserved

Exhibit “Q”

   Reserved

Exhibit “R”

   Assignment and Assumption of Purchase Agreement

Exhibit “S”

   Liens to be Cured

Exhibit “T-1”

   Form of Tenant Estoppel Certificate

Exhibit “T-2”

   Form of Seller Estoppel Certificate

Exhibit “U”

   Certain Covenants, Conditions, Restrictions and Easements

 

WRIT Industrial IV