SALE AND PURCHASE AGREEMENT

          THIS SALE AND PURCHASE AGREEMENT ("Agreement") is made between PEPCO
HOLDINGS, INC., a Delaware corporation ("Seller"), and THE JOHN AKRIDGE
DEVELOPMENT COMPANY, a Virginia corporation ("Buyer"). The effective date of
this Agreement (the "Effective Date") shall be the date on which the last of the
Seller or Buyer sign this Agreement below.

          WHEREAS, Seller is the owner of certain real property consisting of
land totaling approximately 384,051 square feet in size, which land is more
particularly described in Exhibit A attached hereto located between First and
Second Street from S Street on the north to V Street on the south in Southwest
Washington, D.C. (the "Property").

          AND, WHEREAS, Seller has agreed to sell the Property to Buyer, and
Buyer has agreed to purchase the Property from Seller, under all of the terms
set forth herein.

          NOW, THEREFORE, for good and valuable consideration, Seller hereby
agrees to sell to Buyer, and Buyer hereby agrees to purchase from Seller, the
Property, together with all improvements thereto, all structures thereon, all
rights, privileges, easements and appurtenances thereto, all equipment and
personal property, if any, owned by Seller and located at such Property, and all
of Seller's right, title and interest in any leases (including ground leases) of
any portions of such Property, under all of the following terms and conditions:

          1.         Price and Deposit.

                      1.01     Purchase Price. The purchase price for the
Property (the "Purchase Price") shall be Seventy-Five Million Dollars
($75,000,000.00).

                      1.02     Payment. The Purchase Price shall be paid as
follows:

                                  (a)        On the Effective Date of this
Agreement, Buyer shall deposit with the Title Company (as defined in Section
2.04 below), which shall also act as escrow agent ("Escrow Agent"), a deposit
(by wire transfer of immediately available federal funds sent in accordance with
the instructions to be provided by Seller) in the amount of $1,500,000 (the
"Initial Deposit"). Unless Buyer delivers the Study Period Notice (defined in
Section 2.02 below), on or before the Study Period Expiration Date (defined in
Section 2.02 below) Buyer shall deposit with Escrow Agent an additional deposit
(by a wire transfer of immediately available federal funds) in the amount of
$1,500,000 (the "Second Deposit"). The Initial Deposit and, if delivered in
accordance herewith, the Second Deposit are collectively the "Deposit." Failure
by Buyer to deliver the Second Deposit to Escrow Agent on time shall be a
default by Buyer entitling Seller to the remedies set forth in Section 7.02
hereof. The Deposit shall be held, released or retained by Escrow Agent in
accordance with the terms and provisions of Section 8 of this Agreement. Unless
Buyer terminates this Agreement pursuant to Section 2.02, the Deposit

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shall be non-refundable, except upon the occurrence of a default by Seller in
accordance with Section 7.01 hereof.

                                  (b)          Upon closing under this
Agreement, the Deposit and the remainder of the Purchase Price, subject to
closing adjustments provided herein, shall be paid by wire transfer of funds to
Seller's account.

          2.         Review of Property.

                      2.01     Property Information. Seller has or shall, within
10 business days after the Effective Date, deliver to Buyer, or make available
for review by Buyer, copies of the following documents to the extent in the
Seller's possession:

                                   (a)          All written leases, licenses or
other occupancy agreements (with any amendments thereto) of any portions of the
Property which are in effect on the Effective Date.

                                  (b)          Any survey of the Property
prepared for Seller at the time of Seller's acquisition of the Property.

                                  (c)          The most recent bill(s) for real
estate taxes and assessments.

                                  (d)          All contracts or agreements (with
any amendments thereto) for maintenance, trash removal, landscaping, snow
removal and other ongoing services provided to Seller in connection with the
Property, if any.

                                  (e)          Any title policy insuring Seller
and all endorsements thereto.

                                  (f)          A copy of all Environmental
Reports (as defined in § 3.01 below).

                      2.02     Study Period. Buyer shall have a period (the
"Study Period"), commencing upon the Effective Date and ending 30 business days
thereafter (the "Study Period Expiration Date"), in which to determine in its
discretion whether to proceed to closing of the purchase of the Property. If
Buyer elects not to proceed to closing of the purchase of the Property, then
Buyer shall have the right to terminate this Agreement upon written notice to
Seller delivered prior to 4:00 p.m. Eastern Standard Time on the Study Period
Expiration Date (the "Study Period Notice"), in which event the Deposit shall be
returned to Buyer and the parties shall have no further liability hereunder
(excepting any obligations, covenants and agreements of the parties hereto which
pursuant to the terms of this Agreement survive termination, including without
limitation Buyer's obligations under Sections 2.03, 8.03, 9.04, 9.07 and 9.08
and the indemnity obligations of Buyer under Sections 2.03 and 9.07
(collectively the "Continuing Obligations")). In the event Buyer does not
deliver the Study Period Notice in accordance with this Section 2.02, Buyer
shall be deemed to have automatically waived its right to terminate this
Agreement, and the parties shall proceed to closing in accordance with the terms
set forth herein.

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                      2.03     Right of Entry. During the Study Period, Buyer
and its agents shall have the right to enter the Property for the purpose of
examining the environmental, physical, and other conditions of the Property.
Such right of entry shall be governed by the following provisions:

                                   (a)          In exercising such right of
entry, Buyer or the Buyer's representatives, attorneys, consultants, engineers,
architects and other employees and agents, who, because of their involvement
with the proposed transaction, need to know such information for the purpose of
giving advice with respect to, bidding on or consummating the proposed
transaction (collectively, the "Buyer Parties") are entitled to enter upon the
Property, including any leased areas, however such entry may be done only during
normal business hours, upon reasonable prior notice to Seller, and for the sole
purposes, each of which must be expressly approved in advance by Seller, in
Seller's reasonable discretion, (i) to perform inspections and tests of the
Property, including surveys, environmental studies and examinations, and (ii) to
examine the books and records of Seller and Seller's property manager relating
to the Property, excluding (1) any proprietary information related to Seller's
business, (2) any opinions, appraisals, audits, internal memoranda or other
internal work product or similar documents with respect to the Property and
(3) any information related to the financing of the Seller or the Property.
Buyer shall not communicate with any officials at environmental, zoning,
assessment or other government agencies regarding the Property or the Seller by
name without the Seller's prior consent (which consent shall not be unreasonably
withheld by Seller). Notwithstanding the foregoing, Buyer and the Buyer Parties
shall not interfere unreasonably with Seller's operations at the Property or
interfere with any service provider's or tenant's operations at the Property,
and the scheduling of any inspections shall take into account the timing and
availability of access to tenants' premises pursuant to tenants' rights under
their leases or otherwise. Buyer agrees that it or the Buyer Parties will not
communicate with any tenants or service providers unless (x) such meetings are
coordinated with Seller and (y) a representative of Seller is present during any
such tenant or service provider meeting.

                                   (b)          If Buyer wishes to engage in any
testing of any portion of the Property, Buyer shall obtain Seller's prior
written consent thereto, which may be refused or conditioned as Seller may deem
appropriate in its reasonable discretion. Notwithstanding anything to the
contrary contained herein, Buyer shall not conduct or allow any physically
intrusive testing of, on or under the Property without first obtaining Seller's
written consent as to the timing and scope of the work to be performed, which
shall not be unreasonably withheld, and the parties entering into an amendment
hereto memorializing such scope of work and any additional agreements of the
parties with respect to such testing. Without limiting the generality of the
foregoing, Seller's written approval (which may be granted, withheld or
conditioned in Seller's sole discretion) shall be required prior to any Phase II
environmental survey or any testing or sampling of surface or subsurface soils,
surface water, groundwater or any materials in or about the Property in
connection with Buyer's environmental due diligence. If any testing is approved
by Seller, Buyer agrees to cooperate with any request by Seller in connection
with the timing of any such inspection or test. Buyer agrees to provide Seller,
upon Seller's request, with a copy of any written inspection or test report or
summary prepared by any third party. Buyer agrees that any inspection, test or
other study or analysis of the Property shall be performed at

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Buyer's expense and in accordance with applicable law. Buyer agrees at its own
expense to promptly restore the Property or, at Seller's option, to reimburse
Seller for any repair or restoration costs, if any inspection or test requires
or results in any damage to or alteration of its condition.

                                   (c)          Buyer agrees that Buyer and any
person accessing the Property hereunder will be covered by not less than
$2,000,000 commercial general liability insurance (with, in the case of Buyer's
coverage, a contractual liability endorsement, insuring its indemnity obligation
under this Agreement) insuring all activity and conduct of Buyer and such
persons while exercising such right of access and naming Seller as insured,
issued by a licensed insurance company reasonably acceptable to Seller.

                                   (d)          Buyer agrees that any materials
or information provided or made available to Buyer by Seller or its
representatives pursuant to Section 2.01 or otherwise in connection with the
Property and any and all information, studies and tests obtained by Buyer
pursuant to Section 2.03 above, including without limitation any and all
Property Information as defined in the certain Confidentiality Agreement, dated
April 22, 2005, as amended by Amendment to Confidentiality Agreement dated
May 20, 2005, by and between Buyer and Seller (collectively, the "Property
Information") is proprietary and confidential, unless such information is in the
public domain. Buyer further agrees that all such Property Information and any
notes regarding such Property Information ("Notes") will be used solely for the
purpose of evaluating the potential purchase of the Property by Buyer and will
not be used or duplicated for any other purpose. Buyer shall keep all Property
Information and Notes strictly confidential. Notwithstanding the foregoing,
Buyer may disclose the Property Information to the Buyer Parties, provided that
Buyer shall inform the Buyer Parties of the confidential nature of such
information and shall direct and cause such Buyer Parties to keep all such
information in the strictest confidence and to use such information only in
connection with the proposed transaction and in accordance with the terms of
this Agreement. In any event, Buyer has caused or will cause any Buyer Party to
execute the agreement attached hereto as Exhibit D (or as attached to the prior
confidentiality agreement delivered by Buyer to Seller) (the "Confidentiality
Agreement") and such executed agreement has been or shall be delivered to Seller
prior to (a) Buyer giving such Buyer Party Property Information or Notes or
authorizing or directing such Buyer Party to receive such Property Information
or Notes, or (b) any entry by a Buyer Party onto the Property. If, at any time,
either Buyer elects not to proceed with the purchase of the Property, upon any
termination of this Agreement or upon the request of Seller, Buyer will promptly
deliver to Seller all Property Information and destroy all Notes, and promptly
certify to Seller, in writing, that, to the best of Buyer's knowledge, all
Property Information has been returned and all Notes destroyed. All obligations
of Buyer under this Section 9 shall be referred to as the "Confidentiality
Obligations."

                                   (e)          Buyer agrees to indemnify,
defend with counsel reasonably acceptable to Seller and hold harmless Seller and
all employees, affiliates, subsidiaries, shareholders, officers, directors,
trustees and partners of Seller, as well as any investment manager and other
agents of Seller (collectively, the "Seller Parties"), from and against any and
all loss, injury, damage, claim, lien, liability, suit, cost, including without
limitation reasonable

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attorneys' fees and costs, or expense (collectively, "Claims"), caused by or
arising from the exercise by Buyer or any of the Buyer Parties or their
respective employees, contractors, consultants, agents or representatives of the
right of access under this Agreement or arising out of a breach by Buyer of its
obligations under this Section 2.03. The indemnity in this Section 2.03(e) shall
survive closing or any termination of this Agreement.

          Except as otherwise may be expressly set forth herein, Seller makes no
representation or warranty as to the truth, accuracy or completeness of the
Property Information, including without limitation the contents of Seller's or
Seller's agents' and representatives' books and records, contracts, rent rolls,
leases or income and expense statements, which it may make available to Buyer in
connection with Buyer's evaluation of the Property, including without limitation
the Property Information, or that actual results will conform to any projections
contained therein. Seller expressly disclaims any and all liability for
representations, warranties, express or implied, in such materials or in any
other written, oral or other communications transmitted or made available to
Buyer by Seller or its consultants, agents or representatives including, without
limitation, computer disks containing files with financial data or projections.
Buyer acknowledges and agrees that all materials, data and other information
made available to Buyer are made available as a convenience and accommodation
only. Buyer shall be responsible for verifying through Buyer's own due diligence
the accuracy and completeness of all documents and information, provided by
Seller to Buyer, and any reliance by Buyer on such documents and information
shall be at Buyer's own risk.

                        2.04     Legal Review Period. After the Effective Date,
Buyer shall have the right to obtain a current survey ("Survey") of the Property
by a recognized local surveyor reasonably acceptable to Seller and a title
insurance commitment ("Title Commitment") with respect to the Property from a
nationally recognized title insurer acceptable to Seller in its sole discretion
(the "Title Company"). On or before a date which is the earlier of (i) 10
business days after the later of Buyer's receipt of the Survey or Buyer's
receipt of the Title Commitment, or (ii) the date on which the Study Period
expires, Buyer shall notify Seller in writing of any bona-fide defect in title
to the Property or of any other matter which is indicated on the Survey or Title
Commitment to which Buyer reasonably objects (the "Title Notice"). If Buyer does
so notify Seller of a defect in title or other matter reasonably objectionable
to Buyer within the prescribed time, Seller shall have 5 business days in which
to determine whether to cure the defect or other matter so objected to by Buyer
and to notify Buyer of Seller's decision in this regard. Notwithstanding
anything to the contrary in this Agreement, Seller shall not be required or
obligated to expend any amount of money or take any other action to cure any
defect or other matter, except that Seller will cause to be paid off (with
proceeds up to the Seller's proceeds of sale) and released, bond over, or
otherwise secure any mortgage or deed of trust encumbering title to the
Property. If Seller is unable or elects not to cure the defect or other matter
so objected to by Buyer to the reasonable satisfaction of Buyer, or if a new
bona-fide defect in title to the Property first arises of record following the
Title Notice (a "New Defect"), Buyer shall have the right, as its sole remedy on
account thereof, to either (i) waive such defect or other matter and take title
to the Property without any adjustment in the Purchase Price, or (ii) terminate
this Agreement and receive a return of the Deposit, provided that if Buyer
elects to terminate this Agreement Buyer notifies Seller of its election to
terminate within 5 business days after the Seller's notice or, in the case of

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any New Defect, within 5 business days after the date Buyer becomes aware of
such New Defect (or by the date of closing, if earlier), failing which option
(i) will be applicable. In the event Buyer elects to terminate this Agreement by
timely notifying Seller of Buyer's election as aforesaid, the Deposit shall be
returned to Buyer and the parties shall have no further liabilities hereunder
except for the Continuing Obligations. In the event that Buyer fails to
initially notify Seller in writing of a defect or other objectionable matter
within the prescribed time as described above, or Buyer fails to terminate the
Agreement within the prescribed time upon Seller's failure to cure the defect or
other matter to Buyer's reasonable satisfaction, Buyer shall be deemed to have
automatically waived any objection to the state of title to the Property or to
any matter shown on the Survey and to have agreed to proceed to closing in
accordance with the terms of this Agreement without adjustment of the Purchase
Price.

          3.          Representations and Warranties.

                        3.01     Seller's Representations and Warranties. Seller
hereby represents and warrants that to Seller's knowledge:

                                    (a)       All of the documents and
information required to be delivered to Buyer pursuant to Section 2.01 have been
or will be so delivered without intentional alteration or omission. The leases,
licenses and other occupancy agreements, including any amendments thereto,
delivered pursuant to Section 2.01 are all the leases, licenses and other
occupancy agreements affecting the Property and such leases licenses and other
occupancy agreements are true, accurate and complete copies of such agreements.

                                    (b)       There are not pending any special
assessments or condemnation actions with respect to the Property. All real
estate taxes, due and payable with respect to the Property, on or before closing
(excepting special assessments or benefit charges, which are payable over a
period of years) have been or will be paid in full prior to closing, subject to
pro-ration in accordance with Section 5.05 below.

                                    (c)       This Agreement has been, and all
the documents to be delivered by Seller to Buyer at closing pursuant to
Section 5.02 will be, duly authorized.

                                    (d)       This Agreement, and the transfer
of the Property by Seller, shall not violate any contract, agreement or
instrument to which Seller is a party or by which the Seller is bound.

                                    (e)       The Property is not, or at closing
hereunder will not be, subject to mechanics' liens or other similar liens for
services provided to or on behalf of the Seller, or other matters of record that
evidence, secure or create a lien upon the Property, for payment of any monetary
sum, other than a lien for real estate taxes, assessments, vault rents or other
similar charges not yet due and payable.

                                    (f)       The Seller is not a "foreign
person" within the meaning of Section 1445(f)(3) of the Internal Revenue Code of
1986.

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                                    (g)       There are no court actions or
other legal proceedings pending against Seller before any court or
administrative agency that affects or could affect Seller's ability to perform
its obligations under this Agreement or that, if decided adversely to Seller,
could have a material adverse effect on the Property.

                                    (h)       Except as disclosed in the
environmental reports listed on Exhibit B attached hereto (the "Environmental
Reports"), Seller has received no written notice of any violation of any
Environmental Laws from any governmental authority. For purposes of this
Agreement, "Environmental Laws" shall mean all federal, state and local laws,
statutes, ordinances, codes, rules, regulations, decisions, or decrees, and any
judicial interpretation of any of the foregoing, applicable to the Property that
pertains or relates to Hazardous Substances, and all amendments to any of the
foregoing (including, without limitation, the following: the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as amended by
the Superfund Amendments and Reauthorization Act of 1986; the Resource
Conservation and Recovery Act of 1976; the Solid Waste Disposal Act; the Clean
Water Act; the Clean Air Act; the Federal Insecticide, Fungicide and Rodenticide
Act; the Hazardous Materials Transportation Act; the Toxic Substances and
Control Act of 1976; the Occupational Safety and Health Act; the Safe Drinking
Water Act; and the Underground Storage Tank Management Act of 1990). For the
purposes of this Agreement "Hazardous Substances" shall mean (i) any "hazardous
substance," "hazardous material," "toxic substance" or "solid waste" as such
terms are presently defined in those laws specifically listed under the
definition of Environmental Laws in this Agreement.

                                    (i)        There are no due and payable but
unpaid leasing commissions relating to the Property.

                                    (j)       Seller has not entered into any
agreement or assumed any obligation which is not of public record with any
governmental authority or agency which would impose on Buyer the obligation to
make any contributions of money, dedications of land, grants of easements or
rights of way, or to construct, install or maintain any improvements, public or
private, on or off the Property, or which otherwise affect, restrict or encumber
the development of the Property, which has not been, or will not be, satisfied
or discharged prior to closing.

                                    Any reference in this Agreement to
"knowledge," "actual knowledge" or "best of knowledge" of Seller, shall be
deemed to mean the actual knowledge of Vernon D. Gibson, without inquiry or
review of Seller's books and records. Any reference in this Agreement to the
receipt of notices or other communications by Seller shall be deemed to mean the
knowledge by Vernon D. Gibson of receipt by Seller of such notice or
communication in writing to Seller. Buyer acknowledges and agrees that neither
such party nor any other employee or agent of Seller shall have any duty or
obligation under this Agreement or other law to make any affirmative
investigation of the matters covered by the foregoing provisions in order to
determine the accuracy or truthfulness thereof. Buyer has not relied and will
not rely on, and Seller is not liable for or bound by, any express or implied
warranties, guaranties, statements, representations or information pertaining to
the Property or relating thereto made or furnished by Seller, or any real estate
broker or agent representing or purporting to represent Seller, or any third

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party in the form of reports or otherwise, to whomever made or given, directly
or indirectly, orally or in writing, unless specifically set forth in this
Agreement. In addition, Buyer hereby acknowledges and agrees that except with
respect to the foregoing representations and warranties set forth in this
provision above, or that which may be expressly set forth elsewhere in this
Agreement (if at all), the Property is to be conveyed by Seller to Buyer in
"as-is, where-is, with all faults" condition without warranty or representation,
express or implied, as to zoning, physical condition, environmental condition,
suitability for a particular purpose or any other matter whatsoever.

                    3.02     Conditions to Buyer's Closing. The (i) continued
accuracy in all material respects of the representations and warranties set
forth in Section 3.01 above, and (ii) the commitment by the Title Company, upon
payment by Buyer of the premium therefore, to issue to Buyer a title insurance
policy in the form called for by the Title Commitment, subject, however, to all
matters to which the deed is subject in accordance with Section 5.02(a), shall
be a condition precedent to the Buyer's obligation to close hereunder. If any
representation or warranty set forth in Section 3.01 above shall not be correct
in any material respect at or before closing, as may be determined by the
certificate delivered from Seller to Buyer at closing as described in
Section 5.02 or otherwise, or if the Title Company fails upon closing and
payment of its premium to commit to issue a title policy to Buyer as above
provided, Buyer may, as its sole remedy on account thereof, terminate this
Agreement and receive a return of its Deposit, in which event the parties shall
have no further liability hereunder (except for the Continuing Obligations).
Absent any such termination, upon closing hereunder the covenants,
representations and warranties set forth in Section 3.01 above, as modified by
the certificate delivered from Seller to Buyer at closing as described in
Section 5.02, shall be deemed remade as of the date of closing hereunder.
However, notwithstanding anything to the contrary herein, to the extent that any
documents or information regarding the Seller or the Property are disclosed to
Buyer or brought to Buyer's attention prior to closing, either orally or in
writing, and Buyer nevertheless closes on purchase of the Property, Buyer shall
be deemed to have accepted and to have waived any objection to or claim based on
such documents or information. Furthermore, except with respect to any
covenants, representations or warranties which are expressly to survive closing
hereunder (if any), any and all covenants, representations and warranties
contained in this Agreement shall merge in the deed delivered at closing and
shall not survive closing hereunder.

                        3.03     Buyer's Representations and Warranties. Buyer
hereby covenants, represents and warrants to Seller as follows:

                                    (a)       This Agreement has been, and all
the documents to be delivered by Buyer to Seller at closing will be, duly
authorized.

                                    (b)       This Agreement, and the
acquisition of the Property by Buyer, shall not violate any contract, agreement
or instrument to which Buyer is a party or by which the Buyer is bound.

                         3.04     Conditions to Seller's Closing. The continued
accuracy in all material respects of the representations and warranties set
forth in Section 3.03 above shall be a condition

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precedent to the Seller's obligation to close hereunder. If any representation
or warranty set forth in Section 3.03 above shall not be correct in any material
respect at or before closing, Seller may terminate this Agreement and retain the
Deposit without prejudice to or limitation on Seller's remedies on account of
breach or default of contract by Buyer.

                       3.05     Survival of Representations. All of the
representations of Seller and Buyer expressly made in this Agreement and in any
other instrument or agreement entered into in connection herewith shall survive
closing hereunder for a period of six (6) months, after which no suit, action or
claim may be initiated with respect to such matters.

          4.         Pre-closing Obligations.

                       4.01     Operations. Between the Effective Date and
closing hereunder, Seller shall continue to operate the Property in the normal
course of business.

                       4.02     Actions Affecting Property. Between the
Effective Date and the expiration of the Study Period, Seller shall give Buyer
notice of any actions taken or notices received, with regard to leases, title or
otherwise, with respect to the Property. Between the expiration of the Study
Period and closing hereunder, Seller shall not execute any new leases or lease
amendments without Buyer's prior written approval, which approval shall not be
unreasonably withheld, conditioned or delayed. In addition, during the period
between the expiration of the Study Period and closing hereunder, Seller shall
not execute any documents, agreements or instruments affecting title to the
Property, or (to the extent within Seller's control) otherwise allow or permit
the imposition of any liens or other encumbrances which affect title to the
Property, without the prior written approval of the Buyer. In the event that
Buyer fails to respond within 3 business days after its receipt of any request
for approval of a lease or any other document, then Buyer's approval shall be
deemed granted. Furthermore, Buyer shall be responsible for paying, and shall
indemnify and hold harmless Seller from, leasing commissions and other similar
expenses related to leases of space at the Property, provided the terms of such
leases or a renewal or extension thereof commence after the Effective Date, when
and as due, provided further that with respect to any such obligations which
arise in connection with the execution of a new lease after the Effective Date,
such lease is approved or deemed approved by Buyer pursuant to this section.

                       4.03     Service Contracts. Before the expiration of the
Study Period, Buyer shall designate in writing to Seller any landscaping, trash
removal, maintenance or other service contracts or agreements Buyer elects to
have Seller terminate as of closing, and at closing Seller shall take steps to
terminate such contracts and agreements in accordance with their terms (with the
understanding that to the extent that any such contracts require advance notice
for termination to be effective, Buyer shall at closing assume and perform such
contracts until the first date on which the termination may become effective).
Buyer shall be responsible for, and shall pay as of closing, any cancellation
charges or fees for termination of contracts or agreements which Buyer elects to
have terminated.

                       4.04     Marketing of Property. After the Effective Date,
and until closing or earlier termination of this Agreement, Seller may
communicate with other prospective third party

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purchasers, but Seller shall not enter into any other contract for sale of the
Property unless such contract is expressly subject to the prior rights of Buyer
hereunder.

          5.         Closing and Settlement.

                      5.01     Closing Date. The purchase and sale contemplated
herein shall close at the office of Wilmer Cutler Pickering Hale and Dorr LLP
("Seller's Counsel"), 1801 Pennsylvania Avenue, Washington, D.C. within 15
business days after the expiration of the Study Period. In addition, at the
request of Seller, the parties shall meet at the aforesaid offices of Seller's
Counsel one day prior to the closing date in order to verify compliance with all
terms of the Agreement by both parties.

                      5.02     Seller's Deliveries. At closing, upon payment to
Seller of the Purchase Price (subject to closing adjustments in accordance with
this Agreement), Seller shall execute and deliver to Buyer the following
documents, each of which shall be in a form prepared by or reasonably acceptable
to Seller:

                                   (a)       A special warranty deed subject to
(i) liens securing payment of taxes, assessments, vault rents and other public
charges imposed in connection with the Property but which are not yet due as of
the date of closing, (ii) all matters, including without limitation defects in
title to the Property indicated on the Title Commitment, to which Buyer is
deemed to have waived any objection under Section 2.04, (iii) any matters which
could be disclosed by an accurate survey of the Property, (iv) any zoning,
subdivision or other public laws and regulations, and (v) leases or other
occupancy agreements with tenants at the Property.

                                   (b)       A bill of sale, conveying to Buyer
without warranty or representation and without recourse, title to all personal
property, if any, owned by Seller and located at the Property.

                                   (c)       An assignment by Seller, with an
assumption by Buyer, of (1) all leases affecting the Property provided to Buyer
pursuant to Section 2.01 above, (2) all service contracts and agreements which
Buyer elects not to have terminated at closing, (3) all equipment leases,
permits and warranties and other rights relating to the Property which are
assignable without charge or restriction (the "Assignment").

                                   (d)       Letters to each tenant at the
Property notifying the tenants of the sale of the Property to Buyer.

                                   (e)       Evidence, in form reasonably
satisfactory to the Title Company, of Seller's power and authority to enter into
this transaction.

                                   (f)       A written certificate stating that
all representations and warranties contained in Section 3.01 above remain, as of
the date of closing, correct in all material respects as when first made
hereunder or, if not correct, stating the extent to which any such
representations and warranties are not correct ("Seller's Certificate").

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                                   (g)       A District of Columbia Form FP-7C
(the "FP-7C").

                                   (h)       An owner's title affidavit in form
acceptable to the Title Company and Seller.

                                   (i)       A settlement statement in
accordance with the terms of this Agreement (the "Settlement Statement").

                                   (j)       Such additional documents as may be
reasonably necessary or customary to consummate the transactions contemplated by
this Agreement.

                      5.03     Buyer's Deliveries.

                                   (a)       At closing, Buyer shall pay the
Purchase Price in accordance with Section 1.

                                   (b)       At closing, Buyer shall execute and
deliver to Seller the following documents:

                                              (i)       The Settlement
Statement.

                                              (ii)      The Assignment.

                                              (iii)     A written certificate
stating that all representations and warranties contained in Section 3.03 above
remain, as of the date of closing, correct in all material respects as when
first made hereunder or, if not correct, stating the extent to which any such
representations and warranties are not correct (the "Buyer's Certificate").

                                              (iv)     The FP-7C.

                                              (v)       Such additional
documents as may be reasonably necessary or customary to consummate the
transactions contemplated by this Agreement.

                      5.04     Possession. Possession of the Property shall be
delivered to the Buyer on the date of closing. In addition, on or before the
date of closing, Seller shall deliver to Buyer the Seller's copies of all leases
(including all amendments thereto).

                      5.05     Prorations. The following provisions shall apply
to the division of funds, obligations and payments between the parties as of
closing hereunder:

                                  (a)       The parties shall adjust and prorate
the following items as of 11:59 p.m. on the day prior to closing:

                                             (i)       All rent, including base
rent, minimum rent and percentage rent (if any), which relates to the months or
other applicable rent periods up through the month or other applicable period
within which the closing occurs. Any rent which is payable in arrears

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shall be adjusted on the basis of figures equivalent to such rent payable for
the immediately preceding rent period, then readjusted after closing upon
determination of final, actual amounts in accordance with this section. Seller
shall receive a credit for any rental amounts which are due and payable prior to
closing but not actually paid by the respective tenant(s), and Buyer shall have
all rights of collection and enforcement with respect thereto after closing.

                                             (ii)      All amounts payable by
tenants at the Property as periodic estimates of the costs of utilities, vault
rents, taxes, insurance, maintenance, repairs and other operating expenses
relating to the months or other applicable periods up through the month or other
applicable period within which the closing occurs. Seller shall receive a credit
for any estimates of expenses which are due and payable prior to closing but not
actually paid by the respective tenant(s), and Buyer shall have all rights of
collection and enforcement with respect thereto after closing.

                                             (iii)     All real property taxes,
assessments and other governmental impositions of any kind or nature, including
any special assessments or similar charges, accrued or imposed in any connection
with the Property (collectively "Taxes"), which relate to the tax year or other
applicable tax period within which the closing occurs (whether paid or accrued).
With respect to any portion of the Taxes which are payable by any tenant
directly to the authorities, no proration or adjustment shall be made.

                                             (iv)      All fees, costs and
expenses under maintenance, trash removal, janitorial or other service contracts
which relate to the period within which the closing occurs.

                                  (b)      The parties agree that in the event
the Seller's proceeds of the Purchase Price are not delivered to Seller's
account pursuant to Section 1.02(b) by 3:00 p.m. Eastern Standard Time on the
day of closing determined in accordance with Section 5.01 above, then the
prorations described in subsection (a) above shall be recalculated as of
11:59 p.m. Eastern Standard Time the day immediately prior to the first day on
which Seller has such funds by 3:00 p.m. Eastern Standard Time. Such
recalculation shall not diminish or otherwise affect the parties' obligation to
close at the time and at the place required by the terms of this Agreement.

                                  (c)      Seller shall transfer to Buyer a
credit against the Purchase Price equal to the total amount held by the Seller
as security deposit money under tenant leases in connection with the Property.
All leasing commissions and tenant improvement costs arising in connection with
leases, lease amendments or other agreements with tenants which are entered into
by Seller with Buyer's approval (not to be unreasonably withheld) on or after
the Effective Date and before closing shall be assumed and paid by Buyer, with
an adjustment of the Purchase Price to be made at closing in order to credit to
Seller any payments of such amounts made by Seller prior to closing. In
addition, Buyer shall assume and pay, and hereby indemnifies Seller from, any
commissions or fees becoming payable to brokers or agents after closing,
including commissions or fees which become payable after closing on account of
property visits, lease negotiations or other broker or agent activities taking
place prior to closing.

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                                  (d)      The obligations under this section
shall survive closing. In the event that any errors in prorations made at
closing are discovered or additional adjustments to prorations are necessary
after closing, the parties shall promptly re-adjust the subject amounts, with
such payments to be made between the parties as are necessary to correct the
errors. In all events, the parties shall make such adjustments, or confirm in
writing that no such adjustments are necessary, within 120 days after the end of
the calendar year in which the closing occurs.

                        5.06     Closing Costs. Buyer shall pay any and all
transfer, recordation, documentary stamp and other similar taxes and charges
imposed in connection with the delivery and recordation of a deed for the
Property and otherwise in connection with this transaction. In addition, Buyer
shall pay all costs of the survey, examination of title and all title insurance
policy premiums. Seller and Buyer shall each pay the costs of its own counsel.

          6.         Condemnation. In the event any governmental or
quasi-governmental authority notifies Seller, or Seller becomes aware, of any
permanent or temporary actual taking or condemnation of all or any material
portion of the Property ("Taking"), Seller shall promptly notify Buyer of the
same. If such Taking would not materially adversely affect Buyer's intended
development of the Property, Buyer shall proceed to closing with no reduction in
the Purchase Price, and all proceeds of such Taking less costs of collection
incurred by Seller shall be delivered or assigned to Buyer at closing. If,
however, such Taking would materially adversely affect Buyer's intended
development of the Property, Buyer shall have the right, at its sole option,
either to (a) proceed to closing with no reduction in the Purchase Price, in
which event any and all proceeds of such Taking less costs of collection
incurred by Seller shall be delivered or assigned to Buyer at closing, or
(b) terminate this Agreement, in which event the Deposit shall be promptly
released to Buyer, and Seller and Buyer thereafter shall be released from any
further liabilities or obligations under this Agreement, except for the
Continuing Obligations. Within ten (10) days after Buyer's receipt of written
notice from Seller regarding the occurrence of any Taking, Buyer shall notify
Seller in writing of Buyer's determination as to whether such Taking would or
would not materially adversely affect Buyer's intended development of the
Property. If Buyer fails to deliver such written notice to Seller prior to the
expiration of said 10-day period, then Buyer shall be deemed to have made a
determination that such Taking shall not adversely affect Buyer's intended
development of the Property, and an election to proceed to closing with no
reduction of the Purchase Price in accordance with subclause (a) above.

          7.         Default/Remedies.

                       7.01     Default by Seller. If Seller breaches or
defaults in any covenant or obligation under this Agreement prior to closing
(but not including the breach of any representation or warranty set forth in
Section 3.01 hereof, which shall be addressed in Section 3.02 above), and such
breach or default is not cured within a reasonable time after written notice
from Buyer, then Buyer shall have, as its sole option and remedy on account
thereof, the right to either (a) enforce this Agreement by specific performance,
or (b) terminate this Agreement and receive a return of the Deposit; provided,
however, if Seller intentionally

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breaches any of its covenants contained herein, and Buyer terminates this
Agreement as a result thereof, Seller shall reimburse Buyer for its reasonable
out-of-pocket costs up to $300,000.

                         7.02     Default by Buyer. If prior to closing, Buyer
breaches any covenant, warranty or representation contained in this Agreement,
then Seller shall have the right to retain the full amount of the Deposit
hereunder, as Seller's sole remedy and liquidated damages on account of the
Buyer's default. Notwithstanding the foregoing, this provision shall not limit
the Seller's right and claim against Buyer for any portion of the total Deposit
which is not paid to Seller, and further provided that this provision shall not
limit the Seller's right to pursue and recover on a claim with respect to any
Continuing Obligations of Buyer. The parties agree that the Seller's actual
damages would be difficult to ascertain and that the total Deposit is the
parties' best and good faith estimate of such damages and not a penalty.

          8.            Deposit.

                         8.01     Disbursement of Deposit. Escrow Agent shall
hold the Deposit in an interest bearing account at a federally insured financial
institution in the Washington metropolitan area. Any interest earned on the
Deposit shall be and become part of the Deposit. Escrow Agent shall retain
and/or return the Deposit as provided in this Agreement. If by 4:00 p.m.
(Eastern Standard Time) on the expiration date of the Study Period, Buyer has
delivered the Study Period Notice, terminating the Agreement, then Escrow Agent
shall return the Deposit to Buyer.

                         8.02     Disputes. In the event of any dispute between
Seller and Buyer regarding the disbursement of the Deposit, Seller shall hold
the Deposit until (i) Seller and Buyer agree with respect to the disbursement of
the Deposit or (ii) Escrow Agent receives a final, non-appealable, unstayed
order binding upon it from a court of competent jurisdiction with respect to the
disbursement of the Deposit.

                         8.03     Attorneys' Fees and Interest. In the event
there exists a dispute between Seller and Buyer as to the disbursement of the
Deposit in accordance with Section 8.01, and a court of competent jurisdiction
determines that the Deposit should have been disbursed to either Seller or to
Buyer, then in addition to all other amounts payable under this Agreement, and
notwithstanding any limitation set forth in this Agreement on the liability of
any party, the non-prevailing party in such litigation or proceeding shall pay
all fees and expenses (including, without limitation, court costs and reasonable
attorneys' fees) incurred by the other party in obtaining the release of the
Deposit.

          9.          Miscellaneous.

                         9.01     Assignment. Buyer represents to Seller that
Buyer intends to purchase the Property for Buyer's own investment purposes.
Likewise, Buyer shall not assign or transfer this Agreement or any interest
herein or in the Property to any third party without the prior written consent
of the Seller. However, Seller agrees to not unreasonably withhold its consent
to any request by Buyer for consent to an assignment of this Agreement prior to
closing to a single asset

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entity formed solely for the purpose of holding title to the Property for
benefit of Buyer. Likewise, Seller may withhold its consent to, and Buyer hereby
agrees to not undertake, any assignment for the purpose of transferring directly
or indirectly the rights to purchase the Property in return for monetary
consideration. Upon any assignment, the original named Buyer herein shall not be
released but shall remain primarily responsible for all duties, obligations and
liabilities of the Buyer hereunder. This Agreement shall inure to the benefit
of, and be binding upon, the successors and assigns of the parties hereto.

                         9.02     No Personal Liability. No employee, officer,
director, trustee, partner or affiliate of Seller, or any investment manager or
other agent of Seller, and except for the obligations of Buyer Parties under
Section 2.03(d) or any Confidentiality Agreement delivered under Section
2.03(d), no employee, officer, director, trustee, partner or affiliate of Buyer
or any investment manager or agent of Buyer, shall be personally liable or
responsible for any duties, obligations or liabilities of the Seller or Buyer,
as applicable, hereunder or in any other connection with the Property or this
transaction.

                         9.03     Limitation of Assets. To the extent that
Seller has obligations or liabilities of any kind after closing under this
Agreement, recourse for enforcement of such obligations or liabilities (if any)
shall be limited to an amount of $500,000, and no action may be taken with
respect to any greater amounts or other assets of Seller. However, this
provision shall not be construed or interpreted as creating any such obligations
or liabilities of Seller, which shall be determined by other provisions of this
Agreement.

                         9.04     Limitation of Claims. No statutory or other
legal rights under federal, state or local laws and/or regulations shall apply
between the parties with respect to the Property and the transactions
contemplated by this Agreement, and the parties are liable only pursuant to the
covenants, representations and/or warranties expressly stated in this Agreement
and no other agreements, laws or regulations. Likewise, upon closing hereunder,
except as otherwise specifically set forth in this Agreement, Buyer shall be
deemed to have automatically released and discharged forever the Seller and all
Seller Parties from and against any and all Claims, including but not limited to
actions for contribution or reimbursement after environmental remediation, which
might otherwise arise under any law or regulation. Without limiting the
foregoing, from and after closing hereunder, Buyer shall indemnify, defend with
counsel reasonably acceptable to Seller, and hold harmless Seller and all Seller
Parties from and against any and all Claims caused by or arising from the
generation, storage, presence, release, discharge, remediation or removal of
Hazardous Substances on or from the Property, including without limitation the
soils or groundwater in or under the Property. Notwithstanding the foregoing,
Buyer shall not be liable to Seller or Seller Parties under the immediately
preceding sentence for claims by third parties arising from the occurrence
before closing of any release (including without limitation any release by
migration through the soils or ground water) of Hazardous Substances from the
Property onto adjacent property. The provisions of this Section 9.04 shall
survive closing or any termination of this Agreement.

                         9.05     Notices. All notices given in connection with
this Agreement shall be effective as of the date personally delivered, one day
after the date delivered to overnight courier,

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or three days after being mailed by U.S. Mail (postage prepaid), as the case may
be, if sent to the parties at the following addresses:

   

If to Seller:

Potomac Electric Power Company
701 Ninth Street, N.W., Rm. 9404
Washington, D.C. 20068
Attn: Mr. Vernon D. Gibson

   

and to:

Potomac Electric Power Company
701 Ninth Street, N.W., Rm. 9404
Washington, D.C. 20068
Attn: Mr. Kambiz Molkara

   

and to:

Potomac Electric Power Company
701 Ninth Street, N.W., Rm. 1113
Washington, D.C. 20068
Attn: Michael J. Boland, Esq.

   

With a copy to:

Wilmer Cutler Pickering Hale and Dorr LLP
1455 Pennsylvania Avenue, N.W.
Washington, D.C. 20004
Attn: Allen H. Fox, Esq.

   

If to Buyer:

Akridge
601 Thirteenth Street, NW, Suite 300N
Washington, DC 20005
Attn: Thomas W. Wilbur

                         9.06     Entire Agreement. This Agreement contains all
agreements of the parties with respect to the Property and supersedes any prior
discussions, contracts or other agreements with respect thereto. No
modifications to this Agreement or waivers of any rights or benefits provided
herein shall be binding unless signed by the party against whom such
modification or waiver is sought to be enforced.

                         9.07     Broker. Each of Seller and Buyer represents
and warrants to the other that it has not dealt with any broker or finder in
connection with the transaction contemplated by this Agreement, except for
Cassidy & Pinkard on behalf of Seller (the "Broker"). Seller shall pay a
commission to the Brokers at closing according to separate agreement.
Furthermore, each of Seller and Buyer indemnifies and holds the other harmless
from and against any losses, damages, costs or expenses (including attorneys'
fees) incurred by such other party due to a breach of the foregoing warranty and
representation. The foregoing indemnity shall survive closing or any termination
of this Agreement.

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                         9.08     Attorney's Fees. If any action is brought by
either party hereto against the other party, the party in whose favor a final
judgment shall be entered shall be entitled to recover court costs and
reasonable attorneys' fees incurred in connection therewith.

                         9.09     Perpetuities. If the rule against perpetuities
would invalidate this Agreement or any portion hereof, due to the potential
failure of an interest in property created herein to vest within a particular
time, then notwithstanding anything to the contrary herein, each such interest
in property must vest, if at all, before the passing of 21 years from the date
of this Agreement, or this Agreement shall become null and void upon the
expiration of such 21 year period and the parties shall have no further
liability hereunder.

                         9.10     Severability. No determination by any court,
governmental body or otherwise that any provision of this Agreement or any
amendment hereof is invalid or unenforceable in any instance shall affect the
validity or enforceability of any other such provision or such provision in any
circumstance not controlled by such determination. Each such provision shall be
valid and enforceable to the fullest extent allowed by, and shall be construed
wherever possible as being consistent with, applicable law.

                         9.11     Recording. This Agreement may not be recorded
among the land records or among any other public records without the Seller's
prior written consent (which consent may be withheld for any reason).

                         9.12     Counterparts. This Agreement may be signed in
counterparts and shall be fully enforceable when signed in such manner.

                         9.13     Timing. The phrase "business days" as used
herein shall mean the days of Monday through Friday, excepting only federal
holidays. The phrase "calendar days" as used herein shall mean all days of the
week, including all holidays. The term "days" without reference to calendar or
business days shall mean calendar days. Time is of the essence of this
Agreement.

                         9.14     Soil Disclosure. The characteristics of soil
on the Property as described by the Soil Conservation Service of the United
States Department of Agriculture in the Soil Survey of the District of Columbia
and as shown on the Soil Maps of the District of Columbia is Urban Land. For
further information, Purchaser may contact a soil-testing laboratory, the
District of Columbia Department of Environmental Services or the Soil
Conservation Service of the Department of Agriculture.

                         9.15     UST Disclosure. Concurrently with its
execution of this Agreement, Seller has executed and delivered to Purchaser,
pursuant to the Underground Storage Tank Management Act of 1990, an Underground
Storage Tank Real Estate Transfer Disclosure Form in the form attached to this
Agreement as Exhibit E.

                         9.16     Approval by Seller's Board of Directors. The
obligation of Seller and Buyer to proceed to closing shall be conditioned upon
approval by Seller's Board of Directors of this Agreement and the consummation
of the transactions described herein.

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          IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the dates set forth below.

SELLER:

PEPCO HOLDINGS, INC.

   KEVIN McGOWAN                    

Witness

By:             W. J. SIM                                       
     Name: William J. Sim                               
     Title: President & C.O.O.                          

 

Date of Execution: 6/3/05                                 

BUYER:

THE JOHN AKRIDGE DEVELOPMENT COMPANY

   JAYNE SHISTER                        

Witness

By:           T. WILBUR                                      
     Name: Thomas W. Wilbur
     Title: Senior Vice President

 

Date of Execution: 3 June 2005                         

Attachments

   

Exhibit A - Plat/Description of Property
Exhibit B - Environmental Reports
Exhibit C - Not Applicable
Exhibit D - Confidentiality Agreement
Exhibit E - UST Disclosure Form

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EXHIBIT A

DESCRIPTION OF PROPERTY

(See Attached)

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EXHIBIT B

ENVIRONMENTAL REPORTS

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EXHIBIT C

NOT APPLICABLE

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EXHIBIT D

CONFIDENTIALITY AGREEMENT

The undersigned, a Buyer Party (as defined in the attached Purchase Agreement)
of _______________________, with respect to the property located between First
and Second Street from S Street on the north to V Street on the south in
Southwest Washington, D.C., agrees to be bound by the terms of Section 9 of the
attached Purchase Agreement.

  

[BUYER PARTY NAME]

By:     _____________________________
           Name:
           Title:

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EXHIBIT E

UST DISCLOSURE FORM

D.C. DEPARTMENT OF CONSUMER AND REGULATORY AFFAIRS
ENVIRONMENTAL REGULATION ADMINISTRATION

UNDERGROUND STORAGE TANK REAL ESTATE TRANSFER
DISCLOSURE FORM

          The Underground Storage Tank (UST) Management Act of 1990, as amended,
and implementing regulations, require that sellers of real property in the
District of Columbia inform prospective purchasers in writing, prior to entering
into a contract for sale, of the existence or removal of any USTs of which the
seller has knowledge. If the sale is of commercial property, seller is also
required to inform prospective purchasers of any prior use of the property of
which seller has actual knowledge which suggests the existence of tanks on the
property. (For example, if seller knows there was formerly a gas station at the
site, he is required to disclose this fact). Sellers of individual condominium
or cooperative units are not subject to the disclosure requirements. Sellers of
single-family homes should use the appropriate from or provide disclosure in the
sales contract.

Seller Name: ______________________________________________________________

Address of property to be sold: _______________________________________________

1)

To the best of your knowledge, are there any underground storage tanks (USTs)
located on or under the above-reference real property? Yes ____ No ____

2)

If yes, how many USTs are located on the property? ________________________

a)

What is the capacity of the tanks? _______

b)

Are they presently in service _______ or abandoned _______?

c)

If in service, for what purpose are they used? ________________________
_____________________________________________________________

3)

Have you removed any USTs during the period of time you have owned the
above-referenced property? Yes ____ No ____

4)

If Yes, how many USTs were removed? ____________ When? _______________

By whom? _________________________________________________________

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a)

What were their capacities?  ____________________________________

b)

Have you and/or the parties who removed the USTs complied with all requirements
of the D.C. UST Regulations pertaining to closure of USTs? Yes ____ No ____
Don't know ____

5)

Do you know of any prior uses of the property which suggest that USTs may be or
have been used on the property? Yes ____ No ____

If yes, please describe the former use:  __________________________________

PEPCO HOLDINGS, INC.

, as seller

By:  ______________________________
Name:
Title:

_________________________
Date

PURCHASER ACKNOWLEDGES THAT PURCHASER HAS RECEIVED THE ABOVE DISCLOSURES PRIOR
TO SIGNING A CONTRACT FOR PURCHASE.

THE JOHN AKRIDGE DEVELOPMENT COMPANY

, as purchaser

By:  ______________________________
Name:
Title:

_________________________
Date

          Information pertaining to USTs and UST removals of which the D.C.
Government has received notification, is on file with the D.C. Department of
Consumer and Regulatory Affairs, Environmental Regulation Administration, UST
Branch, 2100 MLK, Jr. Avenue, S.E., Wash., D.C., Phone (202) 404-1167.

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