exv10w30



 






EXHIBIT 10.30




AGREEMENT OF PURCHASE AND SALE AND




ESCROW INSTRUCTIONS




FOR




ENTERPRISE CENTER




4100 and 4120 Lafayette Center Drive




and




15100 and 15120 Enterprise Court, Chantilly, Virginia




Date: January 27, 2005




 









 








AGREEMENT OF PURCHASE AND

SALE OF PROPERTY

AND ESCROW INSTRUCTIONS




4100 and 4120 Lafayette Center Drive

and

15100 and 15120 Enterprise Court, Chantilly, Virginia




     THIS AGREEMENT OF PURCHASE AND SALE OF PROPERTY AND ESCROW INSTRUCTIONS (this “Agreement”) is
made and entered into as of January 27, 2005, by and between Enterprise Dulles, LLC, a Virginia
limited liability company (“Seller”), and First Potomac Realty Investment Limited Partnership, a
Delaware limited partnership (“Buyer”).



RECITALS:




     R-1. Seller is the owner of the Property (as hereinafter defined) located in Chantilly,
Virginia, as legally and more particularly described on Exhibit A attached hereto.



     R-2. Buyer wishes to purchase, and Seller wishes to sell, the Property on the terms and
conditions set forth herein.



     NOW, THEREFORE, in consideration of the mutual covenants and conditions contained herein, and
good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged,
Seller and Buyer hereby agree as follows:



     Article 1 of this Agreement consists of definitions for certain of the defined terms that are
used throughout this Agreement.



     Article 2 of this Agreement constitutes instructions to “Escrow Agent” (as such term is
defined below), as well as agreements between Buyer and Seller.



     Article 3 of this Agreement consists of further agreements between Buyer and Seller, with
which Escrow Agent need not be concerned (except as otherwise directed in Article 2). Escrow Agent
may rely entirely on the instructions contained in Article 2; however, as between Buyer and Seller,
the provisions of Article 3 shall control if there is any inconsistency between those provisions
and the instructions in Article 2.



ARTICLE 1

DEFINITIONS




     The following terms, wherever used in this Agreement, shall have the respective meanings set
forth below:



     1.1. Actual Knowledge. “Actual Knowledge” means the actual (and not the constructive)
current knowledge of the person or entity making a representation or warranty in this Agreement to
his or its “Actual Knowledge”, and does not imply any inspection,



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examination or other inquiry undertaken by such person or entity to determine the accuracy of
any representation, warranty or other statement made to such person’s or entity’s “Actual
Knowledge” in this Agreement or in any of Seller’s Closing Documents or Buyer’s Closing Documents,
as applicable.




     1.2. Agreement. “Agreement” has the meaning set forth in the first paragraph of the
preamble.



     1.3. Broker. “Broker” means Matan Realty, LLLP.



     1.4. Buyer. “Buyer” has the meaning set forth in the first paragraph of the preamble.



     1.5. Buyer’s Knowledge. “Buyer’s Knowledge” means the Actual Knowledge of Nicholas R.
Smith, an officer of Buyer, and does not imply any inspection, examination or other inquiry
undertaken by Buyer or said individual to determine the accuracy of any representation, warranty or
other statement made “to Buyer’s Knowledge” in this Agreement or in any of Buyer’s Closing
Documents.



     1.6. Buyer’s Closing Documents. “Buyer’s Closing Documents” has the meaning specified
in the last sentence of Section 2.2.2.



     1.7. Closing. “Closing” means the execution and delivery by Seller of the Seller
Closing Documents and by Buyer of the Buyer Closing Documents, as applicable, concurrently with the
disbursement by the Title Company of the Purchase Price to Seller as at a “New York-style” closing
in conformity with the terms and provisions of this Agreement.



     1.8. Closing Date. “Closing Date” means on or before the second (2nd)
Business Day following the Parties’ receipt of the Existing Lender Approvals (as defined in Section
3.3.6 below), but in no event later than March 15, 2005.



     1.9. Closing Indemnity Agreement. “Closing Indemnity Agreement” shall mean a separate
written indemnification agreement for the Seller and for the Buyer covering the respective
indemnities set forth in Section 2.5.2 and Section 3.5.2.



     1.10. Day and Business Day. The term “day” means a calendar day, and the term
“Business Day” means any day on which commercial banks are generally open for business in the
Commonwealth of Virginia. Any period of time specified in this Agreement that would otherwise end
upon a non-Business Day shall be extended to, and shall end upon, the next following Business Day.



     1.11. Deposit. “Deposit” has the meaning specified in Section 2.1.1.1.



     1.12. Effective Date. “Effective Date” means the last date on which the Seller and
the Buyer have executed and delivered this Agreement, as indicated by the later of the dates
appearing next to their respective signatures below.



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     1.13. Environmental Law. “Environmental Law” shall mean any environmental or health and
safety-related law, regulation, rule, ordinance, order or determination of any governmental or
judicial authority at the federal, state, or local level, to the extent applicable to the Property,
including, but not limited to, the Comprehensive Response, Compensation and Liability Act, as
amended (“CERCLA”), the Resource Conservation and Recovery Act, as amended (“RCRA”), the Federal
Clean Water Act, as amended, the Toxic Substances Control Act, as amended, and the Hazardous
Materials Transportation Act, as amended.



     1.14. Environmental Reports. “Environmental Reports” means, collectively, the reports
for the Property that are identified in the Schedule of Environmental Reports attached hereto as a
part of Exhibit M.



     1.15. Escrow Agent. “Escrow Agent” means Chicago Title Insurance Company having an
address at 19 East Fayette Street, Suite 300, Baltimore, Maryland 21202, Attn: Albert E. Sikorsky,
III.



     1.16. Escrow. “Escrow” means the escrow established by and pursuant to this
Agreement, with Escrow Agent, as applicable, for purposes of consummating the sale and purchase of
the Property in accordance with this Agreement.



     1.17. Existing Title Policy. “Existing Title Policy” means that certain owner’s
policy of title insurance for the Property (Policy No. 5312-426460), dated November 21, 2000,
issued to Seller by Commercial Title Group, Inc., as Agent for Fidelity National Title Insurance
Company of New York.



     1.18. Feasibility Period. “Feasibility Period” means the period that commences on the
Effective Date and that expires on February 11, 2005.



     1.19. Feasibility Period Expiration Date. “Feasibility Period Expiration Date” means
February 11, 2005.



     1.20. Hazardous Substance. “Hazardous Substance” means any pollutant, contaminant,
toxic substance, hazardous waste, hazardous material, hazardous substance, petroleum or petroleum
product, asbestos, polychlorinated biphenyls, underground or aboveground storage tanks and the
contents thereof including, without limitation, any such materials defined in or regulated pursuant
to any Environmental Law.



     1.21. Improvements. “Improvements” mean all of the buildings, improvements, fixtures,
structures, utilities and amenities on the Land.



     1.22. Land. “Land” means that certain parcel of land that is legally and more
particularly described on Exhibit A attached hereto, together with all easements, benefits,
rights, privileges and other rights appurtenant thereto (“Land”).



     1.23. Laws. “Laws” means any and all constitutions, statutes, ordinances, rules,
regulations, orders, rulings or decrees of the United States, or of the state, county, city, other
municipality, political subdivision, or governmental or quasi-governmental authority having



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jurisdiction or otherwise operating where the Property is located, or any agency, division,
district, court or other authority thereof.



     1.24. Lease. “Lease” means (1) any of the leases of commercial space within the
Improvements identified in the Schedule of Leases (Rent Roll) attached hereto as Exhibit D;
and (2) any lease of space within the Improvements entered into after the Effective Date subject to
and in conformity with the provisions set forth in Section 3.2.1(xvii). “Leases” mean,
collectively, every Lease.



     1.25. Parties and Party. “Parties” means, collectively, Buyer and Seller and “Party”
means either of the Buyer or Seller, as the case may be.



     1.26. Permit. “Permit” means any permit, certificate, license or other form of
authorization or approval issued by a government agency or authority and legally required for the
occupancy and use of the Property or any component thereof (including, without limitation, any
certificates of occupancy with respect to the Improvements) in Seller’s possession on Effective
Date. “Permits” means, collectively, every Permit.



     1.27. Permitted Exceptions. “Permitted Exceptions” means with respect to the Real
Property (i) liens for all real property taxes and general and special assessments for the current
year that are not yet due and payable, (ii) liens or encumbrances arising out of any activity of
Buyer with respect to the Real Property, (iii) the Leases and the lien securing the Existing
Financing, (iv) title exceptions reflected in the Title Commitment and matters reflected on the
Survey as updated by a Buyer’s Survey Update, if applicable, that are not objected to by Buyer or
are otherwise deemed to be “Permitted Exceptions” pursuant to the title review process set forth in
Section 2.3.2, expressly including all standard “printed form” exceptions and exclusions from
coverage customarily included within the form of a policy for owner’s title insurance.
Notwithstanding anything to the contrary set forth in this Agreement, the term Permitted Exceptions
expressly excludes any liens, monetary encumbrances or judgments affecting title to the Property,
all of which, subject to the conditions and limitations set forth in Section 2.3.4, shall be
released of record by Seller at its sole cost and expense on or before Closing pursuant to Section
2.3.4, except for the lien securing the Existing Financing and except for any liens or encumbrances
referenced in clause (ii) above.



“Permitted Exception” means any of the Permitted Exceptions.



     1.28. Personal Property. “Personal Property” means all of the non-affixed equipment,
trade fixtures, furnishings, furniture, appliances, equipment, decorative items, inventory,
supplies, tools and other tangible personal property owned by Seller and used or held for use in
operation of the Real Property, including, without limitation, the personal property listed on
Exhibit C hereto.



     1.29. Plans. “Plans” means the plans and specifications for the original construction
of the applicable Improvements, together with any subsequent material modifications thereof, to the
extent such items are in the Seller’s possession on the Effective Date.



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     1.30. Property. “Property” means collectively (i) the Real Property; (ii) the Personal
Property, (iii) the Service Contracts; (iv) all of Seller’s rights in or to condemnation awards
and insurance proceeds (to the extent not applied to restoration) relating to the Real Property,
subject to the terms set forth herein; (v) all assignable warranties, guaranties, bonds, claims and
rights, if any, in favor of Seller relating to the construction, maintenance, operation or repair
of the Real Property or any component thereof, if any; (vi) all of Seller’s right, title and
interest in and to any assignable drawings, plans, specifications, surveys, manuals and contracts
relating to construction, maintenance and operation of the Real Property or the Personal Property
that are in Seller’s possession on the Effective Date; (vii) all Permits applicable to the Real
Property; (viii) all of Seller’s interest in and under all of the Leases including unapplied
security deposits held by Seller in connection therewith, which shall be credited against the
Purchase Price payable by Buyer at Closing hereunder; and (ix) all other tangible and intangible
property or rights which Seller owns or in which Seller has an interest in connection with its
ownership and operation of the Real Property, to the extent the same are assignable.



     1.31. Purchase Price. “Purchase Price” means the purchase price being paid by Buyer
to Seller for the Property, as specified in Section 2.1.



     1.32. Real Property. “Real Property” means, collectively, the Land and the
Improvements.



     1.33. Seller. “Seller” has the meaning set forth in the first paragraph of the
preamble.



     1.34. Seller’s Knowledge. “Seller’s Knowledge” means, as the context of this
Agreement may require, the Actual Knowledge of Mark C. Matan, and does not imply or require any
inspection, examination or other inquiry undertaken by Seller or the said individual to determine
the accuracy of any representation, warranty or other statement made “to Seller’s Knowledge” in
this Agreement or in any of Seller’s Closing Documents. Seller represents, however, that Mark C.
Matan is the individual to whom material facts relevant to the matters covered by the
representations and warranties of Seller that are set forth in this Agreement would be reported in
the ordinary course of business. Notwithstanding the foregoing, or anything else set forth in this
Agreement to the contrary, (i) Mark C. Matan shall not have any personal liability whatsoever under
this Agreement; (ii) none of the officers, directors, stockholders, employees, agents, principals,
members, partners or affiliates of the Seller shall have any personal liability whatsoever under
this Agreement; and (iii) Buyer and Buyer’s officers, directors, employees, principals and
affiliates hereby expressly disclaim and waive any and all rights they may have to bring any
actions or claims against Mark C. Matan, or any of the officers, directors, stockholders,
employees, agents, principals, members, partners or affiliates of Seller for or in connection with
the provisions of this paragraph or in connection with any representations and/or warranties that
are made throughout this Agreement to the applicable “Seller’s Knowledge”, as herein defined.



     1.35. Seller Representative. “Seller Representative” means Mark C. Matan.



     1.36. Seller’s Closing Documents. “Seller’s Closing Documents” has the meaning
specified in the last sentence of Section 2.2.1.



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     1.37. Service Contract. “Service Contract” means any written contract or other
arrangement for the provision of services relating to the construction, maintenance, repair or
operation of the Property; excluding, however, any property management contract or arrangement.
“Service Contracts” mean, collectively, every Service Contract.



     1.38. Surveyor. “Surveyor” means Lavelle & Associates, Inc.



     1.39. Survey. “Survey” means that certain ALTA/ACSM Survey of the Real Property
prepared by and most recently certified by the Surveyor.



     1.40. Tenant. “Tenant” means any tenant or lessee under a Lease.



     1.41.
Title Commitment. “Title Commitment” means a commitment for title
insurance acquired by Buyer at its cost from the Title Company in connection with its proposed
acquisition of the Real Property and the issuance of the Title Policy.



     1.42. Title Company. “Title Company” means Chicago Title Insurance Company.



     1.43. Title Policy. “Title Policy” means an ALTA owner’s policy of title
insurance, in the amount of the Purchase Price, insuring, at standard rates (excluding endorsement
premiums), fee simple title to the Real Property pursuant to the Title Commitment, under the latest
ALTA standard full coverage owner’s title insurance policy form, which shall contain no exceptions
except for the Permitted Exceptions and shall be dated as of the Closing Date, as more fully
described below in Section 2.3.3.



     1.44. Other Definitions. Terms defined in any other part of this Agreement shall have
the defined meanings wherever capitalized herein. As used in this Agreement, the terms “herein,”
“hereof” and “hereunder” refer to this Agreement in its entirety and are not limited to any
specific sections; and the term “person” means any natural person, other legal entity, or
combination of natural persons and/or other legal entities acting as a unit. Wherever appropriate
in this Agreement, the singular shall be deemed to refer to the plural and the plural to the
singular, and pronouns of certain genders shall be deemed to comprehend either or both of the other
genders.



ARTICLE 2

COVENANT OF PURCHASE AND SALE AND INSTRUCTIONS TO ESCROW AGENT




     In accordance with and subject to the terms and conditions of this Agreement, for and in
consideration of the Purchase Price, Seller shall sell to Buyer, and Buyer shall purchase from
Seller, the Property. No later than two (2) Business Days after the Effective Date, Buyer shall
deliver a copy of this Agreement to Escrow Agent, and Escrow Agent shall promptly notify Seller
Representative on behalf of the Seller, of such delivery and shall evidence its agreement to act as
Escrow Agent hereunder by countersigning and delivering to Buyer and Seller a copy of this
Agreement.



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     In connection with the administration of Escrow and Closing, Buyer and Seller hereby agree,
and advise and instruct Escrow Agent, as follows:



     2.1 Purchase Price. The Purchase Price for the Property shall be Twenty Nine Million
Five Hundred Thousand Dollars ($29,500,000.00) (the “Purchase Price”), which shall be payable as
provided below.




	 	2.1.1  	Buyer’s Deposit.






2.1.1.1 Buyer’s Deposit. Within two (2) business days after full execution
of this Agreement by Buyer and Seller, Buyer shall deliver to Escrow Agent a deposit
(the “Deposit”) either, at Buyer’s election, (i) in the form of cash or immediately
available federal funds in the amount of Seven Hundred Fifty Thousand Dollars
($750,000.00), to be held in escrow in an interest bearing account; or (ii) in the
form of an irrevocable commercial letter of credit (collectively with any additional
letters of credit or replacements therefor or extensions thereof being referred to
herein as the “Credit”), having an expiration date no earlier than six (6) months
after the Effective Date of this Agreement, and issued by a bank or other financial
institution that is acceptable to Seller in its reasonable discretion and capable of
being drawn in person at a financial institution located in the Washington, DC
metropolitan area. The Deposit whether in the form of cash or Credit, shall be
dealt with by the Escrow Agent in conformity with the terms of this Agreement. All
interest earned on the Deposit shall be paid to the Party entitled to receive the
Deposit pursuant to the terms of this Agreement. The term “Deposit”, as used in
this Agreement, shall include any interest that may accrue on any cash Deposit. Any
Credit given as the Deposit shall be issued to the Seller and Escrow Agent, as their
interests may appear, by a commercial banking institution reasonably acceptable to
Seller, shall be delivered to Escrow Agent, and shall be in substantially the form
of Exhibit R attached hereto and incorporated herein by this reference. Any
Credit may be drawn upon: (1) by Seller, if Buyer is in default of its obligations
under this Agreement beyond any applicable notice and cure period specified herein;
or (2) by Escrow Agent, if the Credit is due to expire within thirty (30) days and
the expiration date of the Credit has not been extended as required by the terms of
this Section 2.1.1. In the event that the Credit shall be due to expire prior to
the Closing Date, Buyer shall, at least thirty (30) days prior to the expiration of
the Credit or each subsequent Credit, substitute a replacement Credit or cause the
issuer to extend the expiration date of the Credit in such intervals of up to six
(6) months each from time to time as may be necessary to cause the expiration date
of the Credit to be at least thirty (30) days after the reasonably anticipated
Closing Date. If the Credit has not been extended or a replacement Credit
substituted therefor as hereinabove required, Escrow Agent shall, upon the written
direction of Seller, draw upon the Credit, in which event the funds received upon
such draw shall be deemed to constitute the Deposit and shall be deposited in
conformity with the provisions of Section 2.1.1.2, and otherwise shall be held and
dealt with as provided in this Agreement for a cash Deposit. Whenever Seller is
entitled to the Deposit as provided in this Agreement, Escrow Agent shall, upon the
written direction of Seller, immediately



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deliver the Credit to Seller. Whenever Escrow Agent is required to draw against the
Credit as provided in this Agreement, Escrow Agent shall promptly do so and hold the
proceeds thereof in escrow as provided in this Agreement for a cash Deposit. If a
dispute shall arise with respect to the Deposit, Escrow Agent shall continue to hold
any Credit or other Deposit pursuant to the terms of this Section 2.1.1, and Buyer
shall extend the maturity of the Credit for periods of up to six (6) months each as
necessary from time to time to permit resolution of such dispute prior to the
expiration of the Credit, and the provisions of this Section 2.1.1 permitting the
Credit to be drawn shall apply in the event Buyer shall fail to extend the Credit as
required at any time. The obligations of the Escrow Agent with respect to the
Deposit shall be governed by the terms and conditions set forth below in this
Article 2.




2.1.1.2 Investment of Cash Deposit. Any cash Deposit, while held in Escrow,
shall be held by the Escrow Agent in escrow and invested in an interest bearing
money market account that is mutually approved by Seller and Buyer, such approval
not to be unreasonably withheld, conditioned or delayed. All interest earned on any
cash Deposit while in Escrow shall be added to, and become part of, the Deposit.




2.1.1.3 Application of Deposit. In the event that Buyer terminates this
Agreement after the Effective Date in conformity with Buyer’s rights hereunder,
Escrow Agent shall, immediately upon receipt of written notice thereof from both
Buyer and Seller to Escrow Agent deliver the Deposit to Buyer; provided, however,
that if Buyer terminates this Agreement pursuant to the terms and conditions of
Section 2.4 hereof on or before the Feasibility Period Expiration Date, then Escrow
Agent shall return the Deposit to Buyer upon its receipt of such Buyer’s written
request and without authorization from the Seller. If Buyer, in breach of its
obligations under this Agreement, defaults in its obligations to purchase the
Property subject to and in conformity with the terms and conditions of this
Agreement, Seller, as its sole and exclusive remedy hereunder, shall be entitled to
receive the Deposit as liquidated damages (and not as a penalty), as more fully
provided in Section 3.22. At Closing, Escrow Agent shall apply any cash Deposit
against the Purchase Price, or if the Deposit is in the form of a Credit, Escrow
Agent shall return the Credit to Buyer. Following the Feasibility Period Expiration
Date, the Deposit shall be non-refundable to the Buyer except in the event of a
failed condition precedent to the obligation of the Buyer to close hereunder as set
forth in Section 3.3 or in the event of a default by Seller under this Agreement
which remains uncured beyond any applicable notice and cure period provided in this
Agreement.




2.1.1.4 Duties and Liabilities of Escrow Agent. Escrow Agent shall not be
liable to either of the Parties in connection with the performance of any duty
imposed upon Escrow Agent hereunder for any action taken by Escrow Agent in good
faith in conformity with the provisions of this Agreement in holding or dealing with
the Deposit, except for the negligence or misconduct of Escrow Agent. Escrow Agent
may act upon any instrument or other writing believed by



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Escrow Agent in good faith to be genuine and to be executed and presented by the
proper person. Escrow Agent shall have no duties or responsibilities other than as
expressly set forth herein. In the event that (i) Escrow Agent shall be uncertain
as to its rights or duties hereunder, (ii) Escrow Agent shall receive instructions
from Buyer or Seller or the issuer of the Credit (if applicable) which, in the
reasonable opinion of Escrow Agent, are in conflict with any of the provisions
hereof, or (iii) Escrow Agent shall receive conflicting demands from Buyer or Seller
or the issuer of the Credit (if applicable) with respect to the Deposit or directing
Escrow Agent to take any action with respect to the Deposit, Escrow Agent may take
affirmative steps in order to terminate its duties hereunder by depositing the
Deposit with the clerk of court for the Circuit Court for Montgomery County,
Maryland in an action for interpleader, naming the conflicting claimants as parties
in such action. The reasonable costs and expenses of Escrow Agent in connection
with filing such an interpleader action, not to exceed a total of $5,000, shall be
divided equally between Buyer and Seller.




2.1.1.5 EINs. For the information of Escrow Agent, the Employer
Identification Number of the Buyer is 52-2057842 and the Employer Identification
Number of Seller is 52-2277293.




2.1.2 Balance of the Purchase Price (and Other Funds Required for Closing). On the
Closing Date, Buyer shall take title to the Property, with the Property remaining subject to
the lien of the “Existing Deed of Trust” (as defined below in Section 2.3.5.1) and the terms
and conditions of the other “Existing Financing Documents” (as defined below in Section
2.3.5.1), and Buyer shall deposit in Escrow with Escrow Agent immediately available federal
funds in an amount equal to the difference between the Purchase Price and the outstanding
principal balance under the “Existing Note” (as defined below in Section 2.3.5.1) on the
Closing Date, plus Buyer’s share of Closing costs under Section 2.6, plus
the balance as of the Closing Date of the “Existing Lender Escrows” (as defined below in
Section 2.3.5.4) held by the “Existing Lender” (as defined below in Section 2.3.5.1),
minus the amount of any cash Deposit (if applicable), and plus or
minus (as the case may be) the net amount of prorations and other credits under
Section 2.5.




2.2 Escrow Deposits.




2.2.1 By Seller. On the Closing Date, Seller shall deposit or cause to be deposited
in Escrow the following:




(i) A special warranty deed duly executed by Seller, conveying fee simple
title in and to the Property subject to the Permitted Exceptions (the
“Deed”).




(ii) An Assignment and Assumption of Leases and Security Deposits duly
executed by Seller assigning to Buyer all of the Leases and unapplied
Security Deposits, with Buyer assuming all of the obligations of Seller
under the Leases which accrue after the Closing Date (the “Lease



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Assignment”).




(iii) An Assignment and Assumption of Service Contracts duly executed by
Seller assigning to Buyer all of the Service Contracts, with Buyer assuming
all of the obligations of Seller under the Service Contracts which accrue
after the Closing Date (the “Service Contracts Assignment”).




(iv) A Bill of Sale duly executed by Seller conveying to Buyer all of the
Personal Property (the “Bill of Sale”).




(v) The Closing Indemnity Agreement for the Property duly executed by the
Seller (the “Closing Indemnity Agreement”).




(vi) A FIRPTA Certificate duly executed by Seller with respect to the
Property subject to and in conformity with the terms and provisions of this
Agreement.




(vii) A Seller’s Closing Certificate, dated as of Closing, duly executed by
Seller, subject to and in conformity with the terms and provisions of this
Agreement, that all of the warranties and representations contained in
Section 3.2.1 are true and correct in all material respects as of the
Closing Date, except for matters specified in such Seller’s Closing
Certificate, which matters must be reasonably satisfactory to Buyer.




(viii) The original (or, where an original is not available, a copy) of each
Lease, Service Contract, all Plans for the Property, all Environmental
Reports for the Property and all Property Document Deliveries for the
Property (the “Originals”); provided, however, that, instead of delivering
the Originals and other documents and materials identified above to Buyer
through Escrow, Seller may deliver any or all of the Originals directly to
Buyer.




(ix) All tenant files pertaining to the operation of the Property not
theretofore delivered, subject to Seller’s continued right of access thereto
for a reasonable period after Closing for proper purposes.




(x) An Owner’s Affidavit from Seller for the Property subject to and in
conformity with the terms and provisions of this Agreement.




(xi) A “gap” indemnity agreement from Seller for the Property subject to and
in conformity with the terms and provisions of this Agreement and as is
customarily required by the Title Company in connection with conducting a
“New York style” closing.




(xii) Such other documents as the Title Company may reasonably require to
effect Closing on the purchase and sale of the Property, on terms and
conditions reasonably acceptable to Seller, including, but not limited



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to, such documents that are applicable to Seller as reflected on Schedule
B-1 to the Title Commitment.




(xiii) The Final Certified Rent Roll for the Property (as defined in Section
3.3.5).




(xiv) A General Assignment and Assumption Agreement duly executed by Seller
assigning to Buyer all assignable Permits and Plans with respect to the
Property, with Buyer assuming all of the obligations of Seller in connection
with such assignable Permits and Plans which accrue after the Closing Date
(the “General Assignment”).




(xv) Such documents as may be reasonably required to permit Buyer to take
title to the Property subject to the lien of the Existing Deed of Trust and
the other Existing Financing Documents, on terms and conditions reasonably
acceptable to Seller.




(xvi) Such other documents and instruments as may be reasonably required
from Seller to consummate the transaction contemplated by this Agreement
with respect to the Property subject to and in conformity with the terms and
provisions hereof on terms and conditions reasonably acceptable to Seller.




Each of the documents specified in this Section 2.2.1 (collectively, “Seller’s Closing
Documents”) shall, as applicable, have been duly executed and, if appropriate, acknowledged,
by Seller and shall be subject to and in conformity with the terms and provisions hereof,
and otherwise in form and content reasonably acceptable to both Seller and Buyer (to extent
that the form of any such document is not attached to this Agreement).




2.2.2 By Buyer. In addition to the deposit of funds under Section 2.1.2, on the
Closing Date, the Buyer shall duly execute, deliver and deposit or cause to be deposited in
Escrow the following:




(i) Counterparts of the Lease Assignment.




(ii) Counterparts of the Service Contracts Assignment.




(iii) Counterparts of the Bill of Sale.




(iv) Counterparts of the General Assignment.




(v) Counterparts of the Closing Indemnity Agreement for the Property.




(vi) Buyer’s Closing Certificate, dated as of Closing, duly executed by
Buyer, subject to and in conformity with the terms and provisions of this
Agreement, that all of the warranties and representations contained in



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Section 3.2.2 are true and correct in all material respects as of the
Closing Date, except for matters specified in such Buyer’s Closing
Certificate, which matters are reasonably satisfactory to Seller.




(vii) Such other documents as the Title Company may reasonably require to
effect Closing on the purchase and sale of the Property, on terms and
conditions reasonably acceptable to Buyer, including, but not limited to,
such documents that apply to Buyer as reflected on Schedule B-1 to
the Title Commitment.




(viii) Such documents as may be reasonably required to permit Buyer to take
title to the Property subject to the lien of the Existing Deed of Trust and
the other Existing Financing Documents, on terms and conditions reasonably
acceptable to Buyer, including, without limitation, all guaranties that the
Existing Lender requires to approve the assumption of the Existing Financing
by Buyer consistent with the requirements, terms and conditions of the
Existing Financing Documents.




(ix) Such other documents and instruments as may be reasonably required from
Buyer to consummate the transaction contemplated by this Agreement with
respect to the Property subject to and in conformity with the terms and
provisions hereof and on terms and conditions reasonably acceptable to
Buyer.




Each of the documents specified in this Section 2.2.2 (“Buyer’s Closing Documents”) shall
have been duly executed and, if appropriate, acknowledged by Buyer, and shall be subject to
and in conformity with the terms and provisions hereof, and otherwise in form and content
reasonably acceptable to both Seller and Buyer (to extent that the form of any such document
is not attached to this Agreement).




2.3 Due Diligence; Title Insurance; Existing Financing.




2.3.1 Buyer shall have the right at any time to examine title to, and the operation and
condition of, the Property and receive copies of any and all documents relating to title to,
or the operation or condition of, the Property, and, subject to the rights of Tenants at the
Property, to enter upon, test, study, survey, inspect, and conduct engineering,
architectural, environmental, soil, economic and other tests on the Property as Buyer deems
necessary or desirable in order to evaluate the Property; provided, however, that Buyer
shall (i) give Seller reasonable prior written notice of the time and place of such entry,
in order to permit a representative of Seller to accompany Buyer; (ii) use its best efforts
not to interfere with the operations of the Property or any Tenant thereof; (iii) restore
any damage to the Property or any adjacent property caused by such actions; (iv) not enter
into any Tenant’s leased premises or communicate with any Tenant unless accompanied by
Seller or a Seller’s representative in each instance; (v) prior to entry onto the Property,
furnish Seller with a certificate of general liability and property damage insurance
maintained by Buyer with single occurrence coverage of at least $1,000,000 (and aggregate
coverage of $2,000,000) and naming Seller and its property manager as



13









 






additional insureds; and (vi) not conduct any environmental investigations or testing other
than a standard “Phase I” investigation, without the prior written approval of Seller in its
sole and absolute discretion. Seller shall reasonably cooperate with Buyer (at no cost,
liability or expense to Seller) in Buyer’s conducting such due diligence, and Seller hereby
grants to Buyer access to the Property to conduct such due diligence subject to the terms
and provisions of this Agreement.




2.3.2 Prior to the Effective Date, Seller has delivered to Buyer, and Buyer hereby
acknowledges receipt of, the Existing Title Policy and the Survey. Promptly following the
Effective Date, (i) Buyer shall order the Title Commitment from the Title Company; and (ii)
Buyer may order an update of the Survey from an engineering firm selected by Buyer (the
“Buyer’s Survey Update”). On or before the Feasibility Period Expiration Date (the
“Title/Survey Objection Date”), Buyer shall advise the Seller by written notice (the
“Buyer’s Title Objection Notice”) of any objections that Buyer may have to (1) the title
exceptions reflected in the Title Commitment; (2) any matters reflected on the Survey, as
updated by the Buyer’s Survey Update, if applicable; and (3) any zoning matters affecting
the Property. Any title exceptions reflected in the Title Commitment or matters reflected
on the Survey, as updated by the Buyer’s Survey Update, if applicable, or zoning matters
affecting the Property, as to which Buyer does not object in the Buyer’s Title Objection
Notice shall be included within the meaning of the term “ Permitted Exceptions”. By no
later than five (5) Business Days after the Title/Survey Objection Date, Seller shall advise
Buyer by written notice (the “Seller’s Title Notice”) as to whether Seller intends to
correct the objectionable matters reflected in the Buyer’s Title Objection Notice. Seller
shall have no obligation whatsoever to correct any objectionable matters reflected in the
Buyer’s Title Objection Notice, subject to Section 2.3.4 below. In the event that Buyer
does not receive a Seller’s Title Notice or Seller’s Title Notice does not address any of
the objectionable matters raised by Buyer in Buyer’s Title Objection Notice, Seller shall be
deemed to have elected not to cure any such objectionable items raised in Buyer’s Title
Objection Notice. Any objectionable matters that Seller agrees to correct in its sole and
absolute discretion shall be corrected by Seller prior to Closing and the correction of such
objectionable matters by Seller shall be a condition precedent to Buyer’s obligations to
proceed to Closing hereunder. Notwithstanding the foregoing provision, any objectionable
matter(s) that Seller agrees to correct, but is unable to correct prior to Closing, shall
not constitute a default on the part of the Seller, but shall simply be a failed condition
precedent to the obligation of the Buyer to close hereunder. In addition to (and not in
limitation of) Buyer’s other termination rights specified in Section 2.4, if the Seller’s
Title Notice reflects that Seller does not intend to correct some or all of the
objectionable matters specified in the Buyer’s Title Objection Notice or if Seller is deemed
to have elected not to cure such items, Buyer shall have the right, exercisable by written
notice to the Seller given on or before the earlier to occur of (i) the fifth
(5th) Business Day following Buyer’s receipt of Seller’s Title Notice, or (ii)
the tenth (10th) business day following Buyer’s delivery of Buyer’s Title
Objection Notice, in the event that Buyer does not receive a Seller’s Title Notice
addressing all items raised in Buyer’s Title Objection Notice, to terminate this Agreement.
Buyer’s failure to timely respond shall be deemed Buyer’s option to terminate this
Agreement. In the event that Buyer elects not to terminate this Agreement and to proceed to
Closing hereunder, the matters reflected in Buyer’s Title Objection Notice that Seller
elects not to correct (as



14









 






reflected in the Seller’s Title Notice) shall be deemed “Permitted Exceptions” hereunder.




2.3.3 Issuance of Title Policy. Buyer shall have the right to cause the Title
Company to issue to Buyer as soon as practicable after Closing the Title Policy pursuant to
the Title Commitment in the amount of the Purchase Price insuring good of record and in fact
and marketable fee simple title to the Property.




2.3.4 Satisfaction and Removal of Liens, Monetary Encumbrances and Judgments.
Notwithstanding any other provision hereof, on or before Closing (or from proceeds of
Closing), Seller shall be obligated at its sole cost and expense to satisfy and release of
record: (i) any mechanics’, materialman or similar liens, and any monetary liens evidencing
a claim against Seller for the satisfaction of any monetary obligations in a liquidated
amount (including any tax and/or judgment liens other than real estate tax liens and
assessments which are a lien but not yet billed, or not yet due and payable) for an
aggregate liquidated sum of up to $500,000 filed against the Property and affecting title to
the Property, and Seller shall convey the Property free and clear of all such liens,
encumbrances and judgments; and (ii) all liens securing any financing obtained by Seller,
except for the lien of the Existing Deed of Trust and other Existing Financing Documents;
provided, however, that nothing contained herein shall obligate the Buyer to proceed to
Closing in the event that any such liens, encumbrances or judgments encumber the Property on
the Closing Date (regardless of whether Seller is obligated to remove the same as provided
in this Section 2.3.4).




2.3.5. Existing Financing.




2.3.5.1 The Property is currently encumbered by and subject to the lien of an
existing deed of trust securing a loan previously advanced by Secore Financial
Corporation (the “Existing Deed of Trust”), with the Existing Deed of Trust being in
the original principal amount of Eighteen Million Six Hundred Fifty Thousand
Dollars ($18,650,000.00), with a current outstanding principal balance of
approximately Eighteen Million Thirty Six Thousand Five Hundred Fifty Five and
36/100 Dollars ($18,036,555.36) (the “Existing Financing”), which Existing Financing
is currently held by Wells Fargo Bank Minnesota, NA, as Trustee (the “Existing
Lender”). The Existing Financing is evidenced by a promissory note dated November
21, 2000 in the original face amount of Eighteen Million Six Hundred Fifty Thousand
Dollars ($18,650,000.00), bearing interest at the rate of eight and 03/100 percent
(8.03%) per annum, payable in monthly installments of principal and interest in the
amount of One Hundred Thirty Seven Thousand Two Hundred Thirty Seven Dollars and
Thirty Three Cents ($137,237.33) (the “Existing Note”). The Existing Lender is the
current holder of the Existing Note and the beneficiary of the Existing Deed of
Trust. A list of all of the documents evidencing and securing the Existing
Financing (collectively, the “Existing Financing Documents”) is attached hereto as
Exhibit Q.




2.3.5.2 Subject to the terms and conditions of this Agreement, at Closing, Buyer
shall take title to the Property, with the Property remaining subject to the lien of
the Existing Deed of Trust and the terms and conditions of the other Existing



15









 






Financing Documents. During the period from the Effective Date and until Closing
hereunder, Seller and Buyer shall use diligent, commercially reasonable, good faith
efforts to obtain the approval of the Existing Lender to the transactions
contemplated by this Agreement and a written release executed by the Existing Lender
of all obligations of Kenneth A. Huntsman, C. Michael Armstrong, William O. Grabe,
and Mark C. Matan under or in connection with the Existing Financing in form and
content reasonably acceptable to each of them (the “Existing Financing Release”).
The obligations of the Seller to proceed to Closing hereunder shall be conditioned
upon the Seller receiving at Closing the Existing Financing Release.




2.3.5.3 Seller covenants, agrees and warrants to the Buyer as follows with respect
to the Existing Financing: (i) the list of the Existing Financing Documents
attached hereto as Exhibit Q constitutes all of the documents or instruments
evidencing or securing the Existing Financing, there being no amendments or
modifications thereto except as noted on Exhibit Q hereto; (ii) if not
previously delivered, within five (5) Business Days after the Effective Date hereof,
Seller shall deliver to Buyer, true, correct and complete copies of each the
Existing Financing Documents listed on Exhibit Q hereto; and (iii) Seller
shall until Closing (A) fully and timely perform its payment and other material
obligations under the Existing Financing Documents; (B) not make any voluntary
principal prepayments of the Existing Note (i.e., no principal payments greater than
those mandatory principal payments presently required by the terms of the Existing
Note); and (C) not join in or consent to any modifications of the Existing Financing
Documents without Buyer’s prior written consent thereto in each instance which
consent may be granted or withheld in Buyer’s reasonable discretion.




2.3.5.4 The obligations of the Buyer to proceed to Closing hereunder shall be
conditioned upon Buyer receiving at Closing evidence that Seller has paid the
mortgage payment due and payable for the month in which Closing occurs and a
statement (which may be included as a part of any loan assignment and/or assumption
agreement) from the Existing Lender (the “Existing Lender Statement”), dated no more
than ten (10) Business Days prior to Closing, setting forth the following with
respect to the Existing Financing: (i) the outstanding principal balance of the
Existing Note; (ii) the interest rate payable on the Existing Note and the latest
date to which interest has been paid thereon; (iii) the current balance of the
escrow accounts for real property taxes and insurance premiums, the current balance
of the replacement reserves, the current balance of the tenant improvement and/or
leasing commission reserves, and any other reserve or escrow accounts required to be
maintained pursuant to the terms of the Existing Financing Documents (collectively
the “Existing Lender Escrows”); and (iv) the amount of the required monthly payment
to each such escrow or reserve and the latest date to which such payments have been
made. Seller agrees to reasonably cooperate with Buyer, at no cost to Seller (other
than its own legal fees), in obtaining the Existing Lender Statement and otherwise
causing the Existing Lender to permit the Buyer to take title to the Property at
Closing, with



16









 






the Property remaining subject to the lien of the Existing Deed of Trust. Buyer
shall pay the costs associated with the assumption of the Existing Financing as and
when required, including, without limitation, all assumption fees, application fees,
non-refundable deposit fees or retainers, and all other charges required to be paid
to the Existing Lender and all of the Existing Lender’s legal fees and other
consultant fees, which obligations shall survive Closing or other termination of
this Agreement.



     2.4 Termination Prior to Feasibility Period Expiration Date. Buyer shall have the
right, in its sole and absolute discretion, to either proceed to Closing hereunder in accordance
with the terms hereof following the Feasibility Period Expiration Date or to terminate this
Agreement on or before the Feasibility Period Expiration Date. In the event that Buyer has not
given Seller written notice that Buyer intends to proceed under this Agreement following the
Feasibility Period Expiration Date on or before 5:00 p.m., Eastern Standard Time (the “Notice to
Proceed”), on the Feasibility Period Expiration Date, Buyer shall be deemed to have terminated this
Agreement, in which event, the Parties shall have no further liabilities or obligations hereunder,
except for such liabilities and obligations that expressly survive the termination of this
Agreement, and the Deposit, together with all accrued interest thereon, shall be refunded in full
to Buyer by Escrow Agent. In the event that Buyer timely issues the Notice to Proceed to Seller in
conformity with this Section 2.4, Buyer and Seller shall proceed to Closing under this Agreement
subject to and upon the terms and conditions hereof, and the Deposit shall be non-refundable except
in the event of a failed condition precedent to Buyer’s obligations to close hereunder or in the
event of a default hereunder by the Seller, which continues beyond the expiration of any applicable
notice or cure period.




2.5 Prorations and Credits.




2.5.1 Prorated Items. The following items (on an accrual basis) shall be prorated
between Seller and Buyer with respect to the Property as of 12:00:01 a.m., local time, on
the Closing Date:




2.5.1.1 Rents. Rents and other fixed periodic payments under each Lease. No
proration shall be made of any such rents or other payments that have not been
actually received from Tenants as of the Closing Date.




2.5.1.2 Taxes. All real estate taxes and assessments, general and special
(including, without limitation, the current year’s installment of any bond
assessments) and all personal property taxes with respect to the Property.




2.5.1.3 Operating Expenses. For purposes hereof, “Operating Expenses”
shall mean all costs, expenses, charges and fees relating to the ownership,
management, operation, maintenance and repair of the Property, including, without
limitation, all assessments and charges imposed with respect to the Property
pursuant to any declaration of covenants, conditions and restrictions, water and
sewer charges, public telephone and other public utilities, common area maintenance
and utility charges, vault charges, personal property taxes, and periodic charges
payable under the Service Contracts, but not including any costs, expenses, charges
or fees



17









 






that are the direct responsibility of a Tenant under a Lease. All Operating Expenses
shall be prorated between Seller and Buyer as of the Closing Date based on the
actual number of days in the month during which the Closing Date occurs for monthly
expenses, and based on a 365-day year for annual expenses. Seller shall be
responsible for all Operating Expenses attributable to the period before the Closing
Date and Buyer shall be responsible for all Operating Expenses attributable to the
period on and after the Closing Date. To the extent commercially reasonable and
practicable, Seller and Buyer 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 that are not the direct responsibility of
Tenants. If billings or meter readings as of the Business Day preceding the Closing
Date are obtained, adjustments of any costs, expenses, charges or fees shown thereon
shall be made in accordance with such billings or meter readings. If billings or
meter readings as of the Business Day preceding the Closing Date are not available
for any 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.




2.5.1.4 Other Revenue and Expenses. All other recurring operating receipts,
recurring revenues and recurring expenses or charges attributable to the Property,
including (without limitation) recurring charges under each of the Service
Contracts, electric utility charges paid by Tenants of the Property to the Seller,
utility expenses, water and sewer rents, or similar charges or fees, inventories of
supplies and fuel oil and gas (if applicable), and accrued but unpaid interest on
the Existing Financing, but excluding insurance premiums. The Seller’s insurance
with respect to the Property shall terminate as of Closing and shall not be assigned
to Buyer.




2.5.2 Credits. At Closing, and to the extent not held by the Existing Lender,
Seller shall deliver and/or assign to Buyer, or make appropriate adjustments for, all
unapplied Tenant security deposits and the like, together with contractual interest (if any)
owed to Tenants, held by Seller. To the extent that any Tenant security deposits are in the
form of letters of credit, and to the extent that the beneficiary under such letters of
credit is the Seller (and not the Existing Lender), then, at Closing (i) Seller shall
execute and deliver to Buyer any assignments or documents, without warranty or
representation, necessary to assign and transfer such letters of credit (and any amendments
thereto) to Buyer, and (ii) Seller and Buyer shall split equally any fees charged or to be
charged by the issuing banks in order to assign and transfer such letters of credit to
Buyer. Following Closing, Seller shall cooperate with Buyer and the said issuing banks to
effectuate the assignment and transfer of such letters of credit (and any amendments
thereto) to Buyer. Pursuant to the Closing Indemnity Agreement, Buyer shall indemnify,
defend and save harmless Seller from and against any claims relating to the Buyer’s
application or holding of such deposits and interest, which the Buyer has received or for
which an adjustment has been made at Closing, from and after Closing, but the Buyer shall
not indemnify the Seller for any amount in excess of the sums so delivered or the amount of
such adjustment. Pursuant to the Closing Indemnity Agreement, Seller shall indemnify,
defend and save harmless Buyer from and against any claims relating to the application or
holding of such



18









 






deposits and interest by Seller prior to Closing or for any claims for deposits that are not
delivered to Buyer or for which an adjustment is not made in favor of the Buyer at Closing.




2.5.3 Determination of Prorations and Credits. The prorations and credits provided
for in this Section 2.5 shall be effected through Escrow, based upon:




(i) In the case of real estate taxes and assessments, the most recent
available tax bill for the Real Property.




(ii) In the case of all other prorations and credits, a proration statement
which Buyer and Seller shall jointly prepare and deliver to Escrow Agent on
or before the Closing Date.




After taking all such prorations and credits into account, the net amount owing to Seller or
Buyer (as the case may be) shall be added to or deducted from the proceeds of the Purchase
Price payable to Seller at Closing.




2.5.4 Utility Deposits. At Closing, Seller shall be entitled to the refund and
retention of all utility deposits and all interest accrued thereon. If any of the utility
deposits is not refundable to Seller without replacement by Buyer, then Buyer shall deliver
the requisite replacement utility deposit to the utility company on or before the Closing
Date.




2.5.5 Closing Escrow. At Closing, (1) all operating adjustments between Buyer and
Seller provided for pursuant to the terms of this Agreement shall be made on the basis of
estimates (except as otherwise set forth above in 2.5.3) using the most current information
available as of the Closing Date; and (2) a suitable escrow (the “Closing Escrow”), the
amount and terms of which shall be reasonably satisfactory to Buyer and Seller, shall be
established by Seller and held by the Escrow Agent to provide for payment of utility
charges, operating expenses, contract liabilities accrued, and/or work on the Property
contracted for by or on behalf of Seller, that are due and payable by Seller pursuant to the
terms of this Agreement, but for which final bills are not available at Closing. Buyer and
Seller agree that within sixty (60) days after the completion of Closing hereunder, Buyer
and Seller shall make a final settlement of all operating adjustments to be made pursuant to
the terms of this Agreement, and following such final settlement of Closing adjustments, any
sums remaining in the Closing Escrow shall be paid by Escrow Agent to Seller.




2.5.6. Tenant Related Expenses. With respect to all leasing or tenant-related
expenses at the Property, and provided that Closing occurs, Seller and Buyer intend that,
from and after the Effective Date, Buyer shall solely be responsible for such costs
(including, without limitation, brokerage commissions and tenant improvements), provided
that such expenses were not due and owing before the Effective Date. Buyer shall provide
Seller with a credit at Closing for any such post-Effective Date expenses that are actually
paid by Seller. Notwithstanding the foregoing provisions to the contrary, (i) Seller shall
be responsible for the leasing and tenant-related expenses to be paid by Seller (if any) as
provided on Exhibit T attached hereto and made a part hereof, which shall be paid or



19









 







accounted for at Closing; and (ii) Buyer shall be responsible for the leasing and
tenant-related expenses to be paid by the Buyer (if any) as provided on Exhibit T,
which shall be paid or accounted for at Closing.




2.6 Closing Costs.




2.6.1 Allocation of Closing Costs. Closing costs shall be allocated between Buyer
and Seller as follows:




	 	(i)  	Seller shall pay:






(A) One-half
(1/2) of the fees and expenses of Escrow Agent for
administering Escrow;




(B) The commission due to Broker on the Closing of the Property, in
accordance with a separate written agreement between Seller and
Broker;




(C) All costs to satisfy and release of record all liens, monetary
encumbrances and judgments affecting title to the Property to convey
the Property to Buyer free and clear thereof, except for the lien of
the Existing Deed of Trust and the other Existing Financing
Documents, and subject to the conditions and limitations set forth in
Section 2.3.4;




(D) All legal fees and consulting fees, if any, incurred by the
Seller in connection with the transactions contemplated by this
Agreement; and




(E) All of the grantor taxes based on the Purchase Price and payable
in connection with the recording of the Deed for the Property.




	 	(ii)  	Buyer shall pay:






(A) All costs associated with the issuance of the Title Commitment
and the Title Policy, and the cost of acquiring the Buyer’s Survey
Update (if acquired by Buyer);




(B) One-half
(1/2) of the fees and expenses of Escrow Agent for
administering Escrow;




(C) All fees, charges and expenses related to (1) Buyer’s financing
(if any) for the purchase of the Property; and (2) the assumption of
the Existing Financing (other than the legal fees of the Seller);



20









 






(D) All of the fees and costs (other than legal fees of Seller)
specified in Section 2.3.5 relating to Buyer’s purchase of the
Property, with the Property remaining subject to the lien of the
Existing Deed of Trust and the other Existing Financing Documents;




(E) All costs incurred in connection with Buyer’s review of the
Existing Title Policy, Survey, and Property Document Deliveries, and
with Buyer’s due diligence investigations of the Property;




(F) All legal and consulting fees, if any, incurred by Buyer in
connection with the transaction contemplated by this Agreement;




(G) All of the State and local grantee taxes and recording charges
based on the Purchase Price and payable in connection with the
recording of the Deed for the Property; and




(H) All the State and local transfer taxes and recordation taxes
(including, without limitation, the grantor taxes and the grantee
taxes, if applicable) and recording charges payable in connection
with the recording of any financing documents for Buyer’s financing
(if any) for the purchase of the Property.




2.6.2 Preliminary Closing Statement. At least three (3) Business Days prior to the
Closing Date, Escrow Agent shall prepare and submit to Buyer and Seller preliminary Closing
statements, showing the Parties’ respective amounts of Closing costs, the Deposit, the net
credit due to Seller or Buyer under Section 2.5 and the net amount of funds required to be
deposited by Buyer in order to effect Closing hereunder.




2.7 Closing.




2.7.1 Time and Place. Closing shall take place at the Escrow Agent’s offices (or at
another location in the Washington, D.C. metropolitan area mutually agreed upon by Buyer and
Seller) on or before the Closing Date, provided that all of the conditions specified in
Section 2.7.2 and Sections 3.3 and 3.4 are satisfied. If Escrow Agent is unable to close
Escrow by the Closing Date in compliance with Section 2.7.2, Escrow Agent shall hold Escrow
open and effect Closing as soon as it is able to do so in compliance with such provision,
unless Escrow Agent receives written demand from either Buyer or Seller for cancellation of
Escrow (in which event, Escrow Agent shall proceed in accordance with Section 2.8). Neither
Party shall be required to attend Closing in person.




2.7.2 Closing Instructions. On the Closing Date, as soon as:




(i) Seller has delivered into Escrow Seller’s Closing Documents, and Buyer
has approved Seller’s Closing Documents as satisfying the requirements of
this Agreement; and



21









 






(ii) Buyer has delivered into Escrow the funds required to effect Closing
hereunder, as reflected on the final closing statement that has been
approved by the Parties, and Buyer’s Closing Documents, and Seller has
approved Buyer’s Closing Documents as satisfying the requirements of this
Agreement;



     Escrow Agent shall close Escrow by:




(iii) Disbursing the funds in Escrow as follows and otherwise in accordance
with the final approved closing statement:




(A) To Seller by wire transfer of immediately available federal
funds, the net proceeds payable to Seller pursuant the final approved
closing statement; and




(B) To Buyer, any funds remaining in Escrow after the foregoing
disbursement to Seller and payment of all of the Closing costs; and




(iv) Causing the Title Company to record the Deed;




(v) Delivering to Buyer the Originals (if and to the extent deposited with
Escrow Agent) and the rest of Seller’s Closing Documents; and




(vi) Delivering to Seller the Buyer’s Closing Documents, together with a
copy of the Deed as recorded, showing the recording data thereon; and




(vii) Delivering to Buyer the executed Title Policy for the Property (or
marked up Title Commitment in a form so that such document constitutes
owner’s title insurance policy binding upon the Title Company for the
benefit of Buyer for the Property).



Nothing set forth in this Section 2.7.2 shall negate or modify the obligations of the Parties and
the Title Company to conduct the Closing as a “New York-style” closing, subject to and in
conformity with the terms and conditions of this Agreement.




     2.8 Cancellation of Escrow Without Closing. After the Closing Date, if Closing has
still not occurred, upon receiving a written demand from either Party for cancellation of Escrow,
Escrow Agent shall promptly deliver a copy of such demand to the other Party and shall then proceed
as follows:




(i) If, by close of business on the fifth (5th) Business Day
after Escrow Agent gives the other Party a copy of such demand for
cancellation, Escrow Agent has not received from such other Party written
instructions which conflict in any way with such demand, Escrow Agent shall
cancel Escrow, disburse the Deposit as directed in such demand and return
every



22









 






other item deposited in Escrow to the Party which deposited the same; or




(ii) If, by close of business on the fifth (5th) Business Day
after Escrow Agent gives the other Party a copy of such demand for
cancellation, Escrow Agent has received conflicting written instructions
from such other Party, Escrow Agent shall take no further actions with
respect to Escrow (other than to continue to invest and reinvest the Deposit
as provided in Section 2.1.1) except (A) in accordance with joint written
instructions of Seller and Buyer, or (B) upon advice of Escrow Agent’s legal
counsel, in accordance with a certified copy of the order or judgment of any
court; provided, however, that if Seller and Buyer have not provided Escrow
Agent with joint written instructions as to the disposition of Escrow (and
all items deposited therein) within 60 days after Escrow Agent’s receipt of
such demand for cancellation, Escrow Agent shall have the right (at any time
thereafter) to commence an action in interpleader in the Circuit Court for
Montgomery County, Maryland against the Seller and Buyer and, in connection
therewith, to deposit all funds and other items held in Escrow with the
court hearing such action, whereupon Escrow Agent shall be relieved of all
further obligations and duties with respect to Escrow.



Buyer and Seller shall share equally, and Buyer and Seller, jointly, shall hold harmless and
indemnify Escrow Agent from and against, any costs and expenses incurred by it in connection with
any interpleader action commenced pursuant to clause (ii) above, not to exceed a total of $5,000.00
in the aggregate. Upon cancellation of Escrow, either pursuant to this Section or other joint
written instructions of Seller and Buyer, Seller and Buyer shall each pay one-half of Escrow
Agent’s reasonable and customary cancellation fees. All notices and other communications by Escrow
Agent under this Section 2.8 shall be given and delivered in accordance with Section 3.12.




     2.9 Supplemental Escrow Agreement. Buyer and Seller shall execute such supplemental
escrow instructions or supplemental escrow agreement as Escrow Agent may reasonably request,
provided the provisions of such supplemental instructions or agreement do not materially conflict
with the provisions of this Agreement. In the event of any conflict between this Agreement and
such supplemental instructions, the supplemental instructions shall control.



ARTICLE 3

FURTHER AGREEMENTS BETWEEN BUYER AND SELLER

(OF NO CONCERN TO ESCROW AGENT

EXCEPT AS EXPRESSLY REFERENCED IN ARTICLES 1 OR 2)





3.1 Items to be Delivered Outside of Escrow.




3.1.1 Property Document Deliveries. Prior to the Effective Date, Seller has either
delivered to Buyer, or made available to Buyer at the Seller’s business/management offices
located in Frederick and Germantown, Maryland, each of the items generally



23









 






specified in the schedule of documents (“Property Document Deliveries”) attached hereto as
Exhibit L, to the extent such items exist and are within Seller’s possession. Buyer
hereby acknowledges that it has already received the Property Document Deliveries.




3.1.2 Return of Documents; Copies of Buyer Reports. If this Agreement terminates
without Closing for any reason, Buyer shall promptly return to the Seller each item provided
pursuant to this Section 3.1 and shall diligently undertake either to have delivered to the
Seller or destroyed every copy, digest or summary made of any such item so delivered by the
Seller. In addition, if this Agreement terminates without Closing for reasons other than
default by Seller, Buyer shall deliver to the Seller copies of all feasibility reports and
studies, to the extent that the same are in Buyer’s possession or control, that have been
prepared by Buyer’s third party professional consultants regarding the Property. The
obligation of Buyer set forth in this Section 3.1.2 shall survive the termination of this
Agreement.




3.2 Warranties, Representations and Covenants.




3.2.1 By Seller. Seller hereby warrants, represents and/or covenants to Buyer as
follows (the representations and warranties of Seller that are set forth in this Section
3.2.1 being referred to herein collectively as the “Property Representations”):




     (i) Seller is a limited liability company validly existing and in good standing under
the laws of the state of its formation. Seller has full authority, right and power to enter
into this Agreement, to perform its obligations hereunder and to consummate the
transactions contemplated by this Agreement. Seller has full authority, right and power
to enter into this Agreement and has caused this Agreement to be duly executed and
delivered to Buyer by an individual who is duly authorized and empowered to do so. This
Agreement and the Seller’s Closing Documents will constitute valid and legally binding
obligations of Seller, enforceable in accordance with their respective terms, subject to:
(i) judicial principles limiting the availability of specific performance, injunctive
relief, and other equitable remedies, and (ii) bankruptcy, insolvency, reorganization,
moratorium or other laws now or hereafter in effect generally relating to or affecting
creditors’ rights.




     (ii) Seller has obtained all government or third-party consents and approvals, except
for the consent of the Existing Lender, necessary for the execution and delivery of this
Agreement by Seller to make this Agreement binding upon Seller and to permit consummation
of the transactions contemplated herein in accordance with the terms of this Agreement.
The execution and performance of this Agreement by Seller does not and will not violate,
and are not restricted by, the terms of any other contract or instrument to which Seller is
a party, except for the Existing Financing Documents, or any Law by which Seller and/or the
Property is bound.




     (iii) Within the twelve (12) month period prior to the Effective Date hereof, Seller
has not received any written notice from any government authority, agency, officer or
insurance company that the current condition, occupancy or use of the Property is not in
material compliance with applicable Law or that any condition or situation exists



24









 






which requires work to be done to cure a noted violation with respect to the Property,
except for failures to comply (if any) which have been remedied or will be remedied on or
before the Closing Date at the sole cost and expense of Seller, subject to the conditions
and limitations set forth in Section 3.3.4. Seller shall promptly provide Buyer with copies
of any such written notice received by Seller prior to the Closing Date.




     (iv) Exhibit D is a rent roll which identifies for the Property, each existing
Lease, indicating security and other deposits. To Seller’s Actual Knowledge, but upon
commercially reasonable investigation and inquiry by Seller, Exhibit D is true,
accurate and complete as of the date of said rent roll. To Seller’s Actual Knowledge, (i)
no material default or breach exists under any Lease on the part of Seller, as landlord,
and no event has occurred or has failed to occur which, with the passage of time, or the
giving of notice, or both, would constitute a default on the part of Seller under any of
the Leases; and (ii) no monetary default exists under any Lease on the part of a Tenant,
except as otherwise listed on the Aged Delinquencies Report attached hereto as Exhibit
S. To Seller’s Actual Knowledge, but upon commercially reasonable investigation and
inquiry by Seller, (i) Seller has not received written notice of any material default by
Seller, as landlord, under any of the Leases that has not been cured; and (ii) Seller has
not made any commitment to any Tenants to provide any benefits, services, facilities, or
amenities, or to perform repairs or renovations not specified in the Leases with such
Tenants. Except as shown on the Rent Roll, no Tenant at the Property has paid any rent in
advance except for the then-current month. Except as provided in Exhibit D or as
reflected in the Leases, no Tenant of the Property has received or is entitled to any
rebate, concession, “free rent”, abated rent (in the nature of an incentive), or other
benefit. Seller shall not execute new leases with any new tenant with respect to any
vacant space at the Property except in accordance with the provisions of Section
3.2.1(xvii) hereof. Seller shall update the rent roll for the Property on a monthly basis
and shall promptly provide a copy of such updates to Buyer for each month after the
Effective Date until Closing.




     (v) Exhibit G correctly identifies each existing Service Contract in effect on
the Effective Date and that may be in effect on the Closing Date for the Property and
except as disclosed on Exhibit G, and except for utilities, no other service
contract or management, service, leasing, employment or supply commitments or contracts of
any kind or description are in existence with respect to the Property (or will be in
existence with respect to the Property on the Closing Date). The Service Contracts
available for review by Buyer are true and correct copies of the actual Service Contracts
in Seller’s possession and, to Seller’s Actual Knowledge, are the complete written
documentation of all of the agreements between Seller and third party vendors, with respect
to the Property.




     (vi) Within the twelve (12) month period prior to the Effective Date, Seller has not
received (i) any written notice from any governmental agency having jurisdiction that the
Real Property (including land, surface and subsurface soil, surface water, ground water and
improvements) or any part thereof is not presently in compliance in any material respect
with any applicable Environmental Laws, except as reflected in the Environmental Reports
for the Property or in the Buyer’s environmental



25









 






reports for the Property to be delivered to Seller following the Effective Date
hereof; and (ii) any written notice from any adjoining property owners that its respective
real property (including land, surface and subsurface soil, surface water, ground water and
improvements) or any part thereof is not presently in compliance in any material respect
with any applicable Environmental Laws, except as reflected in the Environmental Report(s)
for the Property or in the Buyer’s environmental reports for the Property to be delivered
to Seller following the Effective Date hereof. Seller has no Actual Knowledge of any
adverse environmental conditions existing on the Property as of the Effective Date, except
for those conditions reflected in the applicable Environmental Reports for the Property and
except for those conditions reflected in Buyer’s environmental reports to be delivered to
Seller following the Effective Date hereof.




     (vii) There are no lawsuits, governmental proceedings, notices of action required to
be taken, judgments, causes of action or special assessments, pending or, to Seller’s
Actual Knowledge, threatened, against Seller, whose outcome could adversely affect the
operation of the Property (including, without limitation, actions for condemnation). There
are no bankruptcy, insolvency, rearrangement or similar actions or proceedings, whether
voluntary or involuntary, pending or, to the Seller’s Actual Knowledge, threatened, against
Seller




     (viii) Except as disclosed in the Existing Title Policy and/or in the Title Commitment
and/or in the Leases and/or in the Existing Financing Documents, (i) Seller has not entered
into any agreement granting or creating any option or other right to acquire any legal or
beneficial ownership interest in the Property or any part thereof; and (ii) no person or
entity has a legal or beneficial ownership interest in, or has an option to acquire any
legal or beneficial ownership interest in, the Property or any part thereof, the basis for
which arises out of an event or circumstance that occurred during Seller’s period of
ownership of the Property and that is not of record among the appropriate land records as
of the Effective Date.




     (ix) Except for Broker, Seller has not engaged or dealt with any broker, finder or
similar agent in connection with the transactions contemplated by this Agreement.




     (x) All bills, accounts, invoices and/or claims for labor performed and services and
materials furnished to or for the benefit of the Property prior to the Closing Date,
including all utility bills, have been or will be paid in full (or for any such unpaid
items an escrow shall be established at Closing); and there are no mechanic’s liens or
materialman’s liens filed or, to Seller’s Actual Knowledge, threatened, or past due utility
bills on or affecting the Property.




     (xi) All items of personal property, if any, which are included in the Property and
listed on Exhibit C are owned by Seller and shall be owned by Seller on the Closing
Date, free and clear of all liens, debts, charges, and encumbrances of every nature, kind,
and description, except for the lien securing the Existing Financing, and subject to the
replacement rights relating to such personal property as are set forth herein.



26









 






     (xii) To Seller’s Actual Knowledge, Seller holds, and is in compliance in all material
respects with, the Permits.




     (xiii) Seller has no employees for or with respect to the Property and all employees
providing services to or for the benefit of the Property are employees of Seller’s property
management company.




     (xiv) Seller is not a “foreign person” within the meaning of the Internal Revenue Code
of 1986, as amended to date (the “Code”), and the transaction contemplated hereby does not
constitute a disposition of a U.S. real property interest by a foreign person.




     (xv) During the period from the Effective Date to the Closing Date, Seller shall:




          (A) Maintain the Property in its present condition and state of repair and maintenance
(subject to casualty damage and to normal wear and tear and damages by the elements);




          (B) Subject to the terms of Section 3.2.1(xvii) below, continue implementation of its
leasing program for space in the Improvements, and use commercially reasonable efforts to
preserve relations with each Tenant;




          (C) Take commercially reasonable measures consistent with Seller’s past practices to
preserve and enforce all of its rights and remedies with respect to the Property and the
Leases, the Service Contracts and the Permits;




          (D) Not mortgage or subject to a lien or other encumbrance of the Property; and




          (E) Not sell or transfer the Property.




     (xvi) During the period from the Effective Date to the Closing Date, Seller shall
comply in all material respects with the terms and conditions of the Service Contracts and
other agreements pertaining to the operation, management, leasing, and maintenance of the
Property. Without the prior written consent of Buyer in each case, which consent will not
be unreasonably withheld, delayed or conditioned, Seller shall not at any point during the
period from the Effective Date to the Closing Date (i) enter into any new contracts
concerning the operation, management, leasing or maintenance of the Property or services
thereto which are not cancelable without premium or penalty on thirty (30) days’ notice,
or (ii) make or contract for any maintenance item or capital repair exceeding a cost of
$10,000.00, except in the event of an emergency (in which event, Seller shall provide
Buyer with prompt notice of any emergency), unless the same is paid for in full before or
at Closing. Seller shall not modify or terminate a Service Contract other than in a
manner consistent with the following restrictions: After the Effective Date, Seller may
not modify or terminate any Service Contract



27









 






without Buyer’s prior written consent, which Buyer shall not unreasonably withhold or
delay or condition. No approval by Buyer shall be required for any Service Contract
entered into by Seller prior to Closing to the extent the same will be fully performed and
paid for by Seller before Closing.




     (xvii) From and after the Effective Date, Seller shall not enter into any new lease
or commitment to lease with respect to any portion of the Property exceeding 5,000 square
feet, without Buyer’s prior written consent, which consent will not be unreasonably
withheld, delayed or conditioned, and with respect to any new lease or commitment to lease
any portion of the Property equal to or less than 5,000 square feet, which does not require
the approval of Buyer, such leases or commitments to lease shall be at customary market
rates and on customary terms and conditions. All leases referenced in Exhibit D
and any new lease or amendment entered into from and after the Effective Date conforming to
the terms of this Section 3.2.1(xvii) or with Buyer’s prior written consent shall be deemed
included within the term “ Leases” as used herein and the tenants under any such new leases
and/or amendments shall be deemed included within the term “ Tenants” as used herein.
Seller shall comply with the terms and conditions of the Leases in effect.




     (xviii) Each of the representations and warranties given and covenants undertaken by
Seller in Section 2.3.5 above with respect to the Existing Financing are incorporated into
this Section 3.2.1(xviii) by this reference. Seller shall keep the Existing Financing
current at all times until Closing. Seller will not further encumber the Property, grant
any easements or rights-of-way with respect to the Property or in any way affect or alter
the title to the Property, and shall not engage in any activity or effect any transaction
with respect to the Property, including, but not limited to, the disposal of any items of
personal property or fixtures which are attached to the realty and are part of the
Property, which is outside the normal and ordinary course of business of the Property,
without the Buyer’s prior written consent, which consent may be withheld in Buyer’s
reasonable discretion. After the Effective Date hereof, Seller shall not remove any
fixtures, equipment, furnishings, and other personalty from the Improvements without
replacing them with items of like kind and quality.




     (xix) During the period from the Effective Date to the Closing Date, Seller shall
provide Buyer, its agents, consultants, accountants and counsel upon reasonable prior
notice, (A) access at all reasonable times to all of Seller’s contracts, books and records
and other documents relating to the acquisition, construction, occupancy, operation,
leasing, maintenance and repair of the Property (including, without limitation, such
records maintained by or otherwise in the possession of Seller’s property manager, but
excluding any appraisals, budgets, internal valuations or attorney-client privileged
materials), with the right to make photocopies thereof at Buyer’s expense, (B) subject to
the foregoing exclusions, access to all such other information regarding the Property and
in Seller’s possession (including copies of such contracts, books and records and other
documents) as Buyer may reasonably request, and (C) subject to the rights of the Tenants to
the quiet enjoyment and exclusive possession of their leased premises, access to the
Property at all reasonable times for purposes of conducting (at Buyer’s expense and
liability) any examinations, surveys and tests as



28









 






Buyer may reasonably require pursuant to the terms of this Agreement.




     (xx) Seller shall promptly furnish to Buyer copies of any and all written notices that
Seller receives from federal, state or local governmental authorities having jurisdiction
over the Property, any Board of Fire Underwriters and from any other body having
jurisdiction with respect to the use and occupancy or physical condition of the Property.




     (xxi) Seller shall deliver to Buyer the following additional materials from time to
time while this Agreement is in effect promptly upon the receipt thereof by Seller: (a)
copies of any notices of violation of law received by Seller that are issued with respect
to the Property; (b) copies of any additional Service Contracts or amendments to the
Service Contracts; and (c) any assessment or reassessment notices received for the
Property.




     (xxii) During the period from the Effective Date to the Closing Date, Seller shall
maintain in force any currently existing policy or policies of fire and extended coverage,
hazard insurance and a liability insurance policy with respect to the Property in an amount
not less than is presently in force. Seller has not received any written notice from the
Existing Lender indicating that the currently existing insurance policy or policies for the
Property do not comply with the insurance requirements of the Existing Lender.




     (xxiii) During the period from the Effective Date to the Closing Date, Seller shall
not knowingly commit any act or fail to take any required action, other than as required or
permitted hereunder, which would result in any of the warranties or representations
contained in this Section not being materially true or correct as of Closing.




     (xxiv) At Closing, Seller shall remake and rewarrant to Buyer each of the
representations and warranties given by Seller pursuant to the terms of this Section 3.2.1
(subject to any modifications thereof made pursuant to Section 3.2.3) pursuant to Seller’s
Closing Certificate.




3.2.2 By Buyer. Buyer hereby warrants, represents and covenants to Seller that:




     (i) Buyer is a limited partnership validly existing and in good standing under the laws
of Delaware; has full power and authority to enter into this Agreement and to fulfill its
obligations hereunder; has duly authorized this Agreement by all appropriate action; and has
caused this Agreement to be duly executed and delivered to Seller by an individual who is
duly authorized and empowered to do so. This Agreement and the Buyer’s Closing Documents
will constitute valid and legally binding obligations of the Buyer, enforceable in
accordance with their respective terms, subject to: (i) judicial principles limiting the
availability of specific performance, injunctive relief, and other equitable remedies, and
(ii) bankruptcy, insolvency, reorganization, moratorium or other laws now or hereafter in
effect generally relating to or affecting creditors’ rights. There are no bankruptcy,
insolvency, rearrangement or similar actions or proceedings, whether



29









 






voluntary or involuntary, pending or, to the Buyer’s Actual Knowledge, threatened,
against the Buyer.




     (ii) To Buyer’s Knowledge, no government or other third-party approvals or consents are
required for the execution and delivery of, or performance of its obligations under, this
Agreement by the Buyer. The execution and performance of this Agreement by the Buyer do not
and will not violate, and are not restricted by, any the terms of any other contract or
instrument to which any of the Buyer is a party or any Law by which any of the Buyer is
otherwise bound.




     (iii) To Buyer’s Knowledge, there are no lawsuits pending and served against the Buyer
or threatened against the Buyer whose outcome could adversely affect the ability of the
Buyer to purchase the Property under this Agreement.




     (iv) The Buyer has not engaged or dealt with any broker, finder or similar agent in
connection with the transaction contemplated by this Agreement.




     (v) EXCEPT FOR THE WARRANTIES, REPRESENTATIONS, COVENANTS AND INDEMNITIES OF SELLER
EXPRESSLY SET FORTH IN THIS AGREEMENT OR IN THE SELLER’S CLOSING DOCUMENTS, (1) BUYER’S
PURCHASE OF THE PROPERTY HEREUNDER WILL BE “AS-IS, WHERE-IS, WITH ALL FAULTS”, AND (2) BUYER
WILL BE CONCLUDING THE PURCHASE OF THE PROPERTY HEREUNDER BASED SOLELY ON ITS OWN INSPECTION
AND INVESTIGATION OF THE PROPERTY AND ON ALL DOCUMENTS RELATED THERETO. WITHOUT LIMITING
THE FOREGOING, BUYER ACKNOWLEDGES THAT, EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT OR
IN THE SELLER’S CLOSING DOCUMENTS, SELLER HAS NOT MADE ANY REPRESENTATIONS, WARRANTIES OR
INDEMNITIES ON WHICH BUYER IS RELYING AS TO ANY MATTERS CONCERNING THE PROPERTY. FURTHER,
TO THE EXTENT THAT SELLER OR ANY OF ITS AGENTS OR CONSULTANTS HAS PROVIDED TO BUYER ANY
ENVIRONMENTAL REPORT OR ANY INFORMATION FROM ANY OTHER INSPECTION, ENGINEERING OR
ENVIRONMENTAL REPORTS CONCERNING ASBESTOS, RADON OR ANY HAZARDOUS SUBSTANCE, NO
REPRESENTATIONS, WARRANTIES OR INDEMNITIES ARE MADE BY SELLER WITH RESPECT TO THE ACCURACY
OR COMPLETENESS, METHODOLOGY OF PREPARATION OR OTHERWISE CONCERNING THE CONTENTS OF SUCH
REPORTS.




     AS A MATERIAL PART OF THE CONSIDERATION TO SELLER FOR THE SALE OF THE PROPERTY, BUYER
HEREBY WAIVES AND RELEASES SELLER (AND ITS RESPECTIVE PARTNERS, MEMBERS, MANAGERS,
AFFILIATES, DIRECTORS, OFFICERS, EMPLOYEES AND AGENTS) FROM, ANY AND ALL CLAIMS (OTHER THAN
THOSE RELATING TO BREACH OF WARRANTIES, REPRESENTATIONS OR COVENANTS BY SELLER OR FOR
INDEMNITIES OF SELLER SET FORTH IN THIS AGREEMENT OR IN THE SELLER’S CLOSING DOCUMENTS) THAT
ARE BASED DIRECTLY OR INDIRECTLY ON, ARISE FROM OR IN CONNECTION WITH, OR ARE RELATED



30









 






TO: (A) ANY PAST, PRESENT OR FUTURE CONDITION OF THE PROPERTY, INCLUDING, WITHOUT
LIMITATION, THE PRESENCE OF HAZARDOUS SUBSTANCES AT THE PROPERTY, (B) ANY AND ALL
STATEMENTS, REPRESENTATIONS, WARRANTIES, DETERMINATIONS, CONCLUSIONS, ASSESSMENTS,
ASSERTIONS OR ANY OTHER INFORMATION CONTAINED IN ANY OF THE PROPERTY DOCUMENT DELIVERIES, OR
(C) ANY DEFECT, INACCURACY OR INADEQUACY IN TITLE OF THE PROPERTY, LEGAL DESCRIPTION OF THE
PROPERTY, COVENANTS, RESTRICTIONS, ENCUMBRANCES OR ENCROACHMENTS WHICH AFFECT THE PROPERTY.




BUYER HEREBY ACKNOWLEDGES AND AGREES THAT (i) BUYER MAY HEREAFTER DISCOVER FACTS DIFFERENT
FROM OR IN ADDITION TO THOSE NOW (OR AS OF THE CLOSING) KNOWN OR BELIEVED TO BE TRUE
REGARDING THE PROPERTY AND/OR PROPERTY INFORMATION, AND (ii) UPON CLOSING, THE BUYER’S
AGREEMENT TO RELEASE, ACQUIT AND DISCHARGE SELLER, SUBJECT TO AND UPON THE TERMS AND
PROVISIONS SET FORTH HEREIN, SHALL REMAIN IN FULL FORCE AND EFFECT, NOTWITHSTANDING THE
EXISTENCE OR DISCOVERY OF ANY SUCH DIFFERENT OR ADDITIONAL FACTS; PROVIDED THAT SUCH
DIFFERENT OR ADDITIONAL FACTS WERE NOT INTENTIONALLY OR FRAUDULENTLY CONCEALED BY SELLER.




3.2.3 Changes in Representations and Warranties. From and after full execution hereof until
Closing, each Party shall promptly notify the other Parties in writing of any events or
circumstances, of which the notifying Party has Actual Knowledge which have occurred from
and after the Effective Date hereof or which were unknown to the notifying Party as of such
date and were subsequently discovered by the notifying Party, which events or circumstances
make any of the foregoing representations and warranties untrue, incomplete or inaccurate in
any material respect.




3.2.3.1 If at or prior to the Closing, (A) Buyer has Actual Knowledge (whether through its
own efforts, by notice from Seller or otherwise) that any of the representations or
warranties made herein by Seller are untrue, inaccurate or incorrect and shall give the
Seller notice thereof at or prior to the Closing, or (B) Seller shall notify Buyer that a
representation or warranty made herein by any Seller is untrue, inaccurate or incorrect,
then either Party may, in its sole discretion, elect by notice to the other Party to adjourn
the Closing one or more times for up to sixty (60) days in the aggregate in order to allow
the Seller to cure or correct such untrue, inaccurate or incorrect representation or
warranty. If any such untrue, inaccurate or incorrect representation or warranty is not
cured or corrected by the Seller on or before the Closing Date (whether or not the Closing
is adjourned as provided above), then Buyer, as its sole and exclusive remedy for any and
all such untrue, inaccurate or incorrect representations or warranties, shall elect either
(x) to waive such misrepresentations or breaches of warranties and consummate the
transactions contemplated hereby without any reduction of or credit against the Purchase
Price, or (y) to terminate this Agreement by notice given to Seller on or before the Closing
Date, in which event, this Agreement shall be terminated and neither Party shall have any
further rights, obligations or liabilities hereunder, except as otherwise expressly



31









 






set forth herein, and Escrow Agent shall refund the Deposit to Buyer, and Seller shall
reimburse Buyer for its actual third party due diligence costs incurred in connection with
this Agreement, but not to exceed $50,000.00.




3.2.4 Seller’s Liability for Representations, Warranties and Covenants; Limitation on
Actions for Seller’s Breach of Warranties. Except for the terms and conditions set forth in
Section 3.2.3.1 above, notwithstanding anything to the contrary set forth herein, but
subject to the conditions and limitations set forth below in this Section 3.2.4 and in
Section 3.21, Seller shall be liable for a breach by Seller of its Property Representations
set forth in Section 3.2.1 and for the performance of the covenants undertaken by Seller as
set forth in Section 3.2.1 or elsewhere in this Agreement, and for the performance of its
indemnity obligations set forth in this Agreement and the Seller’s Closing Documents. The
Property Representations contained in Section 3.2.1 will be deemed made on and as of the
Closing Date with the same force and effect as if made at that time and Seller shall execute
and deliver the Seller Closing Certificate as of the Closing Date confirming the Property
Representations contained in Section 3.2.1, subject to any modifications thereof made
pursuant to Section 3.2.3. Except for the terms and conditions set forth in Section 3.2.3.1
above, notwithstanding any other provision of this Agreement or Seller’s Closing Documents,
any claim following the Closing Date based on a breach of the Property Representations and
covenants in Section 3.2.1 or in a Seller Closing Certificate shall be forever barred, and
Buyer shall not bring any action thereon, unless:




3.2.4.1 Buyer has incurred actual losses as a result of such breach in excess of
Fifty Thousand Dollars ($50,000.00); and




3.2.4.2 Buyer gives Seller written notice of such claim within six (6) months
following the Closing Date with respect to any breach of the Property
Representations. Such written notice given pursuant to this Section 3.2.4.2 shall
describe with reasonable particularity in such notice each representation and
warranty of the Seller which Buyer claims to have been breached and the facts on
which such claim is based; and




3.2.4.3 Buyer files an action on such claim in a court of appropriate jurisdiction
within eight (8) months following the Closing Date with respect to any breach of the
Property Representations; and




3.2.4.4 (i) Buyer has no Actual Knowledge of the facts constituting such breach
prior to Closing; and (ii) such facts are not otherwise contained or found within
(A) the Property Document Deliveries, the Leases, the Service Contracts, the
Environmental Reports, the Existing Title Policy, the Permits, the Permitted
Exceptions, the Plans, the Survey and the Title Commitment, but only to the extent
that such items are actually received by Buyer, or (B) any of the reports and
studies that have been prepared by Buyer’s third party professional consultants
regarding the Property; and




3.2.4.5 Such claim is not covered by Buyer’s insurance policy in effect at the time
of the claim, and if so covered, Seller shall reimburse Buyer for its



32









 






deductible, not to exceed $10,000.00 per claim, or $25,000.00 in the aggregate; and
provided further, that in no event shall Seller’s aggregate liability to Buyer for
all breaches of the Property Representations set forth in Section 3.2.1 exceed Seven
Hundred Fifty Thousand Dollars ($750,000.00), except that nothing set forth herein
shall limit Buyer’s rights and remedies under Section 3.21 below.




Notwithstanding the foregoing provisions to the contrary, the limitations set forth above in
this Section 3.2.4 and set forth below in Section 3.21 shall not apply to any of the
Seller’s indemnity obligations set forth in this Agreement or in the Seller’s Closing
Documents (but such indemnity obligations shall be subject to the conditions and limitations
thereon as set forth elsewhere in this Agreement) and shall not apply to the Seller’s breach
of its covenants or obligations set forth in Sections 3.9 and 3.25 hereof and shall not
apply to the extent that Seller has committed fraud.




3.2.5 Buyer’s Liability for Representations, Warranties and Covenants; Limitation on Actions
for Buyer’s Breach of Warranties. Notwithstanding anything to the contrary contained
herein, but subject to the conditions and limitations set forth below in this Section 3.2.5
and in Section 3.22, the Buyer shall be liable for a breach by the Buyer of its
representations and warranties set forth in Section 3.2.2 and for the performance of the
covenants undertaken by the Buyer as set forth in Section 3.2.2 or elsewhere in this
Agreement, and the performance of Buyer’s indemnity obligations set forth in this Agreement
and the Buyer’s Closing Documents. The representations and warranties in Section 3.2.2 will
be deemed made on and as of the Closing Date with the same force and effect as if made at
that time and Buyer shall execute and deliver the Buyer’s Closing Certificate as of the
Closing Date confirming the representations and warranties contained herein, subject to any
modifications thereof made pursuant to Section 3.2.3. Notwithstanding any other provision
of this Agreement or Buyer’s Closing Documents, any claim based on a breach of Buyer’s
representations and warranties in Section 3.2.2 or in Buyer’s Closing Certificate shall be
forever barred, and Seller shall not bring any action thereon, unless:




3.2.5.1 Seller has incurred actual losses as a result of such breach in excess of
Fifty Thousand Dollars ($50,000.00); and




3.2.5.2 Seller gives Buyer written notice of such claim within six (6) months
following the Closing Date, describing with reasonable particularity in such notice,
each representation and warranty of Buyer which the Seller claims to have been
breached and the facts on which such claim is based; and provided further that in no
event shall Buyer’s aggregate liability to Seller for all breaches of its
representations and warranties exceed the actual damages incurred by Seller for or
in connection with such breach by Buyer; and




3.2.5.3 Seller files an action on such claim in a court of appropriate jurisdiction
within eight (8) months following the Closing Date; and




3.2.5.4 Seller has no Actual Knowledge of the facts constituting such breach prior
to Closing; and provided further that in no event shall Buyer’s



33









 






aggregate liability to Seller for all breaches of its representations and warranties
exceed an amount equal to the amount of the Deposit.




The limitations set forth above in this Section 3.2.5 and set forth below in Section
3.22 shall not apply to any of Buyer’s indemnity obligations set forth in this
Agreement or in Buyer’s Closing Documents (but such indemnity obligations shall be
subject to the conditions and limitations thereon as set forth elsewhere in this
Agreement) and shall not apply to the Buyer’s breach of its covenants or obligations
set forth in Sections 2.3.1, 3.1.2, 3.9 and 3.25 hereof and shall not apply to the
extent that Buyer has committed fraud.



     3.3 Conditions Precedent to Buyer’s Obligation. The obligations of the Buyer to close under
this Agreement shall be expressly subject to satisfaction of each of the following conditions
precedent:




3.3.1 Performance of Seller’s Obligations. Performance by Seller in all material respects
of its obligations under this Agreement to be performed at or before Closing. Seller shall
have complied with and not be in material breach of any of its covenants contained in
Section 3.2.1.




3.3.2 Accuracy of Warranties and Representations; Compliance with Covenants. Each of the
Property Representations of Seller set forth in Section 3.2.1 shall be true and accurate in
all material respects as if made as of the Closing Date, subject only to changes made in
conformity with Section 3.2.3. To the extent that any of such Property Representations
are expressly limited to the Seller’s Actual Knowledge, satisfaction of this condition
precedent shall require the actual truth of the underlying facts and circumstances which are
the subject of such Property Representations, without regard to the state of Seller’s
Knowledge about such facts and circumstances. The foregoing notwithstanding, such failure
of condition shall not be deemed to be or create liability for a breach of the Seller’s
Property Representations contained herein or constitute any other breach hereunder.




3.3.3 Satisfactory Title. Title to the Property shall be insurable pursuant to the Title
Commitment, subject only to the Permitted Exceptions, and the Title Company shall be
prepared to issue a Title Policy in the form of a pro-forma title policy reasonably approved
by Buyer on or before the Title/Survey Objection Date.




3.3.4 Compliance with any Governmental Violations. All written notices of violations of
governmental orders or requirements noted or issued by any public authority having
jurisdiction, and any action in any court against or affecting the Properties which have
been received by Seller, the costs of complying with which exceed Fifty Thousand Dollars
($50,000.00) and are less than One Hundred Thousand Dollars ($100,000.00), as reasonably
determined by Seller and Buyer, shall have been complied with by Seller and the Property
shall be free and clear thereof. No part of the Property shall be in violation, in any
material respect, of any governmental laws, ordinances, rules or regulations pertaining to
zoning, use, construction or operation of the Property, including building, fire and health
or similar type ordinances, codes or regulations, the costs of complying



34









 






with which exceed Fifty Thousand Dollars ($50,000.00) and are less than One Hundred Thousand
Dollars ($100,000.00), as reasonably determined by Seller and Buyer. The nature, extent,
methods and materials for any corrective work performed by Seller, in its reasonable
discretion, relating to any of such notices of violation and the parties performing such
work shall be subject to Buyer’s prior approval, which approval shall not be unreasonably
withheld, delayed or conditioned.




3.3.5 Performance of Seller’s Obligations under the Leases. Seller shall have provided to
Buyer an updated rent roll for the Property certified by Seller as of a date no more than
five (5) Business Days prior to the Closing Date in the form attached hereto as Exhibit
D (the “Final Certified Rent Roll”), showing as of the date of such rent roll all
rebates, concessions, deductions or abatements of rent to which any Tenant is entitled,
which Final Certified Rent Roll shall show no material adverse changes from the Rent Roll
for the Property delivered to Buyer for the month prior to the month in which Closing
occurs.




3.3.6 Approval of Existing Lender and Related Matters. (a) Buyer shall have received all
approvals from the Existing Lender that are required for or in connection with the
consummation of the transactions contemplated by this Agreement, approving the assumption of
the Existing Financing by Buyer at Closing upon the existing terms and conditions as set
forth in the Existing Financing Documents, with no new terms and conditions reasonably
unacceptable to Buyer (collectively, the “Existing Lender Approvals”); (b) Buyer shall have
received the Existing Lender Statement from the Existing Lender; and (c) all other
conditions precedent to Buyer’s obligations to close hereunder relating to the Existing
Financing as set forth in Section 2.3.5 hereof shall be satisfied.



     3.3.7 Tenant Estoppel Certificates. Estoppel certificates from Tenants who lease space within
the Improvements greater than 5,000 square feet, such that Buyer receives estoppel certificates
from such 5,000 square foot Tenants totaling one hundred percent (100%) of the square feet rented
by such Tenants within the Improvements prior to Closing, with no material adverse changes to the
estoppel certificates delivered to such Tenants and no material defaults by the Landlord or no
material monetary defaults by the Tenant being cited therein.



     3.3.8 Seller’s Closing Documents. Seller’s Closing Documents, to the extent not attached as
exhibits to this Agreement, shall be subject to and in conformity with the terms and provisions of
this Agreement, and otherwise in form and content reasonably acceptable to Buyer and Seller.



     3.3.9 Certification Letter to Buyer’s Auditor. The Parties hereto acknowledge and agree that
the Buyer’s accounting firm (the “Auditor”) shall audit the revenues and expenses relating to the
Property (the “Audit”), which Audit shall be completed by Auditor on or before February 11, 2005,
and in connection with such Audit, Seller shall cause its property manager, Matan Property
Management, Inc., to execute and deliver an audit certification letter, substantially in the same
form and substance as that certification letter attached hereto as EXHIBIT B, prior to
Closing. Seller will provide all information reasonably requested by



35









 





Buyer’s Auditor.




If any one or more of the conditions specified in this Section 3.3. are not satisfied as of the
Closing Date, then Buyer shall have the option, in its sole discretion, exercised by written notice
to Seller to either (i) waive such condition and make full Closing under this Agreement in
accordance with the terms and conditions hereof; or (ii) terminate this Agreement before Closing on
the Closing Date, in which event, the Escrow Agent shall refund the Deposit to Buyer and the
Parties shall be released from all further liability or obligation under this Agreement, except as
otherwise expressly set forth herein, or (iii) extend Closing for a period of not more than sixty
(60) days to allow Seller to utilize commercially reasonable efforts to satisfy such failed
condition; provided that, if Buyer elects to terminate this Agreement pursuant to clause (ii)
above, and the failed condition(s) giving rise to such termination right is reasonably capable of
being cured or satisfied within sixty (60) days after the Closing Date set forth herein as mutually
and reasonably determined by Seller and Buyer, and an extension of the Closing Date will not
adversely impact in any respect any of Buyer’s financing for the transaction contemplated by this
Agreement, as determined by Buyer in its sole discretion, then Seller shall have the right,
exercisable by written notice to Buyer, to utilize commercially reasonable efforts to satisfy such
failed condition and, in connection therewith, to extend the Closing Date to the date that is sixty
(60) days after the Closing Date set forth herein (the “Extended Closing Date”), in which event, if
such failed condition(s) is not satisfied on or before the Extended Closing Date, Buyer shall once
again have the rights specified in clauses (i) and (ii) above. Failure by Seller to satisfy any
such failed condition on or before the Extended Closing Date shall not constitute a default or
breach by Seller under this Agreement. Buyer’s election under clauses (i) or (ii) of this Section
3.3 shall be Buyer’s sole rights in the event any conditions to Closing are unable to be satisfied
unless the failure of such condition to be satisfied was caused by a breach of this Agreement by
Seller, in which event the provisions of Section 3.21 of this Agreement shall also apply. If Buyer
elects to proceed to Closing under clause (i) above, then once Closing has occurred, all of the
foregoing conditions, to the extent not satisfied at Closing, shall be deemed to have been waived
by Buyer.




     3.4 Conditions Precedent to Seller’s Obligation. Seller’s obligation to close under this
Agreement shall be expressly subject to satisfaction of each of the following conditions precedent:




3.4.1 Performance of Buyer’s Obligations. Performance by the Buyer in all material respects
its respective obligations under this Agreement to be performed at or before Closing. Buyer
shall have complied with and not be in material breach of any of the covenants contained in
Section 3.2.2 hereof.




3.4.2 Accuracy of Warranties and Representations. Each of the warranties and
representations of Buyer set forth in Section 3.2.2 hereof shall be true and accurate in all
material respects as if made as of the Closing Date, subject to only changes made pursuant
to Section 3.2.3. To the extent that any of such representations and warranties are
expressly limited to the Buyer’s Actual Knowledge, satisfaction of this condition precedent
shall require the actual truth of the underlying facts and circumstances which are the
subject of these representations and warranties, without regard to the state of Buyer’s
Knowledge about such facts and circumstances. The foregoing notwithstanding,



36









 






such failure of condition shall not be deemed to be or create liability for a breach of the
applicable Buyer’s representations and warranties contained herein or constitute any other
breach hereunder.




3.4.3 Existing Financing Release. Seller shall have received the fully executed and dated
Existing Financing Release from the Existing Lender.




3.4.5 No Adverse Change in Buyer. As of the Closing Date, there shall be no litigation or
administrative agency or other governmental proceeding pending or threatened, which would
materially adversely affect the ability of Buyer to fully comply in all material respects
with all of Buyer’s duties and obligations contained in this Agreement or in any of the
Buyer’s Closing Documents.



     3.4.6 Buyer’s Closing Documents. Buyer’s Closing Documents, to the extent not attached as
exhibits to this Agreement, shall be subject to and in conformity with the terms and provisions of
this Agreement, and otherwise in form and content reasonably acceptable to Seller and Buyer.



If any of the foregoing conditions is not satisfied (or waived by Seller in writing), Seller shall
have the right to terminate this Agreement before Closing on the Closing Date by written notice of
such termination to Buyer and Escrow Agent given at any time prior to the satisfaction of such
condition, in which event, the Escrow Agent shall refund the Deposit to Buyer and the Parties shall
be released from all further liability or obligations under this Agreement, except as otherwise
expressly set forth herein; but once Closing has occurred, all of the foregoing conditions, to the
extent not satisfied at Closing, shall be deemed to have been waived by Seller.





3.5 Indemnities.




3.5.1 Buyer’s Activities on the Real Property. Buyer shall hold harmless, indemnify and
defend Seller from and against any and all claims, causes of action, liabilities and losses,
and expenses related thereto (including reasonable attorneys’ fees), which Seller incurs by
reason of any damage to the Property (or any other property owned by any other person
regardless of whether it is located on the Real Properties or elsewhere) caused by, or any
third-person claim against Seller arising or asserted to arise out of, any activity of
Buyer, or any of Buyer’s agents, conducted on the Real Property prior to Closing. Buyer
shall, with reasonable promptness, repair any damage caused to the Property (or any other
property owned by any other person regardless of whether it is located on the Real Property
or elsewhere) by Buyer or its agents as a result of any such activity. The limitations on
Buyer’s liability set forth in Section 3.2.5 above and Section 3.22 below shall not apply to
the Buyer’s indemnity obligations set forth in this Section 3.5.1.




3.5.2 Leases and Service Contracts and General Indemnity. Pursuant to the Closing Indemnity
Agreement, Seller shall hold harmless, indemnify and defend Buyer from and against any and
all claims, causes of action, liabilities and losses, and expenses related thereto
(including reasonable attorneys’ fees and costs), which the Buyer incurs by reason of (i)
any alleged default or failure to perform an obligation on the part of the landlord



37









 






under an applicable Lease or as vendee under an applicable Service Contract based upon an
event or condition occurring (or alleged to have occurred) prior to the Closing Date; and
(ii) any act or omission (where there is a duty to act) by Seller occurring (or alleged to
have occurred) prior to the Closing Date. Pursuant to the Closing Indemnity Agreement,
Buyer shall hold harmless, indemnify and defend the Seller from and against any and all
claims, causes of action, liabilities and losses, and expenses related thereto (including
reasonable attorneys’ fees and costs), which the Seller incurs by reason of (x) any alleged
default or failure to perform an obligation on the part of the landlord under an applicable
Lease or as vendee under an applicable Service Contract based upon an event or condition
occurring (or alleged to have occurred) on or after the Closing Date; and (y) any act or
omission (where there is a duty to act) by Buyer occurring (or alleged to have occurred) on
or after the Closing Date.




3.5.3 Survival. Notwithstanding any provisions of this Agreement to the contrary, the
provisions of, and the Buyer’s obligations under, Section 3.5.1 shall survive Closing or
termination of this Agreement, as applicable, for a period of three (3) years.
Notwithstanding any provisions of this Agreement to the contrary the provisions of, and the
Parties’ respective obligations under, Section 2.5.2 and Section 3.5.2 shall survive Closing
for a period of twelve (12) months following the Closing Date, and any indemnity claim by a
Party pursuant to Section 3.5.2 and Section 2.5.2 against the other Party shall be forever
barred, and a Party shall bring no action thereon, unless (i) a Party gives the other Party
written notice of such indemnity claim within twelve (12) months following the Closing Date,
and the said Party files an action on such indemnity claim against the other Party in a
court of appropriate jurisdiction within fourteen (14) months following the Closing Date;
and (ii) the event or circumstance which gives rise to the indemnity claim is not covered by
such Party’s insurance policies, and if so covered, the indemnifying Party shall reimburse
the indemnified Party for its deductible, not to exceed $10,000.00 per claim, or $25,000.00
in the aggregate. The indemnifications contained in this Section 3.5 and Section 2.5.2
shall be set forth in the Closing Indemnity Agreement and shall run to the benefit of the
indemnified Parties.




3.6 Damage, Destruction or Condemnation.




3.6.1 Risk of Loss. The risk of loss or damage to the Property by fire or other casualty
prior to Closing is borne by Seller. Seller shall give Buyer prompt notice of any
destruction of any part of the Property or any portion thereof or the commencement of any
condemnation proceedings against the Property or any portion thereof between the Effective
Date and the Closing Date.




3.6.2 Minor Casualty. If the Improvements are destroyed by fire or other casualty prior to
Closing and the estimated cost of repairs as reasonably and mutually determined by Buyer and
Seller is less than or equal to Five Hundred Thousand Dollars ($500,000.00) (a “Minor
Casualty”), Closing will occur and at Closing:




(a) The Buyer shall receive a credit against the Purchase Price in an amount equal
to the aggregate estimated cost of repair of any damage to the Property remaining
unrepaired at Closing, and any unpaid costs of repairs performed prior



38









 






to Closing for which Buyer will be responsible, and the future loss of rental income
as a result of the Minor Casualty as reasonably mutually determined by Seller and
Buyer;




(b) Buyer shall accept the Property with the Property affected by such Minor
Casualty in its damaged state;




(c) Seller shall have no obligation to repair or restore any damaged or destroyed
portions of the Property affected by such Minor Casualty;




(d) Seller shall maintain all rights to the Seller’s interest in and to all
proceeds of property insurance awards relating to such Minor Casualty and the full
right to settle insurance claims relating thereto; and




(e) Seller shall be permitted reasonable access the Property affected by the Minor
Casualty after Closing in connection with the completion by the Seller of the claim
process with the applicable insurance company, having insurance coverage for such
Minor Casualty.




3.6.3 Major Casualty. If the Improvements are destroyed by fire or other casualty and the
estimated cost of repairs as reasonably mutually determined by Buyer and Seller is more than
Five Hundred Thousand Dollars ($500,000.00) (a “Major Casualty”), then Buyer or Seller may,
as its sole and exclusive remedy, waiving all other remedies, terminate this Agreement by
giving notice to the other Party within ten (10) days after the Major Casualty occurs, in
which event, the Escrow Agent shall return the Deposit to Buyer, and the parties have no
further rights, liabilities, or obligations under this Agreement (other than those that
expressly survive termination). If neither Buyer nor Seller, within ten (10) days after the
Major Casualty, terminates this Agreement as provided above, then both Seller and Buyer
shall be deemed to have elected to terminate this Agreement pursuant to clause (i) above.
If both Seller and Buyer elect to proceed to Closing, which election shall be made within
ten (10) days after the Major Casualty occurs, then Closing will occur without reduction in
the Purchase Price and:




(a) At Closing, Seller shall assign to Buyer all of its interests in all proceeds of
property insurance awards relating to such Major Casualty (and Seller shall execute
all reasonably required assignment or other instruments to confirm the foregoing),
less any reasonable amounts actually paid by Seller to repair, restore, or
clean up the Property affected by such Major Casualty; and




(b) At Closing, Seller shall assign to Buyer all of its interests in all proceeds of
rental loss and business interruption insurance applicable to the period after the
Closing Date relating to such Major Casualty (and Seller shall execute all
reasonably required assignment or other instruments to confirm the foregoing); and




(c) Buyer will pay and reimburse Seller the amount of any deductible under the
Seller’s property insurance policy and rental loss and business interruption



39









 






insurance, if any, paid by the Seller before Closing; and




(d) Buyer will accept title to the Property with the Property affected by such Major
Casualty in its damaged state; and




(e) Seller shall have no obligation to repair or restore any damaged or destroyed
portions of the Property affected by such Major Casualty.




3.6.4 Condemnation. As a condition precedent to the obligations of the Buyer and Seller to
proceed to Closing hereunder, neither the whole nor any “Significant Portion” (as
hereinafter defined) of the Property shall have been acquired, or shall be about to be
acquired, by authority of any governmental agency or other authority in the exercise of its
power of eminent domain or by private purchase in lieu thereof (a “Taking”). If such a
Taking has occurred or if the Seller shall have received written notice of any such
contemplated Taking, Buyer or Seller may, at its sole option (i) terminate this Agreement
and Buyer shall receive a full refund of the Deposit; or (ii) continue this Agreement, and
Buyer shall pay the full Purchase Price without reduction and accept an assignment of
Seller’s rights in any condemnation award (whether received prior to or after Closing), and
the Parties shall proceed to Closing; provided that, (A) Seller shall not consent to any
Taking or agree to any condemnation award without the prior written consent of Buyer (which
consent shall not be unreasonably withheld or delayed); (B) prior to Closing, Seller shall
provide Buyer with a reasonable opportunity to participate with Seller in any negotiations
relating to a Taking affecting any portion of the Property or any condemnation award to be
made in connection therewith; and (C) Seller shall reasonably cooperate with Buyer after
Closing in prosecuting any claim for a condemnation award arising prior to Closing. As used
herein, a “Significant Portion” of the Property shall be deemed to mean such portion of the
Property as, when taken, would leave remaining a balance of the Property that is
commercially unreasonable for Buyer to use or that would not permit Buyer to realize a
reasonable return from the Property (because of the area so taken or the location of the
part so taken in relation to the part not so taken), as determined by Buyer in its
reasonable discretion.



     3.7 Assignment by Buyer. Buyer shall have the right to assign this Agreement to such other
entity in which Buyer has an ownership interest and management control by delivering to Seller a
written assignment and assumption agreement (“Contract Assignment”) under which the assignee
assumes all of Buyer’s obligations under this Agreement. Seller shall have the right to approve
the form and substance of the Contract Assignment, which approval shall not be unreasonably
withheld, conditioned or delayed. Except as provided in the foregoing two sentences, Buyer shall
have no right to assign or transfer its rights under this Agreement except with the prior written
consent of Seller, which Seller may withhold in its sole and absolute discretion. Seller shall
have no obligation to respect any assignment in violation of this Section and such an assignment
shall constitute a material breach of this Agreement on the part of Buyer. No assignment shall
relieve or excuse Buyer of its obligations and liability hereunder. Seller’s consent to any one
assignment shall not be deemed a consent to any other assignment or a waiver of the requirement for
its consent to any other assignment.



     3.8 Termination. Intentionally Deleted.




40










 







     3.9 Brokerage Commission. Seller and Buyer acknowledge that the Broker has acted as the
broker in connection with the transaction contemplated by this Agreement. Seller agrees to pay the
Broker as the total commission for services rendered, the commission specified in separate listing
agreement between Seller and Broker. In the event that Closing shall fail to occur under this
Agreement for any reason whatsoever, Buyer and Seller shall not have any liability or obligation to
the Broker for any commission or other payment in connection with this Agreement, including payment
to the Broker by Seller of any portion of the Deposit retained by Seller. Except as specified in
this Section 3.9, Seller and Buyer represent and warrant to each other that no other agent, broker,
or finder has acted for Seller or Buyer, as applicable, in connection with this Agreement. Each of
Seller and Buyer shall indemnify, defend and save the other Party hereto harmless from and against
any claims for brokerage, commission or finders’ fees resulting from a breach of the foregoing
representations and warranties of Seller and Buyer. Nothing contained herein shall be deemed to
make Broker a third-party beneficiary of this Agreement or to create any obligation on the part of
any Party to close the sale and purchase of the Property for the Broker’s benefit.




     3.10 Post-Closing Prorations and Adjustments; Possession. The Parties shall make the
following additional prorations and settlements:




3.10.1 Delinquent Rents. Any and all rents which are past due at Closing shall not be
adjusted; Buyer shall have no obligation to collect such past-due rents but for a period of
twelve (12) months after Closing, shall reimburse Seller for such past-due rents when, as
and if collected, net of reasonable costs of collection; provided that, there shall be no
costs of collection for any past due rents collected within sixty (60) days after Closing),
it being understood that Buyer shall not be deemed to have collected such arrearage
attributable to the period prior to Closing until such Tenant is current in the payment of
rentals accruing on or after Closing and Buyer shall have recovered all reasonable costs of
collection. Seller shall retain the right after Closing to sue for and collect any rents or
other amount due under a Lease for a period ending before Closing (but in no event shall
Seller have the right to sue any such Tenant for eviction), and Buyer shall reasonably
cooperate with Seller, at no cost to Buyer, in its efforts to collect any such amount.
During the period of the first sixty (60) calendar days after the Closing Date, Seller shall
not take any action to sue for or collect any rents or other amounts due and owing under a
Lease for a period prior to the Closing Date, but after the expiration of said sixty (60)
day period, Seller may at any time or times take such actions as are permitted by the terms
of this Section 3.10.1. Seller shall advise Buyer in writing of the filing any law suit for
the collection of rents or other amounts due under a Lease, as described in the immediately
preceding sentence, and shall keep Buyer reasonably informed of the status of the
proceedings in such a suit during the course thereof. After the twelve (12) month period
following the Closing Date, Buyer shall have no further obligations to remit rents owed to
Seller.




3.10.2 Real Estate Taxes and Assessments; Utility Charges. If Closing prorations of real
estate taxes and assessments are based on other than the current year’s tax bill, within
thirty (30) days after such bill is issued to Buyer, Buyer shall recompute such proration.
If such recomputation results in a larger proration credit to Seller, Buyer shall pay to



41









 






Seller the additional amount due Seller within such thirty (30) days. If such recomputation
results in a larger proration credit to Buyer, Seller shall pay Buyer the additional amount
due Buyer within thirty (30) days after receiving Buyer’s written recomputation of such
proration, accompanied by a copy of such tax bill. Any utility rebate received by Buyer
after Closing for the period prior to the Closing Date which has not already been paid or
reimbursed by Buyer shall be promptly paid over to Seller which obligation shall survive
Closing hereunder.




3.10.3 Remittal of Post-Closing Receipts to Buyer. Seller shall immediately remit to Buyer
each check or other payment which Seller receives after Closing on account of rent or other
amounts due under any Lease for any period ending after Closing. The Buyer shall immediately
remit to Seller each check or other payment which the Buyer receives after Closing on
account of rent or other amounts due under any Lease for any period prior to Closing.




3.10.4 Determinations of Post-Closing Prorations and Adjustments. Except where expressly
provided otherwise, Buyer shall make the required determinations and computations of all
post-Closing prorations and other adjustments under this Section 3.10 (the “Post-Closing
Prorations”) and shall provide Seller with a reasonably detailed written summary of each
Post-Closing Proration, concurrently with or prior to making any payment to or requesting
any payment from Seller under this Section 3.10 with respect thereto. Seller shall have the
right after reasonable prior notice to Buyer to audit all of Buyer’s books and records
pertaining to the Post-Closing Prorations. For these purposes, Buyer shall allow Seller’s
designated representatives access to such books and records, at the Property or Buyer’s
principal place of business, as applicable, at any time during normal business hours and
after reasonable prior notice, and Seller shall have the right to make copies of such books
and records (and the right to use Buyer’s photocopying equipment to make such copies, paying
Buyer its actual out-of-pocket cost for such copying).




3.10.5 Possession. Seller agrees to give possession and occupancy of the Property in its
entirety to Buyer at the time of Closing, free and clear of all leases, tenancies, and
occupancies, except for the Leases and as otherwise herein permitted. In the event that
Seller shall fail so to do, Seller shall be and become a tenant by sufferance of Buyer, and
Seller hereby waives all notice to quit as provided by the applicable laws of the governing
jurisdictions.




     3.11 Section 1031 Exchange. Upon request of Seller to be made not later than five (5) days
prior to Closing, Buyer agrees to reasonably cooperate with Seller (at its sole cost and expense)
in structuring the purchase and sale of the Property as contemplated by this Agreement as part of a
like-kind exchange pursuant to Section 1031 of the Code. Buyer agrees to take such steps and
execute such documents (at Seller’s sole cost and expense) as may be reasonably required by Seller
in order to substitute a qualified intermediary (within the meaning of the Code) to act in the
place of Seller. Buyer shall not be required to incur any expense, to assume any liability, to
provide any deposit or other security or to permit Seller to use the Deposit in connection with
such like-kind exchange, or to be in the chain of title of any exchange property. The like-kind
exchange shall not reduce, diminish or adversely affect Seller’s rights or remedies



42









 






under this Agreement in any respect, nor shall the consummation of the exchange cause any delay in
the Closing. Buyer will have no responsibility or obligation for any tax incidents or consequences
in connection with the exchange.




     3.12 Notices. Except in the case (if any) where this Agreement expressly provides for an
alternate form of communication, any notice, consent, demand or other communication to be delivered
to a Party hereunder shall be deemed delivered and received when made in writing and transmitted to
the applicable Party either by receipted courier service, recognized overnight courier service, or
by the United States Postal Service, first class registered or certified mail, postage prepaid,
return receipt requested, or by electronic facsimile transmission (with a confirmatory copy
currently transmitted by one of the other permitted means of delivery as described herein) (“FAX”),
at the address or addresses indicated for such Party below (and/or to such other address as such
Party may from time to time by written notice given in conformity with this Section 3.12 designate
to the other):



	 	 	 	 	 
	

	 	If to Seller:
	 	Enterprise Dulles, LLC
	

	 	 	 	c/o Matan Property Management, Inc.
	

	 	 	 	4600 Wedgewood Boulevard
	

	 	 	 	Suite A
	

	 	 	 	Frederick, Maryland 21703
	

	 	 	 	Attention: Mark C. Matan
	

	 	 	 	Fax No.: 301-694-9214
	

	 	 	 	Phone: 301-694-9200
	

	 	 	 	Email: MarkMatan@aol.com (for informational purposes only)
	 
	 	 	 	 
	

	 	with a copy to:
	 	Philip D. Topper, Jr., LLC
	

	 	 	 	110 North Court Street
	

	 	 	 	Frederick, Maryland 21701
	

	 	 	 	Attention: Philip D. Topper, Jr., Esq.
	

	 	 	 	Fax No.: 301-696-0858
	

	 	 	 	Phone: 301-696-9780
	

	 	 	 	Email: PhilTopper@aol.com (for informational purposes only)
	 
	 	 	 	 
	

	 	If to Buyer:
	 	First Potomac Realty Trust
	

	 	 	 	7200 Wisconsin Avenue, Suite 310
	

	 	 	 	Bethesda, Maryland 20814
	

	 	 	 	Attention: Nicholas R. Smith
	

	 	 	 	Fax No.: 301-986-5554
	

	 	 	 	Phone: 301-986-9200
	

	 	 	 	Email: nsmith@first-potomac.com (for informational purposes only)






43









 






	 	 	 	 	 
	

	 	with a copy to:
	 	Linowes and Blocher, LLP
	

	 	 	 	7200 Wisconsin Avenue, Suite 800
	

	 	 	 	Bethesda, MD 20814
	

	 	 	 	Attention: Richard M. Zeidman, Esq.
	

	 	 	 	Fax No.: 301-654-2801
	

	 	 	 	Phone: 301-961-5136
	

	 	 	 	Email: rzeidman@linowes-law.com ( for informational purposes
only)







Notices given in conformity with this Section 3.12 shall be deemed delivered and received: (A) on
the date of delivery, if delivery is made by commercial courier or recognized overnight courier or
by FAX transmission and is completed before 5:00 pm recipient’s local time on a Business Day, as
evidenced by courier receipt or by the transmission log sheet generated by the sending FAX machine;
(B) if tendered for delivery by commercial courier or recognized overnight courier between 9:00 am
and 5:00 pm (recipient’s local time) on a Business Day and refused, then on the date of such
attempted delivery and refusal, as evidenced by courier receipt; and (C) three (3) Business Days
after being deposited with the United States Postal Service by first class registered or certified
mail as required by this Section 3.12.




     3.13 Binding Effect. Except as otherwise expressly provided herein, this Agreement shall bind
and inure to the benefit of the Parties and their respective heirs, successors and permitted
assigns. Other than the Parties hereto, nothing contained in this Agreement shall be deemed to
make any person or entity a third-party beneficiary of this Agreement.




     3.14 Entire Agreement; Modification; Severability. This Agreement constitutes the entire
agreement between the Parties pertaining to the subject matter hereof and supersedes all prior
agreements, understandings and representations of the Parties with respect to the subject matter
hereof (including, without limitation, any letter of intent or other such written proposal). This
Agreement may not be modified, amended, supplemented or otherwise changed, except by a writing
executed by both Parties. If any term, covenant, condition, provision or agreement herein
contained is held to be invalid, void or otherwise unenforceable by any court of competent
jurisdiction, the fact that such term, covenant, condition, provision or agreement is invalid, void
or otherwise unenforceable shall in no way affect the validity or enforceability of any other term,
covenant, condition, provision or agreement herein contained.




     3.15 Captions. Article and section headings used herein are for convenience of reference only
and shall not affect the construction of any provision of this Agreement.




     3.16 Interpretation. Each Party acknowledges that it and its legal counsel have participated
substantially in the drafting of this Agreement and agree that in the interpretation and
construction of this Agreement, no ambiguity, real or apparent, in any provision hereof shall be
construed against either Party by reason of the role of such Party or its counsel in the drafting
of such provision.




     3.17 Mutual Cooperation; Further Assurances. The Parties shall cooperate with each other as
reasonably necessary to effect the provisions of this Agreement, shall use reasonable and good
faith efforts to satisfy conditions to Closing and, at and after Closing, shall



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each execute and deliver such additional instruments or other documents as the other may reasonably
request to accomplish the purposes and intent of this Agreement; provided, however, that nothing in
this Section shall be deemed to enlarge the obligations of the Parties hereunder or to require
either Party to incur any material expense or liability not otherwise required of it hereunder.




     3.18 Exhibits. Each of the exhibits attached hereto is hereby incorporated herein to the same
extent as if set forth herein in full.




     3.19 Counterparts; Facsimile Signatures. This Agreement, and any amendment hereto, may be
executed in any number of counterparts and by each Party on separate counterparts, each of which
when so executed and delivered shall be deemed an original and all of which taken together shall
constitute but one and the same instrument. Any party may execute this Agreement by delivery to
the other party of a facsimile copy hereof evidencing such party’s signature. In any such case the
party executing by facsimile shall promptly thereafter provide a signed original counterpart hereof
to the other parties. This Agreement shall not be binding until delivery of an original counterpart
but upon such delivery the Effective Date shall become the date of the delivery of the facsimile.




     3.20 Governing Law. This Agreement shall be deemed to be an agreement made under the laws of
the Commonwealth of Virginia and for all purposes shall be governed by and construed in accordance
with such laws.




     3.21 Remedies for Breach by Seller. In the event that Seller shall fail to perform its
obligations hereunder, including, but not limited to, to make full Closing in accordance with the
terms hereof, Buyer may (i) enforce specific performance by Seller of its obligations hereunder,
including, but not limited to, to convey the Property to Buyer in accordance with this Agreement,
and, in connection therewith, enforce other non-monetary equitable remedies, including injunctive
relief, with the Deposit remaining in Escrow pending the resolution of such specific performance
action; or (ii) terminate this Agreement by giving notice to Seller, in which event the Escrow
Agent shall return the Deposit to Buyer, and Seller shall reimburse Buyer for its actual third
party due diligence costs incurred in connection with this Agreement, but not to exceed $50,000.00,
and except as set forth in this Section 3.21, the Parties shall have no further rights,
liabilities, or obligations under this Agreement (other than those that expressly survive
termination) of this Agreement; or (iii) pursue Seller for actual damages suffered or incurred by
Buyer as a result of such breach by Seller (expressly excluding indirect, consequential and
punitive damages); provided that, (1) Buyer shall make an election of the remedies available to
Buyer pursuant to this Section 3.21 within sixty (60) days after the date that Buyer obtains Actual
Knowledge of the breach of the obligations by Seller giving rise to such election of remedies; (2)
Buyer’s actual damage claim pursuant to this Section 3.21 shall in no event exceed the total
distributions Seller would be entitled to receive upon the sale of the Property; and (3) Buyer may
only pursue the remedy of actual damages pursuant to this Section 3.21 in the event that (A) in
violation of this Agreement, Seller sells, pledges or encumbers the Property, and the remedy of
specific performance is not available to Buyer, or (B) Seller has committed fraud. The provisions
of this 3.21 shall be Buyer’s sole and exclusive remedies for any breach of the obligations by
Seller of the terms of this Agreement, and Buyer hereby waives all other remedies. Notwithstanding
any provision to the contrary set forth herein, but subject to the



45









 






conditions and limitations set forth in Section 3.2.3.1 and Section 3.2.4, nothing set forth herein
shall limit or impair any remedies that may be available to Buyer for or in connection with a
breach by Seller of its Property Representations set forth above in Section 3.2.1 or in connection
with any post-closing indemnities or other post-closing obligations of Seller that are expressly
set forth herein or in any of the Seller’s Closing Documents.




     3.22 LIQUIDATED DAMAGES AND LIMITATION ON REMEDIES FOR BREACH BY BUYER. IF THE BUYER IN
BREACH OF THIS AGREEMENT FAILS TO CLOSE OR TO PERFORM ANY OTHER OBLIGATION REQUIRED OF IT PURSUANT
TO THE TERMS OF THIS AGREEMENT, EXCEPT AS OTHERWISE EXPRESSLY SET FORTH HEREIN, SELLER SHALL, AS
ITS SOLE AND EXCLUSIVE REMEDY ON ACCOUNT OF SUCH FAILURE AND IN CONSIDERATION OF ITS WITHDRAWAL OF
THE PROPERTY FROM THE MARKET DURING THE TERM OF THIS AGREEMENT, BE ENTITLED TO TERMINATE THIS
AGREEMENT AND TO RECEIVE AND RETAIN, AS LIQUIDATED DAMAGES (AND NOT AS A PENALTY), THE ENTIRE
DEPOSIT; AND SELLER SPECIFICALLY WAIVES ANY RIGHT SPECIFICALLY TO ENFORCE THE OBLIGATIONS OF THE
BUYER HEREUNDER TO PURCHASE THE PROPERTY OR FOR MONETARY DAMAGES. THE PARTIES ACKNOWLEDGE AND
AGREE THAT:




3.22.1 THE WRONGFUL FAILURE BY THE BUYER TO CLOSE OR TO PERFORM ANY OTHER OBLIGATION
REQUIRED OF IT PURSUANT TO THE TERMS OF THIS AGREEMENT WILL CAUSE SELLER TO INCUR LOSSES AND
OTHER DAMAGES IN AN AMOUNT THAT WOULD BE EXTREMELY DIFFICULT TO ASCERTAIN.




3.22.2 THE DEPOSIT BEARS A REASONABLE RELATIONSHIP TO THE DAMAGES WHICH THE PARTIES ESTIMATE
SELLER WILL SUFFER BY REASON OF THE BUYER’S WRONGFUL FAILURE TO CLOSE AND IS NOT AN
UNREASONABLE AMOUNT OF LIQUIDATED DAMAGES UNDER THE CIRCUMSTANCES EXISTING AT THE TIME THIS
AGREEMENT IS MADE.




3.22.3 SUCH LIQUIDATED DAMAGES ARE ALSO REASONABLE CONSIDERATION FOR SELLER’S AGREEMENT TO
LIMIT ITS REMEDIES AGAINST THE BUYER FOR SUCH A FAILURE TO CLOSE OR TO PERFORM ANY OTHER
OBLIGATION REQUIRED OF IT PURSUANT TO THE TERMS OF THIS AGREEMENT.




3.22.4 THE BUYER HAS FULLY CONSIDERED THE PROVISIONS OF THIS SECTION 3.22 AND HAS CONSULTED
WITH ITS LEGAL COUNSEL WITH RESPECT THERETO.




3.22.5 THE FOREGOING SECTIONS SHALL NOT, HOWEVER, (i) APPLY IN THE EVENT BUYER HAS COMMITTED
FRAUD, OR (ii) LIMIT SELLER’S RIGHTS AND REMEDIES TO ENFORCE OBLIGATIONS OF BUYER UNDER
SECTIONS 3.1.2, 3.5.1, 3.9 AND/OR 3.25, OR OF THE BUYER AS MAY BE SET FORTH ELSEWHERE IN
THIS AGREEMENT OR IN THE BUYER’S CLOSING DOCUMENTS, PROVIDED THAT IN NO EVENT SHALL THE
AGGREGATE 



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LIABILITY OF THE BUYER TO SELLER FOR ALL SUCH BREACHES EXCEED THE ACTUAL DAMAGES
INCURRED BY SELLER FOR OR IN CONNECTION WITH SUCH BREACH BY THE BUYER.




Any attendance or appearance at Closing by either party shall not nullify or void this provision
for payment of liquidated damages as Seller’s sole remedy.




     3.23 Recording. Neither this Agreement nor any notice or memorandum hereof shall be recorded
in any public record. A violation of this prohibition shall constitute a material breach of this
Agreement.




     3.24 TIME OF THE ESSENCE. TIME IS OF THE ESSENCE OF THIS AGREEMENT, AND OF EACH COVENANT,
AGREEMENT AND CONDITION REPRESENTED HEREOF THAT PROVIDES FOR NOTICE TO BE GIVEN OR ACTION TAKEN ON
A SPECIFIC DATE OR WITHIN A SPECIFIED PERIOD OF TIME.




     3.25 Confidentiality. From and after the Effective Date, the Parties and each of their
respective representatives shall hold in strictest confidence the terms of this transaction, the
contents of all items delivered to Buyer pursuant to Section 3.1.1, and all data and information
obtained with respect to the Property, by Seller or Buyer or their respective businesses, whether
obtained before or after the Effective Date, and shall not disclose the same to others; provided,
however, that it is understood and agreed that each of the Parties may disclose such data and
information to employees, consultants, accountants, attorneys, existing and potential, members,
partners, investors or lenders of the Parties and as otherwise required to comply with applicable
law or to enforce the terms and provisions of this Agreement. In the event of a breach or
threatened breach by any Party or its respective agents or representatives of this Section 3.25,
the non-defaulting party hereunder shall be entitled to an injunction restraining the defaulting
party hereunder from disclosing, in whole or in part, such confidential information. Nothing
herein shall be construed as prohibiting the Parties from pursuing any other available remedy at
law or in equity for such breach or threatened breach. Prior to Closing, Buyer and Seller shall,
at their option, confer and agree on a press release to be issued jointly by Buyer and Seller
disclosing the transaction and the appropriate time for making such release. Neither Buyer nor
Seller shall issue any press releases with respect to the transaction contemplated in this
Agreement without the prior written approval of the other Party. The provisions of this Section
3.25 shall survive Closing or the earlier termination of this Agreement for a period of one (1)
year. The obligation of confidentiality by the Parties and their respective representatives as set
forth in this Section 3.25 shall not apply to any data and information with respect to the Property
which is a matter of public record or otherwise in the public domain.




     3.26.1 Terrorism/Patriot Act. Neither Buyer (nor any of Buyer’s affiliates) is
subject to sanctions of the United States government or in violation of any federal, state,
municipal or local laws, statutes, codes, ordinances, orders, decrees, rules or regulations
relating to terrorism or money laundering, including, without limitation, Executive Order No. 13224
on Terrorist Financing, effective September 24, 2001 (the “Executive Order”) and the Uniting and
Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism
Act of 2001 (Public Law 107-56, the “Patriot Act”). Neither Buyer nor any Buyer affiliate is a
“Prohibited Person,” which term is defined as follows:



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	 	(i)  	a person or entity that is listed in the Annex to, or is otherwise subject to
the provisions of, the Executive Order;
	 
	 	(ii)  	a person or entity owned or controlled by, or acting for or on behalf of, any
person or entity that is listed in the Annex to, or is otherwise subject to the
provisions of, the Executive Order;
	 
	 	(iii)  	a person or entity with whom Seller is prohibited from dealing or otherwise
engaging in any transaction by any terrorism or anti-money laundering Law, including
the Executive Order and the Patriot Act;
	 
	 	(iv)  	a person or entity who commits, threatens or conspires to commit or supports
“terrorism” as defined in the Executive Order; or
	 
	 	(v)  	a person or entity that is named as a “specially designated national and
blocked person” on the most current list published by the U.S. Treasury Department
Office of Foreign Asset Control at its official website,
http://www.treas.gov/ofac/tllsdn.pdf or any replacement website or other replacement
official publication of such list.






     3.26.2 Neither Buyer nor any affiliate of Buyer is or will (i) conduct any business or
engage in making or receiving any contribution of funds, goods or services to or for the benefit of
any Prohibited Person, (ii) deal in, or otherwise engage in, any transaction relating to any
property or interest in property blocked pursuant to the Executive Order, or (iii) engage in or
conspire to engage in any transaction that evades or avoids, or has the purpose of evading or
avoiding, or attempts to violate, any of the prohibitions set forth in the Executive Order or the
Patriot Act.




     3.26.3 Buyer shall deliver to Seller any certification or other evidence reasonably
requested from time to time by Seller confirming Buyer’s compliance with the provisions this
Section 3.26.




     3.26.4 The Buyer’s representations and warranties set forth in this Section 3.26 shall survive
the Closing or termination of this Agreement



[Signatures on Following Page]





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     IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed and delivered
by their respective representatives, thereunto duly authorized, as their free act and deed for the
uses and purposes herein contained as of the date first above written.



	 	 	 	 	 	 	 	 	 	 	 
	WITNESS:

	 	SELLER:	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	ENTERPRISE DULLES, LLC,	 	 
	 	 	a Virginia limited liability company	 	 
	 	 	By:	 	Enterprise Dulles Management, LLC	 	 
	 	 	 	 	a Virginia limited liability company, Manager	 	 
	 	 	 	 	By:	 	Enterprise Dulles SPC, Inc.,	 	 
	 	 	 	 	 	 	a Virginia corporation, Manager	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	/s/ Kyung Rhee

	 	 	 	 	 	By:	 	/s/ Mark C. Matan	 	 
	 

	 	 	 	 	 	 	 	 	 	 
	Kyung Rhee

	 	 	 	 	 	 	 	Mark C. Matan	 	 
	

	 	 	 	 	 	 	 	President	 	 






[Signatures Continue on Following Page]






 









 








	 	 	 	 	 	 	 	 	 
	WITNESS:

	 	BUYER:	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	FIRST POTOMAC REALTY INVESTMENT	 	 
	 	 	LIMITED PARTNERSHIP, a Delaware	 	 
	 	 	limited partnership	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	By:	 	First Potomac Realty Trust, a Maryland	 	 
	 	 	 	 	real estate investment trust,	 	 
	 	 	 	 	its general partner	 	 
	 
	 	 	 	 	 	 	 	 
	/s/ Kyung Rhee

	 	 	 	By:	 	/s/ Nicholas R. Smith	 	 
	 

	 	 	 	 	 	 	 	 
	Kyung Rhee

	 	 	 	Print Name:	 	Nicholas R. Smith	 	 
	

	 	 	 	 	 	 	 	 
	

	 	 	 	Title:	 	Executive VP	 	 
	

	 	 	 	 	 	 	 	 






 









 






The undersigned agrees to serve as Escrow Agent in accordance with the terms and conditions set
forth under the foregoing Agreement:




	 	 	 	 	 	 	 
	

	 	Chicago
	 	Title Insurance Company	 	 
	 
	 	 	 	 	 	 
	

	 	By:	 	/s/
Mary Lou Ryce 	 	 
	

	 	 	 	 	 	 






Date of Escrow Agent’s Execution:



February 1, 2005



 









 





[The following exhibits have
been omitted from this filing. Any omitted exhibit will be
provided to the Commission upon request of the Company.]





LIST OF EXHIBITS




	 	 	 
	Exhibit A

	 	Legal Description of Land
	Exhibit B

	 	Form of Certification Letter
	Exhibit C

	 	Personal Property
	Exhibit D

	 	Schedule of Leases (Rent Roll) for the Improvements
	Exhibit E

	 	Intentionally Deleted
	Exhibit F

	 	Intentionally Deleted
	Exhibit G

	 	Services Contracts for the Property
	Exhibit H

	 	Intentionally Deleted
	Exhibit I

	 	Intentionally Deleted
	Exhibit J

	 	Intentionally Deleted
	Exhibit K

	 	Intentionally Deleted
	Exhibit L

	 	List of Property Document Deliveries
	Exhibit M

	 	List of Environmental Reports
	Exhibit N

	 	Intentionally Deleted
	Exhibit O

	 	Intentionally Deleted
	Exhibit P

	 	Intentionally Deleted
	Exhibit Q

	 	List of Existing Financing Documents
	Exhibit R

	 	Form of Deposit Letter of Credit
	Exhibit S

	 	Aged Delinquencies Report
	Exhibit T

	 	Leasing and Tenant-Related Expenses