**Exhibit 10.21**

 

 

 

PURCHASE AND SALEAGREEMENT

 

 

FAIR OAKS PENDERBROOKAPARTMENTS L.L.C.,

 

Seller

 

and

 

 

COMSTOCK HOMES, INC.

 

 

Purchaser

 

 
| Premises: | Penderbrook Apartments |
|-----------|------------------------|
|      | Fairfax, Virginia      |
|      |                   |
| Date:     | As of November 9, 2004 |

 

 

 

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TABLE OF CONTENTS

 
| 1      | Definitions And Usage                                     |   |
|--------|-----------------------------------------------------------|--------|
|   |                                                      |   |
| 2      | Agreement  Of Purchase And Sale; Conveyancing Instruments |   |
|   |                                                      |   |
| 3      | Purchase Price                                            |   |
|   |                                                      |   |
| 4      | Title                                                     |   |
|   |                                                      |   |
| 5      | Closing                                                   |   |
|   |                                                      |   |
| 6      | Representations Of  The Purchaser                         |   |
|   |                                                      |   |
| 7      | Representations Of  The Seller                            |   |
|   |                                                      |   |
| 8      | Purchaser’s Due Diligence                            |   |
|   |                                                      |   |
| 9      | Operation  Of The Buildings And Other Improvements        |   |
|   |                                                      |   |
| 10     | Environmental  Liabilities                                |   |
|   |                                                      |   |
| 11     | Closing Documentation                                     |   |
|   |                                                      |   |
| 12     | Closing  Adjustments; Closing Costs; And Transfer Taxes   |   |
|   |                                                      |   |
| 13     | Risk Of Loss                                              |   |
|   |                                                      |   |
| 14     | Escrow                                                    |   |
|   |                                                      |   |
| 15     | Default; Conditions  To Closing                           |   |
|   |                                                      |   |
| 16     | No Assignment                                             |   |
|   |                                                      |   |
| 17     | Brokers                                                   |   |
|   |                                                      |   |
| 18     | Notices                                                   |   |
|   |                                                      |   |
| 19     | Exchange Provisions                                       |   |
|   |                                                      |   |
| 20     | Miscellaneous                                             |   |

 

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PURCHASE AND SALE AGREEMENT made as of the 9th day ofNovember, 2004, between FAIR OAKS PENDERBROOK APARTMENTS L.L.C., a limitedliability company organized and existing under the laws of the State ofDelaware having its principal office c/o W&M Properties, L.L.C., 60 East 42ndStreet, New York, New York 10165; and COMSTOCK Homes, Inc., a corporationorganized and existing under the laws of the Commonwealth of Virginia havingits principal office at 11465 Sunset Hills Road, Suite 510, Reston, Virginia20190.

 

WITNESSETH

 

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

 

**1.     Definitions****and Usage**.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

(g)   “Contract Deposit” shall mean the sumsdeposited with the Escrow Agent pursuant to paragraphs (a) and (b) of Section3.02 and 5.01 hereof.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

(p)   “Environmental Laws” shall mean all (and“Environmental Law” shall mean any of the) federal, state and municipal laws,statutes, codes and ordinances, now or hereafter enacted or promulgated,pertaining to (i) the production, generation, release, discharge, emission,disposal, transportation, containment or storage, clean-up or remediation ofany condition involving any Hazardous Substance, (ii) the licensing orpermitting of any of the activities referred to in clause (i) or (iii) theregulation of any of such activities or any Hazardous Activity; including theComprehensive Environmental Response, Compensation and Liability Act of 1980,42 U.S.C. §§ 9601 *et seq.*, as amended by theSuperfund Amendments and Reauthorization Act of 1986; the Resource Conservationand Recovery Act of 1976, 42 U.S.C. §§ 6901 *et seq*.; theFederal Water Pollution Control Act, 33 U.S.C. §§ 1251 *et seq*.;the Clean Air Act, 42 U.S.C. §§ 7401 *et seq*.; theClean Water Act, 33 U.S.C. §§ 1251*et seq*.; theNational Environmental Policy Act, 42 U.S.C. § 4321; the Hazardous MaterialsTransportation Act of 1975, 49 U.S.C. §§ 1801-1812; the Toxic SubstancesControl Act, 15 U.S.C. §§ 2601 *et seq*.; theRefuse Act, 33 U.S.C. §§ 401 *et seq*.; anystate or municipal environmental protection or environmental conservationstatute or ordinance; or any law amending or superseding any of the foregoing;and any law of like or similar import to any of the foregoing, and the rulesand regulations promulgated pursuant to such laws, statutes, codes andordinances and all executive, administrative and judicial orders and decreesissued in connection with the enforcement of the foregoing, whether foreseen orunforeseen, ordinary or extraordinary, whether applying retroactively orprospectively.

 

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

 

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

 

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

 

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

 

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

 

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(v)   “Hazardous Substance” shall mean anyhazardous substance as defined in the Comprehensive Environmental Response,Compensation and Liability Act of 1980, 42 U.S.C. §§ 9601 *et seq.*,as amended by the Superfund Amendments and Reauthorization Act of 1986;hazardous waste as defined in the Resource Conservation and Recovery Act of1976, 42 U.S.C. §§ 6901 *et seq.*, as anyof the foregoing may be amended or superseded; oil; petroleum products,derivatives, compounds or mixtures; minerals, including asbestos; chemicals;gasoline; medical waste; polychlorinated biphenyls (pcb’s); methane; radon; radioactive material, volatilehydrocarbons; or other material, whether naturally occurring, man-made or theby-product of any process, which is toxic, harmful or hazardous or acutelyhazardous to the environment or public health or safety; or any other substancethe existence of which on or at any property would be the basis for a claim fordamages, clean-up costs or remediation costs, fine, penalty or lien under anyEnvironmental Law or applicable common law.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

1.03         Where any representation made herein bythe Seller is made “to the best of the Seller’s knowledge,” it is understoodand agreed that such representation is made based solely upon the actualknowledge, without investigation, of the person who is, on the date hereof, themanager of the Real Property.

 

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

 

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

 

**2.     Agreement of Purchase and Sale; Conveyancing Instruments.**

 

2.01         The Seller shall sell and the Purchasershall purchase the Property upon the terms and subject to the conditionshereinafter set forth.

 

2.02         The Seller shall on the Closing Dateconvey and the Purchaser shall accept Acceptable Title to the Real Property bya special warranty deed in the form annexed hereto and made part hereof asExhibit 1.

 

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

 

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

 

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

 

2.06         The Seller shall on the Closing Dateassign without representation or warranty (except as set forth herein) to thePurchaser all of the Seller’s right, title and interest under each transferablelicense and permit in the Seller’s possession for the use and operation of anyitems constituting Intangibles, and any equipment and apparatus for theBuildings and other Improvements, and the Purchaser shall accept the same andassume all of the Seller’s obligations under such licenses and permits, by anassignment and assumption agreement in the form annexed hereto and made parthereof as Exhibit 5.

 

**3.     PurchasePrice.**

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

3.07         For the purposes hereof, the term“immediately available funds” shall mean United States dollars, which requireno further clearance to be invested immediately by the Seller and earn interestthereon from the time of such investment. Notwithstanding anything herein set forth to the contrary, the Purchasermay, in lieu of the payments under paragraph (a) or paragraph (b) of Section3.02 or both of them, deliver to the Escrow Agent one or more irrevocable,unconditional letters of credit payable on sight issued (or confirmed forpayment) by Branch Banking and Trust Company or another New York ClearinghouseAssociation member bank having capital and surplus of at least $10 billion,payable to the Seller as the sole beneficiary. Any such letter of credit shall be payable upon presentation of onlysaid letter of credit and a sight draft and shall have an expiry date notearlier than November 9, 2005.

 

**4.     Title.**

 

4.01         The Purchaser shall promptly order atitle report of the Real Property from a national title insurance companylicensed to do business in the Commonwealth of Virginia or such company’sagent.  The Purchaser shall promptly informthe Seller and its counsel of any title defect (including any defect disclosedby a survey of the Premises) not among the Permitted Title Exceptions afterlearning of the same and deliver a copy of such title report (and any surveyprepared on behalf of or obtained by the Purchaser) to the Seller promptlyafter the receipt of the same, but not later than the last day of the DueDiligence Period.  If the Purchaser shallfail to notify the Seller and its counsel of the existence of any titleexception or defect not among the Permitted Title Exceptions by the expirationof the Due Diligence Period, then objection to such title exceptions anddefects shall be deemed to have been waived by the Purchaser, and such titleexceptions and defects shall be deemed to be Permitted Title Exceptions.  If any title exception or defect not amongthe Permitted Title Exceptions shall arise after the Due Diligence Period, thePurchaser shall notify the Seller thereof within two (2) Business Days of thePurchaser’s becoming aware of the same or such title exceptions and defectsshall likewise be deemed to have been waived by the Purchaser and such titleexceptions and defects shall be deemed to be Permitted Title Exceptions.

 

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4.02         The Seller shall not be obligated tocure any title defect or to remove any exception to title not among thePermitted Title Exceptions (including any violation noted or issued, of anybuilding, fire, safety, Environmental Law, or other law, code, ordinance orregulation affecting the Real Property), if the aggregate cost of curing allsuch title defects and removing such exceptions not among the Permitted TitleExceptions (including any violation noted or issued, of any building, fire,safety, Environmental Law or other law, code, ordinance or regulation affectingthe Real Property) shall exceed the Cure Amount, except that the Seller shallcause any mortgage (or deed of trust) of the Real Property securingindebtedness for borrowed money, and any judgment against the Seller andmechanics’ or other statutory liens, encumbering the Real Property to bedischarged of record irrespective of the amount.  If the Seller elects to cure any title defector to remove any exception to title not among the Permitted Title Exceptions(including any violations noted or issued, of any or all building, fire, safetyand other laws, codes, ordinances and regulations affecting the Real Property),(which election shall be made by the Seller within five (5) Business Days afterreceipt of the Purchaser’s objections), it shall be entitled to adjourn theClosing Date for up to sixty (60) days to attempt to cure such defect or removesuch exception.  Notwithstanding anythingherein contained to the contrary, the Seller shall not be obligated toinstitute or prosecute any legal proceeding to cure or discharge any titledefect or exception to title.

 

4.03         If the Seller shall have notified thePurchaser of the Seller’s unwillingness or inability to cure title defects orremove exceptions not among the Permitted Title Exceptions or among those titleexceptions that the Seller has agreed to discharge pursuant to Section 4.02hereof, because the cost of curing such title defects or removing suchexceptions will exceed the Cure Amount, or if, as of the Closing Date (as thesame may have been adjourned as provided in this Agreement), the Seller isunable to convey Acceptable Title to the fee simple of the Premises to thePurchaser, then the Purchaser may, upon notice to the Seller, terminate thisAgreement.  The Purchaser may elect toconsummate this transaction subject to such title defects or exceptions uponall of the terms and provisions and subject to all of the conditions set forthin this Agreement (except the obligation of the Seller to convey AcceptableTitle) by giving notice to the Seller within five (5) Business Days after theeffective date of the Seller’s notice. If the Purchaser shall elect to consummate this transaction as providedin the Purchaser’s notice, the Seller shall convey the Property to thePurchaser without diminution of the Purchase Price, subject to the PermittedTitle Exceptions and such additional title exceptions as the Seller shall haveelected not to cure or remove except that Purchaser shall be entitled to acredit against the Purchase Price equal to the Cure Amount and subject to theSeller’s obligations to satisfy mortgages and liens pursuant to Section4.02.  If the Purchaser shall haveelected to terminate this Agreement pursuant to this Section 4.03 and suchelection shall not have been canceled as provided above in this Section 4.03,then the Seller and the Purchaser shall instruct the Escrow Agent to disbursethe Escrow Fund to the Purchaser, and no party shall have any further rights orobligations hereunder.  Such rights toterminate this Agreement and to receive the Escrow Fund shall be thePurchaser’s sole remedies if the Seller is unwilling or unable to cure orremove any such title defect or exception.

 

**5.    Closing.**

 

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

 

5.02         The Seller and the Purchaser shallendeavor to agree upon preliminary estimates of the closing adjustments andprorations to be made in accord with Article 12 hereof at least three (3)Business Days prior to the Closing Date and the final adjustments andprorations not less than one (1) Business Day prior to the Closing Date.  At least one (1) Business Day prior to theClosing Date the Seller and the Purchaser shall deliver to the Escrow Agent thedocuments to be executed and delivered at the Closing pursuant to Article 11hereof and the balance of the Purchase Price (as adjusted pursuant to Article12).  Upon confirmation by the EscrowAgent that it is prepared to issue an owner’s form of title insurance policy tothe Purchaser insuring Acceptable Title to the Purchaser and all otherconditions precedent to its

 

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disbursement of the Purchase Price, the Escrow Agent shall wire theentire Purchase Price (as so adjusted) and all other moneys that the EscrowAgent is holding in immediately available funds to the Seller and itsdesignees, if any.  Upon confirmation bythe Seller that the funds have been received, the Escrow Agent shall thendistribute the documents it is holding to the applicable parties and issue thePurchaser’s title insurance policy.

 

**6.     Representations of the Purchaser.**

 

6.01         The Purchaser represents and warrantsto the Seller that:

 

(a)   **THE TRANSACTIONCONTEMPLATED BY THIS AGREEMENT HAS BEEN NEGOTIATED BETWEEN THE SELLER AND THE PURCHASER.  THIS AGREEMENT REFLECTS THE MUTUAL AGREEMENTOF THE SELLER AND THE PURCHASER, AND THE PURCHASER HAS CONDUCTED OR SHALLCONDUCT ITS OWN INDEPENDENT EXAMINATION OF THE PROPERTY.  OTHER THAN THE MATTERS SPECIFICALLYREPRESENTED HEREIN, BY WHICH ALL OF THE FOLLOWING PROVISIONS OF THIS PARAGRAPHARE LIMITED, THE PURCHASER HAS NOT RELIED UPON AND SHALL NOT RELY UPON ANYREPRESENTATION OR WARRANTY OF THE SELLER OR ANY OF THE SELLER’S AGENTS ORREPRESENTATIVES NOT SPECIFICALLY SET FORTH HEREIN, AND THE PURCHASER HEREBYACKNOWLEDGES THAT EXCEPT AS SPECIFICALLY SET FORTH IN THIS AGREEMENT, NO SUCHREPRESENTATION HAS BEEN MADE.  THEPURCHASER ACKNOWLEDGES AND AGREES THAT EXCEPT AS SPECIFICALLY SET FORTH IN THISAGREEMENT, BY EXECUTING THIS AGREEMENT THE SELLER SPECIFICALLY DISCLAIMS, ANDNEITHER IT NOR ANY OF ITS AFFILIATES NOR ANY OTHER PERSON IS MAKING, ANYREPRESENTATION, WARRANTY OR ASSURANCE WHATSOEVER TO THE PURCHASER, AND NOWARRANTIES OR REPRESENTATIONS OF ANY KIND OR CHARACTER, EITHER EXPRESS OR IMPLIED,EXCEPT AS SPECIFICALLY SET FORTH IN THIS AGREEMENT, ARE MADE BY THE SELLER ORRELIED UPON BY THE PURCHASER WITH RESPECT TO THE STATUS OF TITLE TO OR THEMAINTENANCE, REPAIR, CONDITION, DESIGN OR MARKETABILITY OF ANY OF THE PROPERTYINCLUDING (I) ANY IMPLIED OR EXPRESS WARRANTY OF MERCHANTABILITY, (II) ANYIMPLIED OR EXPRESS WARRANTY OF FITNESS FOR A PARTICULAR PURPOSE, (III) ANYIMPLIED OR EXPRESS WARRANTY OF CONFORMITY TO MODELS OR SAMPLES OF MATERIALS,(IV) ANY RIGHTS OF PURCHASER UNDER APPROPRIATE STATUTES TO CLAIM DIMINUTION OFCONSIDERATION, (V) ANY CLAIM BY PURCHASER FOR DAMAGES BECAUSE OF DEFECTS,WHETHER KNOWN OR UNKNOWN, WITH RESPECT TO THE BUILDINGS AND OTHER IMPROVEMENTSOR THE PERSONAL PROPERTY, (VI) THE FINANCIAL CONDITION OR PROSPECTS OF THE REALPROPERTY, AND (VII) THE COMPLIANCE OR LACK THEREOF OF ANY OF THE BUILDINGS ORTHE OTHER IMPROVEMENTS WITH GOVERNMENTAL REGULATIONS, IT BEING THE EXPRESSINTENTION OF THE SELLER AND THE PURCHASER THAT, EXCEPT AS EXPRESSLY SET FORTHIN THIS AGREEMENT, THE PROPERTY SHALL BE CONVEYED AND TRANSFERRED TO THEPURCHASER IN ITS PRESENT CONDITION AND STATE OF REPAIR, “AS IS” AND “WHERE IS”,WITH ALL FAULTS.  The Purchaser is aknowledgeable, experienced and sophisticated purchaser of real estate, and itis relying solely on its own expertise and that of Purchaser’s consultants inpurchasing the Property.  Prior to thedate hereof and during the Due Diligence Period, the Purchaser has conducted orshall conduct such inspections, investigations and other independentexaminations of the Property and related matters as the Purchaser deemed ordeems necessary, including but not limited to the physical and environmentalconditions thereof, and shall rely upon same and not upon any statements of theSeller (excluding the limited matters specifically represented by the Sellerherein) or of any member officer, director, employee, agent or attorney of theSeller.  The Purchaser acknowledges thatall information obtained by the Purchaser was or shall be obtained from a varietyof sources, and the Seller shall not be deemed to have represented or warrantedthe completeness, truth, or accuracy of any of the documents or other suchinformation heretofore or hereafter furnished to the Purchaser.  Upon Closing, the Purchaser will assume therisk that adverse matters, including, but not limited to,**

 

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**adversephysical and environmental conditions, that may not have been revealed by thePurchaser’s inspections and investigations. The Purchaser further acknowledges and agrees that there are no oralagreements, warranties or representations, collateral to or affecting theProperty, by the Seller, any agent of the Seller or any third party, except asspecifically set forth herein.  The Selleris not liable or bound in any manner by any oral or written statements,representations, collateral to or relating to the Property, by the Seller, anyagent of the Seller or any third party, except to the extent specificallyprovided herein.  The Seller is notliable or bound in any manner by any oral or written statements,representations or information pertaining to the Property furnished by any realestate broker, agent, employee, servant or other person, unless the same arespecifically set forth or referred to herein. The Purchaser acknowledges that the Purchase Price reflects the “as is,where is” nature of this sale and any faults, liabilities, defects or otheradverse matters that may be associated with the Property.  The Purchaser (with the Purchaser’s counsel)as fully reviewed the disclaimers and waivers set forth in this Agreement andunderstands the significance and effect thereof.  The Purchaser acknowledges and agrees thatthe disclaimers and other agreements set forth herein are an integral part ofthis Agreement, and that the Seller would not have agreed to sell the Propertyto the Purchaser for the Purchase Price without this disclaimer and otheragreements set forth in this Agreement. The terms and conditions of this paragraph (a) shall expressly survivethe Closing, shall not merge with the provisions of any ConveyancingInstruments or other documents delivered in connection with the sale of theProperty and shall be deemed to be incorporated into the deed conveying titleto the Real Property.**

 

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

 

(c)   The Purchaser is not relying upon anystatements made by or on behalf of the Seller concerning (i) the condition oroperation or maintenance of the Real Property, or (ii) any other matterconcerning any of the Property, not specifically stated in the body of thisAgreement or in any Schedule hereto.

 

(d)   The Purchaser is not and shall not be as ofthe Closing Date an employee benefit plan as defined in Section 3(30) of ERISA,which is subject to Title I of ERISA, nor a plan as defined in Section4975(e)(1) of the Internal Revenue Code of 1986, as amended, and the assets ofthe Purchaser shall not constitute “plan assets” of one or more of such planswithin the meaning of Department of Labor Regulation Section 2510.3-101.

 

(e)   The persons executing this Agreement onbehalf of the Purchaser have been duly authorized to do so by the appropriategoverning or managing authority of the Purchaser, and this Agreementconstitutes the valid and binding obligation of the Purchaser, enforceable inaccordance with its terms.

 

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

 

**7.     Representations of the Seller.**

 

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

 

(a)   The persons executing this Agreement onbehalf of the Seller have been duly authorized to do so by the appropriategoverning or managing authority of the Seller, and this Agreement constitutesthe valid and binding obligation of the Seller, enforceable in accordance withits terms.

 

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

 

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

 

(c)   The Seller has not received notice ofviolation of any zoning, building, fire or safety code, Environmental Law, theFederal Fair Housing Act or any state or municipal equivalent, or otherapplicable law that has not been discharged.

 

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

 

(e)   It has not received notice of any materialbreach of any material obligation to any third party under any of the documentslisted among the Permitted Title Exceptions or under any Contract that has notbeen cured.

 

(f)    No real estate tax contests are pending.

 

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

 

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

 

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

 

7.04         A representation of the Seller shall bedeemed untrue or incomplete only if (i) the Purchaser did not know that suchrepresentation is untrue, (ii) such representation is factually untrue and(iii) such representation is material. Notwithstanding the provisions of the preceding sentence, if thePurchaser shall discover any of the Seller’s representations to be untruefactually, the Purchaser shall give the Seller notice thereof promptly afterdiscovering such fact and the Seller shall have the opportunity (not to exceedthirty (30) days) to correct any such untrue factual representation.  If the Seller is able to correct suchconditions that made the representation untrue factually so that it is true asof the date of such correction, the representation shall be deemed true as ifmade accurately on the date hereof.  Ifthe Purchaser fails to afford the Seller the opportunity to correct suchcondition, then the Purchaser shall be deemed to have waived any rights andremedies arising by reason of such untrue representation.

 

7.05         Subject to the terms and provisions ofSection 7.04, the Purchaser’s sole right and remedy arising by reason of anyuntrue or incomplete representation discovered by the Purchaser prior toClosing shall be to terminate this Agreement and have the Escrow Fund paid tothe Purchaser together with the Purchaser’s reasonable costs of due diligenceup to $75,000.

 

7.06         All of the Seller’s representationshereunder shall be deemed merged in the Conveyancing Instruments and shall notsurvive the conveyances of the Property to the Purchaser, except as provided inSection 7.07.  The acceptance by thePurchaser of the Conveyancing Instruments by the Purchaser shall constituteconclusive proof that the Seller shall have performed all of its obligationsunder

 

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

 

7.07         The Seller’s representations set forthin Section 7.01 shall survive the Closing for one hundred eighty (180)days.  Following the Closing, if any suchrepresentation shall prove to be untrue or incomplete as defined in Section7.04, the Purchaser may commence an action for the actual damages sufferedthereby, provided that such action shall have been commenced within such180-day period, time being of the essence.

 

**8.     Purchaser’sDue Diligence.**

 

8.01         In consideration of the Purchaser simultaneouslyherewith depositing with the Escrow Agent the Due Diligence Fee (which shall bepayable to the Seller in accordance with Sections 3.02, 8.03, and 14.01),commencing on the date of this Agreement and expiring on December 1, 2004 orsuch earlier date as the Purchaser shall have waived its rights to terminatethis Agreement under Section 8.03 (which right shall conclusively be deemed tohave been waived by making the Contract Deposit pursuant to paragraph (b) ofSection 3.02) (the “Due Diligence Period”), the Purchaser (and the Purchaser’saccountants, engineers and other consultants) may, subject to the terms andprovisions of this Article 8 and upon at least two Business Days’ notice to theSeller,  (i) subject to the rights oftenants of the Premises, enter upon the Real Property for the purpose of makingsuch inspections and surveys thereof as the Purchaser may desire, (ii) reviewthe Leases and (iii) inspect, during regular business hours at the offices ofthe managing agent of the Real Property, the Contracts and the other books andrecords of such managing agent relating to the operation, leasing andmaintenance of the Real Property. Nothing in this Section 8.01 shall be construed to permit the Purchaseror any other person on behalf of the Purchaser to inspect or review any (x)income tax returns or files relating to income taxes of the Seller or anypartner, officer, member, agent or other principal of the Seller or (y)reports, correspondence, memoranda or compendia of information prepared bycounsel for the Seller which may be the subject of any privilege or by anyother persons in contemplation of litigation or any other official proceedingor hearing, except real estate tax *certiorari* (orequivalent) proceedings.  The Sellerreserves the right to have one or more representatives present at any suchinspection, test, examination or walk-through of the Real Property and at anyexamination of the Leases, Contracts or books and records.  No test or physical penetration of anyportion of the Real Property may be conducted without the prior approval of theSeller, which approval shall not be unreasonably withheld.  The Purchaser shall maintain and deliver toSeller certificates of comprehensive liability and property damage insurance ina coverage amount of not less than one million ($1,000,000) dollars*per* occurrence and underwritten by a carrier reasonablyacceptable to the Seller, naming the Seller, its members and managing agent asinsureds against any damage, injury, expenses and other liabilities which theundersigned may incur arising out of any negligence or misconduct by any of thePurchaser’s representatives while present at the Real Property to perform anyactivity permitted under this Section 8.01. The Purchaser shall promptly pay the Seller the Seller’s cost to repairany damage to any Buildings and other Improvements caused by or resulting fromactivities associated with such representatives (excluding, however, conditionsmerely discovered by the Purchaser) and restore the damaged property to itscondition immediately prior to such activities and shall indemnify Selleragainst any related costs.   During theDue Diligence Period, the Seller shall make available to the Purchaser and itsrepresentatives copies of the Leases, the Contracts, such Certificate(s) ofCompliance or Occupancy and Residential Use Permits for the Buildings and otherImprovements as are in the possession of the Seller and its managing agent, themost recent real estate tax bills for the Real Property, such plans anddrawings of the Buildings and other Improvements as are in the possession ofthe Seller and its managing agent and, subject to the foregoing provisions ofthis Section 8.01, such other books and records of the Property, including,without limitation, the items set forth in Schedule K attached hereto,as are in the possession of the Seller and its managing agent.

 

8.02         (a)   Allinformation respecting the Real Property obtained pursuant to Section 8.01 orother source not in the public domain prior to the Closing by the Purchaser orany other person acting on behalf of the Purchaser shall be held in thestrictest confidence and shall not be revealed to any person (other thanpersons retained or employed by Purchaser, the Purchaser’s consultants andlenders, who have a

 

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need to know such information) except pursuant to subpoena or court orother competent authority’s order.  Ifthe Purchaser or any person acting on behalf of the Purchaser shall be made thesubject of a subpoena or the order of any court or other competent authority’sdirecting the Purchaser or such other person to divulge any such information,the Purchaser shall notify the Seller of such subpoena or order promptly afterbeing served with the same to permit the Seller to contest such subpoena orcourt order or to seek such other protective relief as the Seller may deemdesirable.  The Purchaser shall instructeach person to whom the Purchaser imparts any such information about the RealProperty pursuant to this Article 8 to be bound by the terms and provisions ofthis Section 8.02.

 

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

 

(c)   Providedthat the Seller is not in material breach of this Agreement and the Purchaserhas terminated this Agreement in accord with Section 8.03, the Purchaser shalldeliver to the Seller, promptly after receipt by the Purchaser, copies of alltitle abstracts and reports, surveys, inspection and test reports andenvironmental and engineering reports with respect to the Real Property thatmay be prepared for the Purchaser by third-party engineers, providers,consultants or contractors.  All suchcopies shall be delivered without representation or warranty and may not berelied upon by the Seller.

 

(d)   ThePurchaser shall not request any governmental authority to inspect any portionof the Real Property but the Purchaser may request from appropriate agenciesinformation concerning zoning, compliance with codes or other ordinances andcertificates of occupancy.

 

8.03         The Purchaser may terminate thisAgreement for any reason on or before the expiration of the Due DiligencePeriod, time being of the essence, by giving the Seller notice of suchtermination, time being of the essence. If the Purchaser shall so terminate this Agreement pursuant to this Section8.03 and the Seller shall not have made an untrue or incomplete representation(as defined in Section 7.04) or other breach or default hereunder which shallhave formed the basis of such termination, then the Purchaser shall direct theEscrow Agent to disburse the Due Diligence Fee of seventy-five thousand andno/100 ($75,000.00) dollars to the Seller in consideration of the Seller’shaving removed the Property from the market for the duration of the DueDiligence Period and the balance of the Escrow Fund to the Purchaser (withoutthe requirement of obtaining consent of the Seller and notwithstanding contraryinstruction from the Seller) and neither party shall have any furtherobligation or claim against the other arising out of this Agreement (except forsuch claims as the Seller may have by reason of any covenant or condition setforth in Sections 8.01 or 8.02).  If thePurchaser shall not have given such notice of termination in a timely mannerunder this Section 8.03, then the right to terminate this Agreement pursuant tothis Section 8.03 shall be deemed waived for all purposes, the right toterminate this Agreement pursuant to this Section 8.03 shall be of no force oreffect, and the balance of the Contract Deposit (as specified in paragraph (b)of Section 3.02) hereof shall be unconditionally due and payable.  If this Agreement is not terminated pursuantto this Section 8.03, the Contract Deposit shall not be refundable to thePurchaser for any reason not specifically set forth herein.

 

8.04         Pursuant to the provisions of Section8.01 and 8.02, the Purchaser may inspect the Real Property during the ContractPeriod subsequent to the Due Diligence Period.

 

**9.     Operation of the Buildings and Other Improvements.**

 

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

 

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

 

**10.  Environmental Liabilities.**

 

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

 

10.02       From and after the Closing, the Purchasershall indemnify and hold the Seller, its partners, employees and agents andaffiliates harmless against any cost, claim, or liability (including attorneys’fees) arising by virtue of the existence at any time of any Hazardous Activityconducted at or any Hazardous Substance or Hazardous Condition first arising oroccurring at, in or about the Real Property from and after the Closing Datecaused or suffered by the Purchaser.

 

10.03       The obligations of the Purchaser pursuantto this Article 10 shall survive the delivery of the Conveyancing Instrumentsat the Closing.

 

**11.  ClosingDocumentation.**

 

11.01       At the Closing, the Seller shall deliverto the Purchaser:

 

(a)   the deed as heretofore described in Section2.02;

 

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

 

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

 

(d)   an assignment and assumption agreement asheretofore described in Section 2.05 of the Contracts which shall provide thatthe Purchaser is assuming all of the obligations of the Seller under theContracts (including any obligations to union personnel and other persons whomay be beneficiaries under any such agreements) from and after the ClosingDate;

 

(e)   an assignment and assumption agreement asheretofore described in Section 2.06 of the licenses and permits and otheritems constituting Intangibles which shall provide that the Purchaser isassuming all of the obligations of the Seller under such licenses and permits fromand after the Closing Date;

 

(f)    updated and revised Schedules pursuant toSection 7.02 hereof;

 

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

 

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

 

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

 

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

 

(k)   letters addressed to each of the tenantsunder the Leases, including statements to the effect that their respectivesecurity deposits under the Leases have been delivered to and received by thePurchaser (and containing such other statements and information as may berequired pursuant to law to relieve the Seller of further liability for themaintenance and return of the security deposits under the Leases);

 

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

 

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

 

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

 

(o)   a certification to the effect that the Selleris not a “foreign person” as defined in the Foreign Investment in Real PropertyTax Act;

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

(a)   the balance of the Purchase Price as adjustedfor net closing adjustments between the Seller and the Purchaser as hereinafterprovided;

 

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

 

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

 

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

 

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

 

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

 

11.03.   Each of the partiesshall execute such transfer tax and other tax returns incidental to thistransaction as required by law and such other title affidavits documents as maybe reasonably required to consummate the transactions under this Agreement inaccordance with its Terms.

 

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

 

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

 

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

 

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

 

(c)   special district impositions, if any;

 

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

 

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

 

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

 

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

 

(h)   electricity charges based upon the lastavailable electrical reading;

 

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

 

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

 

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

 

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

 

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

 

12.04       If, at Closing, any then tenant of theReal Property, is delinquent in the payment of rent payable for any periodexpiring prior to the month in which the Closing occurs, the Purchaser shallpurchase and the Seller shall sell, without representation or warranty, theSeller’s claims for such delinquencies for one-half (1/2) of the amount thereof(but the Purchaser’s maximum payment therefor shall not exceed ten thousand andno/100 ($10,000.00) dollars).

 

12.05       [Intentionally deleted].

 

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

 

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

 

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

 

12.09       The Purchaser shall pay the followingexpenses with respect to the conveyance of The Property pursuant to thisAgreement.

 

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

 

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

 

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

 

(d)   all other State and County transfer taxes;

 

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

 

(f)  any transfer and/or license fees associatedwith software applications, licenses, and programs to be conveyed to thePurchaser pursuant hereto.

 

12.10       Each party hereto shall bear its ownattorney’s legal charges with respect to the transactions to be consummatedpursuant hereto.

 

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

 

**13.          Riskof Loss.**

 

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

 

(a)   “Damage or destruction” shall mean any damageto or the destruction in whole or in part of any of the Buildings and otherImprovements on the Premises;

 

(b)   “Insubstantial damage or destruction” shallmean any damage or destruction the estimated cost of repair or restoration madein good faith by any independent contractor retained by the Seller does notexceed $1,000,000.

 

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

 

(d)   “Taking” shall mean the vesting of title ofany estate or interest in any portion of the Real Property in any governmentalor *quasi*-governmental authority or anyother person or entity by virtue of the exercise of the power of eminentdomain.

 

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

 

18

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and effect and the Purchaser shall receive an assignment of all of theSeller’s right, title and interest to the insurance proceeds or condemnationaward, as applicable, to be paid (or theretofore paid) accruing to the owner ofthe Premises for such damage or Taking, plus a credit against the PurchasePrice in amount equal to Seller’s deductible. Notwithstanding the foregoing, if the Seller’s insurance company has notadmitted liability by the Closing Date for an amount to restore anyinsubstantial damage or destruction, the Seller may adjourn the Closing for upto sixty (60) days to obtain the insurance company’s agreement to cover suchloss and if at the expiration of such 60-day period, such agreement has notbeen obtained and the Seller has not agreed to reduce the Purchase Price by theestimated value of such loss, the Purchaser may elect, by notice given within ten(10) Business Days after the expiration of such 60-day period, to consummatethis transaction without diminution of the Purchase Price (except for theamount of any insurance deductible) or terminate this Agreement.  If the insurer has agreed to liability forsuch loss or if the Seller shall have agreed to reduce the Purchase Price bysuch amount, this Agreement shall not be terminated.  If the Purchaser does not timely make anyelection under this Section 13.02 a right to which it is granted, then this Agreementshall be deemed terminated.  Upon atermination of this Agreement pursuant to this Section 13.02, the Escrow Fundshall be paid to the Purchaser as its exclusive remedy.

 

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

 

**14.  Escrow.**

 

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

 

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

 

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Acceptable Title to the Real Property or if the Purchaser terminatesthis Agreement pursuant to Section 8.03, then the Escrow Fund shall bedisbursed to the Purchaser. Notwithstanding the foregoing, if the Purchaser shall have delivered oneor more letters of credit pursuant to Section 3.07, then at Closing, thePurchaser shall pay to the Seller in immediately available funds the principalamount(s) of such letter(s) of credit and the letter(s) of credit shall bereturned to the Purchaser.

 

(c)   Prior todelivering the Escrow Fund to the Seller or the Purchaser pursuant to paragraph(b) above (except at the Closing or pursuant to Section 8.03), the Escrow Agentshall deliver to the Seller and the Purchaser notice of the Escrow Agent’sintention to deliver the Escrow Fund. If, within five (5) Business Days after tendering such notice, theEscrow Agent shall not have received a notice from either party instructing theEscrow Agent not to deliver the Escrow Fund as specified in the Escrow Agent’snotice, the Escrow Agent shall deliver the Escrow Fund to the party sospecified.  If, however, the Escrow Agentreceives within such five (5) Business Day period written instructions fromeither party that the Escrow Agent should not so deliver the Escrow Fund, theEscrow Agent shall continue to hold the Escrow Fund (subject to the EscrowAgent’s right to commence an action by way of interpleader, in which case theEscrow Fund shall be delivered to the Clerk of the Supreme Court of the Stateof New York, New York County) until it receives a notice executed by the Sellerand the Purchaser instructing the Agent to whom the Escrow Fund should bedisbursed or delivery of a copy of any final judicial order to the EscrowAgent, whereupon the Escrow Agent shall disburse the Escrow Fund as provided insuch joint instructions or order.  TheSeller and the Purchaser hereby agree to submit themselves to the jurisdictionof the courts of the State of New York sitting in New York County, and serviceupon them may be effected by the Escrow Agent in any way provided bystatute.  If the Escrow Fund (or portionthereof) is represented by one or more letters of credit, and the Escrow fundis to continue to be held by the Escrow Agent is not authorized to release theEscrow Fund, then the Purchaser shall substitute cash in lieu of such letter(s)of credit within five (5) Business Days of notice to do so again by thePurchaser and if cash is not so substituted, then the Escrow Agent shallforthwith, and hereby is irrevocably instructed to, deliver the letter(s) ofcredit to the Seller.

 

14.02       (a)   The Escrow Agent has agreed not to charge afee for performing its duties hereunder. The Seller and the Purchaser shall jointly and severally indemnify andhold the Escrow Agent harmless from all expenses, including legal fees andcharges (including legal fees and charges at the Escrow Agent’s standard feesand charges if the Escrow Agent shall elect to represent itself, either with orwithout outside counsel) and other liabilities incurred by the Escrow Agentarising out of this Agreement, except to the extent that such expenses orliabilities result from the Escrow Agent’s willful misconduct.  The provisions of this Article 14 shallsurvive the delivery of the Conveyancing Instruments at the Closing or thetermination of this Agreement.

 

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

 

(h)   The Escrow Agent shall have no liability forits failure to perform any obligation hereunder, except arising by reason ofits willful misconduct.  Notwithstandingthe foregoing, the Escrow Agent is hereby released from liability for any actperformed or omitted to be performed in good faith in its performance of itsduties hereunder.  The Escrow Agent shallnot be required to inquire into the authority of any person purporting to givea notice on behalf of the Seller or the Purchaser and may assume that allsignatures are genuine.  It is understoodand agreed that the persons and firms referred to in Article 18 as counsel foreach of the Seller and the Purchaser are authorized to give notices to theEscrow Agent pursuant to this Article 14.

 

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

 

20

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

 

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

 

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

 

**15.  Default; Conditions to Closing.**

 

15.01       If the Purchaser shall default hereunder,the parties agree that the Seller shall sustain damages that shall be difficultor impossible to measure.  The partiesagree that the Seller shall retain the Escrow Fund as liquidated damages as itsexclusive remedy if the Purchaser defaults hereunder and that such amountrepresents a fair and reasonable estimation of the damages to Seller from suchdefault.

 

15.02       If the Seller shall be unable to perform(*i.e.*, fails to perform for reasonsbeyond the Seller’s control) any of its material obligations hereunder or ifany representation made by the Seller, subject to the foregoing provisions ofArticle 7, shall be proven to be untrue and incomplete (as understood pursuantto Article 7), the Purchaser’s sole remedy shall be to terminate this Agreementand be paid the proceeds in the Escrow Fund, the cost of the Purchaser’sexamination of title at the rate imposed by the Purchaser’s title insurancecompany for performing such examination without issuing a title insurancepolicy and up to $75,000 for the costs of the Purchaser’s due diligence.  If the Seller shall default (*i.e.*, willfully and intentionally fails to performnotwithstanding that it is within the Seller’s power to do so) in itsobligation hereunder to convey the Property as herein required, the Purchaser’ssole remedy shall be (i) to bring an action for specific performance or (ii) atPurchaser’s election, to receive the sum of five hundred thousand  ($500,000) dollars as liquidated damages (itbeing difficult or impossible to measure the Purchaser’s damage and such amountrepresenting a fair and reasonable estimation of the Purchaser’s damages fromsuch a default) and the return of the Escrow Fund.  The Purchaser hereby waives the right toattach or lien any property (real or personal) of the Seller or to file a *lis pendens* (or equivalent attachment) against any portionof the Real Property, the Personal Property, or any other asset of the Seller,for any purpose under this Agreement, including any enforcement of any right orremedy arising out of any claimed breach of this Agreement by the Seller,except in connection with any proper action for specific performance permittedhereunder.

 

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

 

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

 

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

 

(c)   The Seller shall have performed and observed,in all material respects, all covenants and agreements of this Agreement to beperformed and observed by the Seller as of the Closing Date, including, withoutlimitation, conveying to the Purchaser Acceptable Title to the Real Property;

 

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

 

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(e)   No governmental action (such as but notlimited to the imposition of a sewer or water moratorium or permit allocation scheme)shall have been taken, by any applicable governmental authority, which wouldprevent the occupancy or use of the apartments or condominium units comprisingor to comprise the Real Property.

 

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

 

(a)   The Sellershall have received the Purchase Price as adjusted as provided herein, pursuantto and payable in the manner provided for in this Agreement;

 

(b)   ThePurchaser shall have delivered to the Seller all of the items required to bedelivered to the Seller pursuant to the terms of this Agreement;

 

(c)   All of therepresentations and warranties of the Purchaser contained in this Agreementshall be true and correct in all material respects as of the Closing Date as ifmade on the Closing Date; and

 

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

 

15.05       Except in connection with (a) a failureto tender (i) funds required hereunder or (ii) documents required hereunder forClosing or (b) where a cure period is already provided for herein, neitherparty shall be in breach or default hereunder, nor shall the remedies in thisSection 15 be exercised by either party, until written notice of the allegedbreach or default has been provided to the other party, and such party hasfailed to cure such breach or default within five (5) days; provided, however,that if the alleged breach or default is of a nature that it cannot be cured byexercise of reasonable diligence within such five (5) day period, then theforegoing cure period shall be extended for the period of time reasonablynecessary to cure such alleged breach or default not to exceed sixty (60) days.

 

**16.  NoAssignment.**

 

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

 

**17.  Brokers.**

 

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

 

**18.  Notices.**

 

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

 

22

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

 

To the Seller:

 

Fair OaksPenderbrook Apartments L.L.C.

c/o W&MProperties, L.L.C.

60 East 42ndStreet

New York, NewYork  10165-0015

Attention:  Vincent M. Sultana

TelefaxNumber:  (212) 986-7679

 

with a copy tocounsel:

 

Wien & MalkinLLP

60 East 42ndStreet – 48th Floor

New York, NewYork  10165-0015

Attention:  Jack K. Feirman

TelefaxNumber:  (212) 986-8795

 

To the Purchaser:

 

Comstock Penderbrook,L.C.

c/o ComstockHomes, Inc.

11465 Sunset HillsRoad, Suite 510

Reston, Virginia20190

Attention:  Christopher Clemente

TelefaxNumber:  (703) 760-1520

 

with a copy to:

 

ComstockPenderbrook, L.C.

c/o ComstockHomes, Inc.

11465 Sunset HillsRoad, Suite 510

Reston, Virginia20190

Attention:  Jubal Thompson, Esq.

TelefaxNumber:  (703) 760-1520

 

with a copy tocounsel:

 

Hunton &Williams, LLP

1751 PinnacleDrive, Suite 1700

McLean, Virginia22102

Attention:  Sean H. Curtin, Esq.

TelefaxNumber:  (703) 714-7410

 

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To the EscrowAgent:

 

8221Old Courthouse Road

Suite300

Vienna,Virginia 22182

Attention:Julie Grant

TelefaxNumber:  (      )          -            

 

**19.  ExchangeProvisions.**

 

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

 

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

 

**20.  Miscellaneous.**

 

20.1         **Confidentiality.    **The Purchaser has heretoforeexecuted a confidentiality agreement with respect to the dissemination ofinformation respecting the Real Property and other matters which may be or mayhave been learned in connection with the Purchaser’s extending an offer topurchase the same and in connection with its due diligence.  Such confidentiality agreement continues tobe in full force and effect and shall remain so during the Contract Period, andany default thereunder shall constitute a material default under thisAgreement.  In this respect, any informationnot in the public domain respecting any of the Property or the Seller or itsmembers or agents hereafter acquired by the Purchaser or any representative ofthe Purchaser by reason of any inspection of any portion of the Premises, theBuildings and Other Improvements to any person or entity shall be deemed to beconfidential and shall not be disseminated to any person or entity without theconsent of the Seller, except as expressly permitted under paragraph (a) ofSection 8.02 prior to Closing.  The Purchasershall not release or suffer the release of any information regarding theexecution of this Agreement, the terms hereof or any other publicity orinformation to any person, except as specifically permitted by this Agreement.  The obligations under this Section 20.01shall survive the termination of this Agreement without the occurrence of aClosing.

 

20.2 **        Captions and Headings.    **Article and Section captions and headings are inserted onlyas a matter of convenience and for reference and they shall not be construed todefine, limit or describe the scope of this Agreement nor the intent of anyprovision hereof.

 

20.3 **        Parties Bound.**    The covenants, conditions and agreements contained in this Agreementbind and inure to the benefit of the Seller and the Purchaser and theirrespective legal representatives, successors, and, except as otherwise providedin this Lease, their assigns.

 

20.4 **       No Recording.    **Neitherthis Agreement nor any memorandum or short form hereof may be recorded.

 

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20.5 **        Entire Agreement.    **ThisAgreement contains the entire agreement between the parties and all priornegotiations and agreements are merged into this Agreement.

 

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

 

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

 

20.8 **        Submission of Agreement.    **It is understood and agreed that this Agreement is beingsubmitted to the Purchaser on the understanding that it shall not be consideredan offer and shall not bind the Seller in any way until (i) the Purchaser hasduly executed and delivered duplicate originals hereof to the Seller and theContract Deposit to the Escrow Agent and (ii) the Seller has executed anddelivered one of said originals to the Purchaser.

 

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

 

20.10       **Governing Law.    **This Agreement shall beconstrued in accordance with and governed by the laws of the Commonwealth ofVirginia without regard to the application of conflicts of laws doctrines.

 

20.11       **Counterparts.**     This Agreement may be executed in anynumber of counterparts each of which when executed and delivered shallconstitute an original, and all such counterparts, when taken together shall bedeemed to be but one and the same Agreement.

 

20.12       **FacsimileCounterparts.    **The exchangeof counterparts of this Agreement among the parties by means of facsimiletransmissions which shall contain accurate reproductions of the signatureshereto shall constitute a valid exchange of this Agreement and it shall bebinding upon the parties hereto.

 

 

IN WITNESSWHEREOF, the Seller and the Purchaser have respectively executed this Lease asof the day and year first above written.

 
|   | FAIR OAKS PENDERBROOK APARTMENTS L.L.C. |
|--------|-----------------------------------------|
|   | By:                                     | Malkin Penderbrook L.L.C., Managing Member |
|   |                                    |
|   |                                    | By: | /s/ Peter Malkin |   |
|   |                                    |   | Name: Peter L. Malkin |
|   |                                    |   | Title: Managing Member |
|   |                                    |   |   |
|   |                                    | By: | /s/ Anthony Malkin |   |
|   |                                    |   | Name: Anthony E. Malkin |
|   |                                    |   | Title: Managing Member |
|   |                                    |   |   |
|   |                                    | Taxpayer/Employer Identification No: ******* |
|        |                                         |  |  |  |  |

 

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|   | COMSTOCK HOMES, INC.                                             |
|--------|------------------------------------------------------------------|
|   |                                                             |
|   |                                                             | By: | /s/ Christopher Clemente |   |
|   |                                                             |   | Name:    Christopher Clemente |
|   |                                                             |   | Title: Chief Executive Officer |
|   |                                                             |   |   |
|   |                                                             |   | Taxpayer/Employer Identification No: ********* |
|   |                                                             |
|   | Solely as to the Article 14 and Section 8.03 escrow  provisions: |
|   |                                                             |
|   | PREMIER TITLE                                                    |
|   |                                                             |
|   |                                                             |
|   |                                                             | By: |   |   |
|   |                                                             |   | Name: |
|   |                                                             |   | Title: |
|        |                                                                  |  |  |  |  |

 

26

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SCHEDULE A

to

Purchase and SaleAgreement, dated as of November 9, 2004

between

Fair OaksPenderbrook Apartments L.L.C., Seller,

and

ComstockPenderbrook, L.C., Purchaser

 

 

Metes and BoundsDescription of the Premises

 

 

Beginning at a point on the Easterly R/W line of West Ox Road, Route608 said point marking the P.C. of a 55 foot radius return at the Southeasterlyintersection of the said West Ox Road and Penderbrook Drive, as dedicated inD.B. 6613 at Pg. 963 on the land records of Fairfax County, Virginia; thencewith the said return a curve to the right whose chord is N 43° 10’ 00” E, 81.21feet, an arc distance of 91.36 feet to a point on a Southerly R/W line of thesaid Penderbrook Drive; thence with the said R/W line of the said PenderbrookDrive the following courses: with a curve to the right whose radius is 729.95feet (and whose chord is S 64° 26’ 02” E, 612.64 feet) an arc distance of632.22 feet; S 39° 37’ 20” E, 395.59 feet with a curve to the left whose radiusis 576.00 feet (and whose chord is S 57° 32’ 30” E, 354.44 feet) an arcdistance of 360.29 feet to a point marking the P.C. of a 25 foot radius returnat the Southwesterly intersection of the said Penderbrook Drive and SouthPenderbrook Drive; thence with the said return a curve to the right whose chordis S 33° 24’ 42” E, 33.49 feet, an arc distance of 36.69 feet to a point on theWesterly R/W line of the said South Penderbrook Drive; thence with the said R/Wline of South Penderbrook Drive with a curve to the left whose radius is 476.00feet (and whose chord is S 02° 16’ 57” E, 180.35 feet) an arc distance of181.45 feet and S 13° 12’ 10” E, 483.33 feet to a point marking theNortheasterly corner of the Fairfax County Housing Authority; thence runningwith the Northerly and Westerly lines of the property of the Fairfax CountyHousing Authority the following courses: with a curve to the left whose radiusis 28.50 feet (and whose chord is N 68° 08’ 37” W, 18.32 feet) an arc distanceof 18.65 feet; with a curve to the right whose radius is 121.50 feet (and whosechord is N 78° 32’ 30” W, 35.28 feet) an arc distance of 35.40 feet; N 70° 11’36” W, 43.08 feet; N 84° 49’ 33” W, 73.50 feet; N 71° 38’ 22” W, 36.91 feetwith a curve to the right whose radius is 936.00 feet (and whose chord is N 67°19’ 29” W, 93.69 feet) an arc distance of 93.72 feet and S 28° 55’ 50” W,188.50 feet to a point on a Northerly Boundary of Penderbrook LTD.; thence withthe said Boundary of Penderbrook LTD. N 84° 32’ 18” W, 122.85 feet and with acurve to the right whose radius is 300.00 feet (and whose cord is N 74° 16’ 20”W, 106.93 feet) an arc distance of 107.51 feet to a point on an EasterlyBoundary of the property of the Fairfax County Board of Supervisors; thencewith the Easterly and Northerly boundaries of the said Board of Supervisors N13° 09’ 12” W, 885.23 feet and S 62° 09’ 05” W, 236.69 feet to a point on theaforementioned R/W line of West Ox Road; thence with the said R/W line of WestOx Road the following courses:  with acurve to the left whose radius is 2919.79 feet (and whose chord is N 28° 55’18” W, 83.50 feet) and arc distance of 83.50 feet; N 29° 44’ 27” W, 251.91 feetwith a curve to the right whose radius is 899.93 feet (and whose chord is N 18°01’ 27” W, 365.50 feet) an arc distance of 368.06 feet and N 06° 15’ 00” W,29.66 feet to the point of beginning.

 

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SCHEDULE B

to

Purchase and SaleAgreement, dated as of November 9, 2004

between

Fair OaksPenderbrook Apartments L.L.C., Seller,

and

ComstockPenderbrook, L.C., Purchaser

 

 

Permitted TitleExceptions

 

 

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

 

2.               Easements grantedunto Virginia Electric and Power Company by instrument recorded in Deed Book990 at Page 507; Deed Book 6558 at Page 1013; Deed Book 6795 at Page 1752; DeedBook 6828 at Page 987; Deed Book 6828 at Page 1023 and in Deed Book 6953 atPage 1976.

 

3.               Easement grantedunto Fairfax County Water Authority by instrument recorded in Deed Book 6783 atPage 718.

 

4.               Easement grantedunto Chesapeake and Potomac Telephone Company by instrument recorded in DeedBook 6857 at Page 771.

 

5.               Easement grantedunto Fairfax County Water Authority and Fairfax County Board of Supervisors byinstrument recorded in Deed Book 6613 at Page 955.

 

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

 

7.               Easements andagreements to and with Penderbrook Community Association, Inc., in Deed Book7116 at Page 595.

 

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

 

9.               Cable service andtelecom agreements, if any.

 

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SCHEDULE C

to

Purchase and SaleAgreement, dated as of November 9, 2004

between

Fair OaksPenderbrook Apartments L.L.C., Seller,

and

Comstock Penderbrook,L.C., Purchaser

 

 

Rent Roll

 

 

Rent Roll followsthis page.

 

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SCHEDULE D

to

Purchase and SaleAgreement, dated as of November 9, 2004

between

Fair OaksPenderbrook Apartments L.L.C., Seller,

and

ComstockPenderbrook, L.C., Purchaser

 

 

Contracts

 

 

Contracts followthis page.

 

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SCHEDULE E

to

Purchase and SaleAgreement, dated as of November 9, 2004

between

Fair OaksPenderbrook Apartments L.L.C., Seller,

and

ComstockPenderbrook, L.C., Purchaser

 

 

[IntentionallyOmitted]

 

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SCHEDULE F

to

Purchase and SaleAgreement, dated as of November 9, 2004

between

Fair OaksPenderbrook Apartments L.L.C., Seller,

and

ComstockPenderbrook, L.C., Purchaser

 

 

Employees

 

 

Schedule of Employees follows this page.

 

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SCHEDULE G

to

Purchase and SaleAgreement, dated as of November 9, 2004

between

Fair OaksPenderbrook Apartments L.L.C., Seller,

and

ComstockPenderbrook, L.C., Purchaser

 

 

Insurance Coveragefor the Buildings and other Improvements

 

 

Schedule ofInsurance follows this page.

 

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SCHEDULE H

to

Purchase and SaleAgreement, dated as of November 9, 2004

between

Fair OaksPenderbrook Apartments L.L.C., Seller,

and

ComstockPenderbrook, L.C., Purchaser

 

 

Personal Property

 

 

Schedule ofPersonal Property follows this page.

 

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SCHEDULE I

to

Purchase and SaleAgreement, dated as of November 9, 2004

between

Fair OaksPenderbrook Apartments L.L.C., Seller,

and

ComstockPenderbrook, L.C., Purchaser

 

 

Unpaid TenantImprovement Costs

 

 

None

 

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SCHEDULE J

to

Purchase and SaleAgreement, dated as of November 9, 2004

between

Fair OaksPenderbrook Apartments L.L.C., Seller,

and

ComstockPenderbrook, L.C., Purchaser

 

 

BrokerageCommissions Owed

 

 

None

 

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SCHEDULE K

to

Purchase and SaleAgreement, dated as of November 9, 2004

between

Fair OaksPenderbrook Apartments L.L.C., Seller,

and

ComstockPenderbrook, L.C., Purchaser

 

 

1.               The Survey;

 

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

 

3.               Zoning andresidential use permits information

 

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EXHIBIT 1

to

Purchase and SaleAgreement, dated as of November 9, 2004

between

Fair OaksPenderbrook Apartments L.L.C., Seller,

and

ComstockPenderbrook, L.C., Purchaser

 

 

Deed to the RealProperty

 

----