exv10w6



 




Exhibit
10.6




PURCHASE AND SALE AGREEMENT




     THIS PURCHASE AND SALE AGREEMENT (this “Agreement”), dated as of August 4, 2005 (the
“Effective Date”), is made by and between Patrick Henry Associates, L.P., a Delaware limited
partnership (“Seller”) and Columbia Equity Trust, Inc., a Maryland corporation (“Purchaser”).



     In consideration of the mutual covenants and agreements herein contained, and other good and
valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Seller and
Purchaser agree as follows:



SECTION 1.

PURCHASE AND SALE




     1.1 Purchase and Sale. Subject to the terms and conditions of this Agreement, Seller
hereby agrees to sell, transfer and convey to Purchaser, and Purchaser hereby agrees to purchase
from Seller, all of the following described property (collectively, the “Property”):



     1.2 Land. Seller’s fee interest in and to all of that certain tract of land situated
in the City of Newport News, Virginia and described more particularly in Exhibit A attached hereto
and incorporated herein by reference, together with all of Seller’s right, title and interest
appurtenant to such land, including, without limitation, all of Seller’s right, title and interest,
if any, in and to (i) all minerals, oil, gas, and other hydrocarbon substances thereon, (ii) all
adjacent strips, streets, roads, alleys and rights-of-way, public or private, open or proposed
pertaining thereto, (iii) all easements, privileges, and hereditaments pertaining thereto, whether
or not of record, and (iv) all access, air, water, riparian, development, and utility, and solar
rights pertaining thereto (collectively, the “Land”).



     1.3 Improvements. The office building and all other improvements and structures
constructed on the Land (collectively, the “Improvements”). The Land and Improvements are referred
to herein as the “Real Property.”



     1.4 Personal Property. All of Seller’s right, title and interest, if any, in the
following additional property (“Personal Property”):



               (a) Tangible Property.



                    (i) mechanical systems, fixtures and equipment comprising a part of or attached to or located
upon the Improvements,



                    (ii) maintenance equipment and tools owned by Seller, located on the Land and used exclusively
in connection with the Improvements,



                    (iii) site plans, plans and specifications and floor plans in Seller’s possession which relate
exclusively to the Real Property,



                    (iv) all signs, supplies, appliances, decorations, furniture, furnishings, machinery,
landscaping and other tangible personal property owned by Seller, located at and used in connection
with the leasing, management, operation, maintenance and/or repair of the Property,



 









 





                    (v) pylons and other signs located on the Land and owned by Seller, and



                    (vi) other tangible property of every kind and character owned by Seller and located in or on
the Real Property and used in connection with the leasing, management, operation, maintenance
and/or repair of the Property (collectively, the “Tangible Property”).



               (b) Leases and rental agreements with tenants occupying space in the Improvements (the
“Leases”), and any guaranties or other security applicable thereto and all security deposits,
advance rental, or like payments, if any, held by Seller in connection with the Leases.



               (c) To the extent assignable or transferable, all contract rights (collectively, the “Contract
Rights”) related to the Real Property, Tangible Property or Leases (other than insurance policies),
including, without limitation, Seller’s interest in all maintenance, construction, commission,
architectural, parking, telecommunication, supply or service contracts, warranties, guarantees and
bonds and other agreements related to the Improvements, Tangible Property, or Leases that will
remain in existence after Closing (collectively, the “Operating Contracts”).



               (d) To the extent assignable or transferable, all permits, licenses, certificates of
occupancy, and governmental approvals which relate to the Real Property, Tangible Property, Leases,
the Contract Rights or the Operating Contracts (collectively, the “Permits”).



               (e) To the extent assignable or transferable, tradenames or trademarks used exclusively in
connection with the Real Property, and any goodwill related to the Real Property.



SECTION 2.

PURCHASE PRICE




     2.1 The purchase price for the Property shall be Fourteen Million Six Hundred Thousand Dollars
($14,600,000.00) (the “Purchase Price”), which shall be paid as follows:



               (a) Within one (1) business day following the execution and delivery of this Agreement by
Seller and Purchaser, Purchaser shall deposit with Fidelity National Title Insurance Company (the
“Escrow Agent” or the “Title Company”), the amount of Two Hundred Thousand Dollars ($200,000.00),
and within one (1) business day following the expiration of the Inspection Period (hereinafter
defined) Purchaser shall pay to the Escrow Agent an additional deposit in the amount of Three
Hundred Thousand Dollars ($300,000.00), all of which shall be held by the Escrow Agent in an
interest bearing account. Such amount(s) as shall have been deposited with the Escrow Agent
pursuant to this Section 2.1, and all interest earned thereon are referred to herein collectively
as the “Deposit.” The Deposit will be held pursuant to the provisions of this Agreement and
subject thereto shall be paid to the Seller at Closing. At the same time as the delivery of the
initial Deposit to the Escrow Agent, Purchaser shall deliver to the Escrow Agent, for immediate
release to Seller an additional sum of $100.00 (the “Independent Consideration Amount”), which
amount has been bargained for and agreed to as independent consideration for granting to Purchaser,
in accordance with this Agreement, the



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right to purchase the Property and the Inspection Period. The Independent Consideration
Amount is in addition to and independent of all other consideration provided in this Agreement, and
is nonrefundable in all events.



               (b) The balance of the Purchase Price (i.e. the Purchase Price less the Deposit less the
unpaid principal balance of the Existing Mortgage (as hereinafter defined)), plus or minus other
adjustments required under this Agreement, shall be paid at Closing by wire transfer of funds in
such amount in accordance with the written instructions delivered by Seller to Purchaser.



SECTION 3.

DELIVERIES, INSPECTION, LOAN ASSUMPTION AND REPRESENTATIONS




     3.1 Delivery Obligations. Prior to the Effective Date Purchaser has had access to the
information more particularly described on Schedule 1.



     3.2 Inspection Period/Loan Assumption.



               (a) Notwithstanding any provision of this Agreement to the contrary, this Agreement and the
obligations of Purchaser hereunder are contingent upon Purchaser determining the suitability of the
Property in Purchaser’s sole discretion. Purchaser shall have a period from the date hereof until
12:00 P.M. New York time on August 11, 2005 (the “Inspection Period”) to examine the Property. If
prior to the expiration of the Inspection Period, Purchaser determines that the Property is not
suitable to Purchaser for any reason, then Purchaser shall give written notice thereof (the
“Termination Notice”) to Seller and the Escrow Agent prior to the close of business of the last day
of the Inspection Period. If Purchaser timely advises Seller and the Escrow Agent that it elects
not to proceed with this transaction, the Escrow Agent shall return to Purchaser the Deposit, and
thereafter this Agreement shall be terminated and neither party shall have any further rights or
obligations hereunder except for such obligations which are expressly stated herein to survive the
Closing or the termination of this Agreement (the “Surviving Obligations”.) TIME SHALL BE OF THE
ESSENCE with respect to this Section 3.2(a), and if the Termination Notice shall not be timely
given to the Seller and the Escrow Agent by the expiration of the Inspection Period, this Agreement
shall remain in full force and effect in accordance with its terms.



     On or before the expiration of the Inspection Period, Purchaser may deliver written notice to
Seller (the “Operating Contracts Notice”) specifying any Operating Contracts with respect to which
Purchaser desires to have the Seller deliver notices of termination at the Closing (the “Terminated
Contracts”); provided that (i) the effective date of such termination after Closing shall be
subject to the express terms of such Terminated Contracts, (ii) if any such Service Contract cannot
by its terms be terminated, it shall be assumed by Purchaser and not be a Terminated Contract, and
(iii) to the extent that any such Terminated Contract requires payment of a penalty or premium for
cancellation, Purchaser shall pay any cancellation fees or penalties. If Purchaser fails to
deliver the Operating Contracts Notice on or before the expiration of the Inspection Period, there
shall be no Terminated Contracts and Purchaser shall assume all Operating Contracts at the Closing.



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               (b) Except as may be specifically provided elsewhere in this Agreement, Seller makes no
representations or warranties as to the truth, accuracy, completeness, methodology of preparation
or otherwise concerning any engineering or environmental reports or audits or any other materials,
data or other information supplied to Purchaser in connection with Purchaser’s inspection of the
Property (e.g., that such materials are complete, accurate or the final version thereof, or that
such materials are all of such materials as are in Seller’s Possession (as used in this Agreement,
the term “Seller’s Possession” or “possession of Seller” or words of similar import shall mean and
include documents maintained at Seller’s files located at the Property or with Seller’s managing
agent for the Property)). It is the parties’ express understanding and agreement that such
materials are provided only for Purchaser’s convenience in making its own examination and
determination prior to the expiration of the Inspection Period as to whether it wishes to purchase
the Property.



               (c) The obligations of Seller and Purchaser under this Agreement are also conditioned upon
Seller obtaining the consent and approval (the “Lender Approval”) of Deutsche Banc Mortgage
Capital, LLC (the “Lender”), the holder of the existing first mortgage on the Property (the
“Existing Mortgage”) in the original principal amount of $8,650,000 on or before the expiration of
the Lender Approval Period (as hereinafter defined), to the assumption by Purchaser of the Existing
Mortgage encumbering the Property providing for substantially the following:



               (i) Confirming the unpaid principal balance, accrued interest and unpaid fees, if any, of the
Existing Mortgage; confirming any amounts held as escrow deposits or reserves and, if required by
the mortgage documents, confirming the absence of any amendments thereto or defaults thereunder;



               (ii) Approving the Seller’s transfer to Purchaser or Purchaser’s designee of the Property
pursuant to this Agreement and subject to the Existing Mortgage;



               (iii) Releasing Seller and any guarantor from any and all obligations under the Existing
Mortgage arising from and after the date of the Closing;



               (iv) Confirming the documents evidencing and securing the Existing Mortgage; and



               (v) Agreeing to the modifications to the transfer provisions of the Existing Mortgage to
allow transfers of interests in Columbia Equity Trust, Inc. (the “REIT”) or in Columbia Equity, LP
(the “OP”) or in any person or entity owning a direct or indirect interest in the REIT or the OP.



     For purposes of this Agreement, the “Lender Approval Period” shall expire on the earlier of
(x) the date of receipt of Lender Approval and (y) 5:00 p.m. New York time on September 19, 2005
(the “Outside Date”). Purchaser will cooperate in all respects with Seller in seeking the Lender
Approval, including but not limited to submission by Purchaser to Lender of all financial and
background information requested by Lender. Purchaser agrees to pay an assumption fee required by
the Lender (up to $86,500.00) and all other reasonable fees and expenses of Lender and Lender’s
counsel in connection with such assumption, and to reimburse Seller at the Closing for all escrow
amounts deposited in connection with the Existing Mortgage. Purchaser agrees to



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use commercially reasonable efforts to deliver to Lender, with a copy to Seller, no later than
five (5) business days after the Effective Date, a fully completed application seeking Lender
Approval together with any required application fees.



     In the event Seller has not obtained the Lender Approval on or before the end of the Lender
Approval Period, this Agreement shall terminate, and provided Purchaser timely complied with its
obligations under the preceding paragraph and the Lender Approval has not been received on or
before the Outside Date through no fault of Purchaser, the entire Deposit shall be refunded to
Purchaser, and thereafter the parties shall have no obligations or liabilities to each other, other
than the Surviving Obligations.



     3.3 Title and Survey.



               (a) Prior to the Effective Date, Seller delivered to Purchaser a copy of Seller’s existing
title policy (the “Existing Title Policy”), together with copy of a survey for the Property dated
December 12, 2003, prepared by Hayden Frye and Associates, Inc. (the “Existing Survey”). Seller
has ordered an updated title insurance report from the Title Company (the “Title Commitment”) and
requested that the Title Company provide Purchaser with a copy of the Title Commitment and legible
copies of any covenants, easements and other items listed as title exceptions therein. Purchaser
at Purchaser’s option, cost and expense may obtain an update of the Existing Survey (the “Survey
Update”). In the event any exceptions, appear in the Existing Title Policy and/or the Existing
Survey that are unacceptable to Purchaser, Purchaser shall, prior to the expiration of the
Inspection Period (time being of the essence) (the “Existing Title Approval Period”), notify Seller
in writing of such facts, the reasons therefor and the curative steps that would remove the basis
for Purchaser’s objections (the “Purchaser’s Existing Title Objections”). In the event (i) the
Survey Update shows any matter affecting the Property that is unacceptable to Purchaser or (ii) any
exceptions appear in the Title Commitment that are unacceptable to Purchaser, Purchaser shall, no
later than two (2) business days following receipt of the Title Commitment and the Survey Update
(time being of the essence) but in no event later than August 19, 2005 (the “Title Approval
Period”), notify Seller in writing of such facts, the reasons therefor and the curative steps that
would remove the basis for Purchaser’s objection (“Purchaser’s Title Objections”). Upon the
expiration of the Existing Title Approval Period and the Title Approval Period, except for
Purchaser’s Existing Title Objections and Purchaser’s Title Objections, Purchaser shall be deemed
to have accepted the form and substance of the Existing Survey and Survey Update, all matters shown
or addressed thereon, and all items shown or addressed in the Existing Title Policy and the Title
Commitment (collectively, the “Approved Title Matters”).



               (b) Seller shall have no obligation to take any steps or bring any action or proceeding or
otherwise to incur any effort or expense whatsoever to eliminate or modify any of Purchaser’s
Existing Title Objections or Purchaser’s Title Objections, but the foregoing shall not permit
Seller to refuse to pay off at Closing, to the extent of the monies payable at Closing, mortgages
on the Property of which Seller has actual knowledge, other than the Existing Mortgage, and pay off
or bond mechanic’s liens for work requested by Seller (as opposed to tenants). Seller, however, at
its sole option, may attempt to eliminate or modify all or a portion of Purchaser’s Existing Title
Objections or Purchaser’s Title Objections to Purchaser’s reasonable satisfaction prior to the
Closing Date or within such additional period of time (up to thirty (30) days in the aggregate
thereafter), for which Seller shall have the right to adjourn the



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Closing. In the event Seller is unable or unwilling to attempt to eliminate or modify all of
Purchaser’s Existing Title Objections or Purchaser’s Title Objections to the reasonable
satisfaction of Purchaser, Seller shall provide written notice to Purchaser of those objections
Seller will not attempt or be able to cure (“Seller’s Notice”). Thereafter, Purchaser shall have
the option (as its sole and exclusive remedy) to (x) terminate this Agreement by delivering written
notice thereof to Seller by the earlier to occur of (i) the Closing Date (as the same may be
adjourned as provided in this Agreement), or (ii) five (5) business days after Seller’s Notice,
time being of the essence to the giving of Purchaser’s notice or (y) proceed to Closing without
adjustment to the Purchase Price. If Purchaser shall duly give such termination notice, then this
Agreement shall thereupon terminate, and upon such termination, Purchaser shall be entitled to the
return of the Deposit, and neither party shall have any obligation hereunder other than the
Surviving Obligations.



               (c) The term “Permitted Encumbrances” as used herein includes: (i) all of the Approved Title
Matters, (ii) any Purchaser’s Existing Title Objection and/or Purchaser’s Title Objection that
Seller states it will not attempt to cure in Seller’s Notice and that remain uncured at the earlier
to occur of (A) Closing (as the same may be adjourned as provided in this Agreement) or (B) five
(5) business days after Seller’s provision of the Seller’s Notice, (iii) the rights and interests
of parties claiming under the Leases, (iv) liens for real property taxes, assessments, and water
and sewer meter charges which are not due and payable as of the Closing Date and/or which are
apportioned pursuant to this Agreement, and (v) the Existing Mortgage and documents of record in
connection therewith.



               (d) Purchaser may, at or prior to Closing, notify Seller in writing of any objection to title
(i) raised by the Title Company between the expiration of the Title Approval Period and the Closing
and (ii) not disclosed by the Title Company or otherwise known to Purchaser prior to the expiration
of the Title Approval Period; provided that Purchaser must notify Seller of such new objection to
title within three (3) business days of being made aware of the existence of such matter. If
Purchaser sends such notice to Seller, Purchaser and Seller shall have the same rights and
obligations with respect to such notice as apply to Purchaser’s Title Objections under Sections
3.3(b) and (c) hereof.



     3.4 Purchaser’s Representations and Warranties. Purchaser represents and warrants to
Seller that:



               (a) Purchaser is a corporation, duly organized and in good standing under the laws of the
State of Maryland and has the power to enter into this Agreement and to execute and deliver this
Agreement and to perform all duties and obligations imposed upon it hereunder, and Purchaser has
obtained all necessary corporate, partnership or other organizational authorizations required in
connection with the execution, delivery and performance of this Agreement and the transaction
contemplated herein and has obtained the consent of all entities and parties (whether private or
governmental) necessary to bind Purchaser to this Agreement;



               (b) neither the execution nor the delivery of this Agreement, nor the consummation of the
purchase and sale transaction contemplated hereby, nor the fulfillment of or compliance with the
terms and conditions of this Agreement conflict with or will result in the breach of any of the
terms, conditions or provisions of any agreement or instrument to which Purchaser, or any
shareholder, partner or related entity or affiliate of Purchaser, is a party or by



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which Purchaser, any shareholder, partner or related entity or affiliate of Purchaser, or any
of Purchaser’s assets is bound;



               (c) with respect to each source of funds to be used by Purchaser to purchase the Property
(respectively, the “Source”), at least one of the following statements shall be accurate as of the
Closing Date: (i) the Source does not include the assets of (A) an “employee benefit plan” as
defined in Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended
(“ERISA”), which is subject to Title I of ERISA, or (B) a “plan” as defined in Section 4975(a) of
the Internal Revenue Code of 1986, as amended (“Code”), or (ii) the Source includes the assets of
(A) an “employee benefit plan” as defined in Section 3(3) of ERISA or (B) a “plan” as defined in
Section 4975 of the Code (each of which has been identified to the Seller in writing pursuant to
this Section 3.4 at least ten (10) business days prior to the Closing Date), but the use of such
Source to purchase the Property will not result in a nonexempt prohibited transaction under Section
406 of ERISA or Section 4975 of the Code. The Source is in compliance with the Orders (as
hereinafter defined);



               (d) Purchaser has not received written notice that Purchaser:




	 	(1)	 	is listed on the Specially Designated Nationals
and Blocked Persons List maintained by the Office of Foreign Asset
Control, Department of the Treasury (“OFAC”) pursuant to any enabling
legislation or other Executive Orders in respect thereof (the Order and
such other rules, regulations, legislation, or orders are collectively
called the “Orders”) and/or on any other list of terrorists or
terrorist organizations maintained pursuant to any of the rules and
regulations of OFAC or pursuant to any other applicable Orders (such
lists are collectively referred to as the “Lists”);
	 
	 	(2)	 	is owned or controlled by, nor acts for or on
behalf of, any Person on the Lists or any other Person who has been
determined by competent authority to be subject to the prohibitions
contained in the Orders;




If Purchaser is notified in writing that it has become listed on the Lists (a “Triggering Event”),
Purchaser shall immediately notify Seller, but in no event later than five (5) business days after
the occurrence of the Triggering Event. In the event of a Triggering Event, Seller may terminate
this Agreement upon written notice to Purchaser, whereupon the Deposit, subject to compliance with
applicable governmental regulations, shall be retained by Seller, and neither party shall have any
further obligation hereunder except for the Surviving Obligations. At Seller’s option, Purchaser
shall have ten (10) business days after receipt of Seller’s notice to remove such party from any
interest in Purchaser.



The Purchaser’s representations and warranties set forth in this Section 3.4 shall survive the
Closing or termination of this Agreement. As a condition precedent to Seller’s obligation to close
the purchase and sale transaction contemplated in this Agreement, Purchaser’s representations and
warranties contained herein must remain and be true and correct as of the Closing Date. Prior to
the Closing Date, Purchaser shall notify Seller in writing of any facts,


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conditions or circumstances which render any of the representations and warranties set forth in
this Section 3.4 in any way inaccurate, incomplete, incorrect or misleading.




     3.5 Seller’s Representations and Warranties.



     3.5.1 Seller represents and warrants to Purchaser that:



               (a) it has the full right, power, and authority to enter into, execute and deliver this
Agreement, and, subject to Section 3.2(c), to perform all duties and obligations imposed on it
under this Agreement, except to the limited extent, if any, specifically and expressly set forth in
this Agreement and Seller has obtained all necessary corporate, partnership or other organizational
authorizations required in connection with the execution, delivery and performance of this
Agreement and the transaction contemplated herein and, subject to Section 3.2(c), has obtained the
consent of all entities and parties (whether private or governmental) necessary to bind Seller to
this Agreement;



               (b) subject to Section 3.2(c), neither the execution nor the delivery of this Agreement, nor
the consummation of the purchase and sale contemplated hereby, nor the fulfillment of or compliance
with the terms and conditions of this Agreement conflict with or will result in the breach of any
of the terms, conditions, or provisions of any agreement or instrument to which Seller, or any
shareholder, partner or related entity or affiliate of Seller, is a party or by which Seller, any
shareholder, partner or related entity or affiliate of Seller, or any of Seller’s assets is bound;



               (c) the Rent Roll delivered to Purchaser in accordance with Schedule 1 is accurate in
all material respects as of the date thereon, there are no security deposits other than those set
forth on the Rent Roll, and no tenant has been given free rent, any concession in the payment of
rent or any abatement in the payment of rent, except as set forth in the Rent Roll;



               (d) the list of Operating Contracts to be provided to Purchaser will be complete and accurate
in all material respects as of the date thereon, and Seller has not received any written notice of
Seller’s default under such Operating Contracts which remains uncured;



               (e) the Leases, or copies thereof, provided or otherwise made available to Purchaser are true
and complete in all material respects;



               (f) except as set forth in Schedule 2, there are no agreements with tenants or others
providing for payment after the Closing by Seller of tenant improvement or similar allowances;



               (g) to Seller’s knowledge, there is not now pending any action, suit, or proceeding
(including, but not limited to, condemnation or similar proceedings) before any court or
governmental agency that would adversely affect the Property, or the operation thereof (except
those actions or proceedings that are covered by Seller’s liability insurance coverage and or
landlord/tenant matters is the ordinary course of business);



               (h) to Seller’s knowledge, Seller has not received written notice that the Property or the use
thereof violates any governmental law or regulation that remains uncured and that would have a
materially adverse effect on the use and operation of the Property;



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               (i) to Seller’s knowledge, neither Seller nor, to Seller’s knowledge, any partner of Seller,
is the subject of, or has received any written notice of or threat that the Seller or any such
partner has or will become the subject of, any reorganization, liquidation, dissolution,
receivership or other action or proceeding under the United States Bankruptcy Code, 11 U.S.C. §§
101, et seq., or any other federal, state or local laws affecting the rights of debtors and/or
creditors generally, whether voluntary or involuntary and including, without limitation,
proceedings to set aside or avoid any transfer or any interest in property or obligations, whether
denominated as a fraudulent conveyance, preferential transfer or otherwise, or to recover the value
thereof or to charge, encumber or impose a lien thereon;



               (j) Seller is not a “foreign person” within the meaning of Section 1445 of the Internal
Revenue Code of 1986, as amended, and the regulations promulgated thereunder;



               (k) Seller has no employees and no pension plans or employee benefit plans;



               (l) except as set forth on Schedule 3, there are no agreements providing for payment
after the Closing by Seller of leasing commissions or fees with respect to procuring tenants for
the Property; and



               (m) Robert Lay and Robert Bergman (“Lay” and “Bergman”) are the two persons within Seller’s
asset management organization who have primary responsibility within such organization for
oversight of the operation and management of the Property.



     3.5.2 The Seller’s representations and warranties set forth in Section 3.5.1 shall survive the
Closing for a period of one hundred eighty (180) days (the “Survival Period”). If any Leases or
Operating Contracts which have been exhibited to Purchaser or its representatives contain
provisions that are inconsistent with the representations set forth in Section 3.5(c), (d), (e) and
(f) above, such representations and warranties shall be deemed modified to the extent necessary to
eliminate such inconsistency and to conform such representations and warranties to the provisions
of the Leases and Operating Contracts. As a condition precedent to Purchaser’s obligation to close
the purchase and sale transaction contemplated in this Agreement, Seller’s representations and
warranties contained herein must remain and be true and correct in all material respects as of the
Closing Date, unless such representations and warranties have changed by reason of facts or
circumstances which pursuant to the terms of this Agreement are permitted to have occurred (e.g.,
the Seller entering into a new Operating Contract in accordance with this Agreement, Seller
terminating or entering into a new Lease in accordance with this Agreement, tenant defaults,
vacancies, etc.)



     3.5.3 Prior to the Closing Date, Seller shall notify Purchaser in writing of any facts,
conditions or circumstances which render any of the representations and warranties set forth in
Section 3.5.1 in any way inaccurate, incomplete, incorrect or misleading. The parties agree that if
on or prior to Closing Purchaser becomes aware (either by way of Seller’s notice or otherwise) that
any representation or warranty of Seller is inaccurate, incomplete, incorrect or misleading, and
whether or not Purchaser elects to close the transaction (as opposed to terminating this
Agreement), Purchaser shall have no claim against Seller in connection with a breach of such
representation or warranty and shall not look to Seller and/or Seller Related Parties (as
hereinafter defined) for any redress or relief thereof. The Purchaser may not assert a claim
against the Seller and/or Seller Related Parties if at the time of the Closing the Purchaser had



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knowledge of such breach and nonetheless proceeded with the Closing. Purchaser and Seller agree
that if subsequent to the Closing Purchaser first becomes aware that any representation or warranty
of Seller is inaccurate, incomplete, incorrect or misleading, Purchaser shall have no claim against
Seller and/or Seller Related Parties in connection with a breach of such representation or warranty
and shall not look to Seller and/or Seller Related Parties for any redress or relief thereof unless
(i) a claim is made by Purchaser against Seller for breach of such representation or warranty
before the expiration of the Survival Period and (ii) Purchaser’s damages as a result of such
breach are reasonably estimated to aggregate at least $50,000.



     3.5.4 Anything in this Agreement to the contrary notwithstanding, the maximum aggregate
liability of the Seller for breaches of the representations and warranties herein or the Seller’s
Estoppel Certificate(s) (as hereinafter defined) shall not exceed $350,000 (the “Maximum Amount”).
At Closing, at Seller’s option, Seller will either deliver to Purchaser a separate guaranty of
Seller’s parent, Sterling American Property IV L.P., for the Maximum Amount or maintain such amount
in (cash or letter of credit) a separate escrow with the Escrow Agent for the duration of the
Survival Period (or if longer, until the resolution of the applicable claim). Purchaser and Seller
agree that the words “Seller’s knowledge” and words of similar import shall mean the current
actual knowledge of Lay and/or Bergman, without any independent investigation on their part to
determine the existence or absence of such facts, and shall not be construed, by imputation or
otherwise, to refer to the knowledge of Seller or any affiliate of Seller, to any property manager,
or to any other officer, agent, manager, representative or employee of Seller or any affiliate
thereof or to impose upon Lay and Bergman any duty to investigate the matter to which such actual
knowledge, or the absence thereof, pertains.



     3.5.5 Notwithstanding anything in this Agreement to the contrary, any liability of Seller to
Purchaser under or in respect of this Agreement after the Closing shall not exceed the Maximum
Amount.



     3.6 Tenant Estoppel Certificates/ No Bankruptcy of Major Tenants.



               (a) Seller agrees subsequent to the expiration of the Inspection Period to deliver to all
tenants of the Property a request for an estoppel certificate in the form of Exhibit F attached
hereto. The parties agree that, subject to the provisions of subparagraph (b) below, it shall be a
condition to Purchaser’s obligation to close title under this Agreement that an estoppel
certificate either substantially in the form of Exhibit F or in the form required by a tenant’s
Lease (a “Tenant Estoppel”), dated not earlier than thirty (30) days prior to the initially
scheduled Closing Date be delivered to Purchaser, from tenants occupying not less than one hundred
percent (100%) of the occupied space in the Property (including Northrop Grumman and Patten Wornom
Hatten (the “Major Tenants”)), no later than five (5) days before Closing. Seller agrees to use
good faith efforts to obtain such Tenant Estoppels, provided however, Seller shall not be obligated
to expend any funds in order to do so. Notwithstanding the foregoing, if at Closing Seller is
unable or fails to deliver such Tenant Estoppels, Seller may execute and deliver to Purchaser, at
Closing, its own certificate with respect to up to twenty-five (25) percent (but not for the Major
Tenants) of the one hundred percent (100%) of tenants occupying space, from whom estoppel
certificates were not received and whose Leases are in full force and effect (substantially in the
form of Exhibit F or in the form required by a tenant’s Lease, appropriately modified to reflect
that they are certificates of Seller and made to Seller’s knowledge;



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hereinafter, the “Seller’s Estoppel Certificate”) and the statements of Seller contained
therein shall survive the Closing until the earlier of (a) 180 days after Closing, and (b) the date
Purchaser obtains an estoppel certificate from a tenant for whom Seller delivered a Seller’s
Estoppel Certificate. In the event that any representation or warranty of Seller was confirmed in
a Tenant Estoppel, notwithstanding anything to the contrary set forth in this Agreement, such
Seller representation or warranty shall not survive Closing.



               (b) The parties agree that each Tenant Estoppel containing non-material exceptions,
qualifications or modifications shall be deemed to be an acceptable estoppel certificate for
purposes of this Section 3.6. In the event a Tenant Estoppel contains a material exception or
qualification or alleges a material default by Seller (a “Material Default”), Purchaser’s sole and
exclusive remedy shall be to terminate this Agreement by delivering notice thereof in writing to
Seller, on the earlier of two (2) business days after the date of delivery to Purchaser of a Tenant
Estoppel alleging a Material Default and the Closing Date (the “Estoppel Termination Notice”), time
being of the essence as to the giving of such notice. If Purchaser shall timely give the Estoppel
Termination Notice, then subject to Seller’s option set forth below, this Agreement shall
terminate, and upon such termination, Purchaser shall be entitled to the return of the Deposit, and
neither party shall have any obligation hereunder other than the Surviving Obligations. If
Purchaser shall have timely delivered the Estoppel Termination Notice to Seller, Seller may, at its
sole option, on or before the Closing Date, but not with respect to the Major Tenants, either (i)
deliver to Purchaser a Seller’s Estoppel Certificate without the allegations of the Material
Default, and the statements of Seller contained therein shall survive the Closing until the earlier
of (x) 180 days after Closing, and (y) the date Purchaser obtains an estoppel certificate from such
tenant for whom Seller delivered Seller’s Estoppel Certificate, or (ii) indemnify Purchaser for
any alleged Material Default, which indemnity shall survive Closing for a period of one hundred
eighty (180) days unless on expiration of such one hundred eighty (180) day period there is an
action pending with respect to the subject matter of the Material Default. If Seller shall duly
deliver such Seller Estoppel(s) or indemnity with respect to any space tenants, Purchaser’s notice
of termination shall be void and this Agreement shall continue in full force and effect and Seller
shall be deemed to have delivered to Purchaser Tenant Estoppels in full compliance with this
Section 3.6. If Purchaser shall not have given timely the Estoppel Termination Notice, time being
of the essence as to the giving of such notice, Purchaser shall be deemed for all purposes to be
satisfied with the form and substance of each Tenant Estoppel and shall have no further right to
object thereto or to terminate this Agreement based on the response or lack thereof with respect to
the Tenant Estoppels.



               (c) The parties agree that it shall be a condition to Purchaser’s obligation to close under
this Agreement that at Closing the leases of the Major Tenants shall be in full force and effect
and neither Major Tenant shall have (i) made a general assignment for the benefit of creditors,
(ii) filed any voluntary petition in bankruptcy or suffered the filing of any involuntary petition
by creditors, (iii) suffered the appointment of a receiver to take possession of all, or
substantially all, of its assets, (iv) suffered the attachment or other judicial seizure of all, or
substantially all, of its assets, (v) admitted in writing its inability to pay its debts as they
come due or (vi) made an offer of settlement, extension or composition to its creditors generally.



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SECTION 4.

ACCEPTANCE OF PROPERTY




     4.1 “As Is”. Purchaser agrees that, prior to the end of the Inspection Period,
Purchaser or its duly authorized agent will have examined and investigated to Purchaser’s full
satisfaction the physical, economic and legal condition of the Property, and made all other
inquiries Purchaser deemed necessary in connection with the transaction herein contemplated.
Purchaser is satisfied to purchase the Property in its “as is” condition as of the Effective Date,
reasonable wear and tear from the Effective Date excepted. Any information, data, schedules,
photographs, surveys, set-ups, representations or other materials furnished to or obtained by
Purchaser were for preliminary purposes only and are superseded by this Agreement. Purchaser has
not relied thereon in executing this Agreement. Except as expressly set forth in this Agreement,
no representations, warranties or agreements of any kind whatsoever have been made by Seller in
regard to the physical or operating condition of the Property, the condition of Seller’s title
thereto, freedom from defects, latent or patent, the income or profit to be derived from the
Property, the expenses of operation and maintenance thereof, the present or prospective rental
income therefrom, or any other matter or thing affecting or relating to the whole or any part of
the Property, and no representation, covenant or warranty shall survive the Closing, other than the
Surviving Obligations. In arriving at its decision to purchase the Property, Purchaser did not
rely upon any statements by Seller, Seller’s agents or employees or anyone else acting or
purporting to act on Seller’s behalf, except as expressly set forth in this Agreement. Purchaser
shall rely exclusively on its own independent investigation and evaluation of every aspect of the
Property and not on any materials supplied by Seller, except for Seller’s representations and
warranties contained in this Agreement. Purchaser expressly disclaims any intent to rely on any
such materials provided to it by Seller in connection with its inspection and agrees that it shall
rely solely on its own independently developed or verified information, except for Seller’s
representations and warranties contained in this Agreement. Purchaser acknowledges and agrees that
the Property is to be acquired subject to all notes or notices of violations of law or municipal
ordinances, orders or requirements noted in or issued by any governmental authority having
jurisdiction thereof against or affecting the Property.



     4.2 Except as expressly set forth in this Agreement to the contrary, Purchaser releases
Seller, any person, entity or party related to or affiliated with Seller (the “Seller Related
Parties”) and their respective successors and assigns from and against any and all claims which
Purchaser or any person, entity or any party related to or affiliated with Purchaser (each, a
“Purchaser Related Party”) has or may have arising from or related to any matter or thing related
to or in connection with the Property, including the condition of the Property at any time, before
or after the Closing, including without limitation, the presence of any hazardous materials,
including but not limited to mold, the documents and information referred to in this Agreement, the
leases and the tenants thereunder, any construction defects, errors or omissions in the design or
construction and any environmental conditions and, except as expressly set forth in this Agreement
to the contrary, neither Purchaser nor any Purchaser Related Party shall look to Seller, the Seller
Related Parties or their respective successors and assigns in connection with the foregoing for any
redress or relief. This release shall be given full force and effect according to each of its
express terms and provisions, including those relating to unknown and unsuspected claims, damages
and causes of action. The provisions of this Section 4.2 shall survive the termination of this
Agreement or the Closing Date and shall not be deemed to have merged into any of the documents
executed or delivered at the Closing. To the extent required to be operative, the



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disclaimers and warranties contained herein are “conspicuous” disclaimers for purposes of any
applicable law, rule, regulation or order.



SECTION 5.

CLOSING




     5.1 Closing. The closing of the purchase and sale transaction contemplated herein
(the “Closing) shall take place through an escrow established with the Title Company at 10:00 a.m.
New York time on the date which is five (5) business days after the receipt of Lender Approval (the
“Closing Date”, as the same may be adjourned as provided in this Agreement), provided however,
Purchaser shall have the right to adjourn the Closing once for a period of up to thirty (30) days
(but not beyond the expiration of Lender Approval) by giving Seller written notice of its intention
to do so no later than three (3) business days prior to the initial Closing Date (such written
notice to set forth as the adjourned Closing Date), and in order to be effective, such notice must
be accompanied by an additional Deposit of Three Hundred Thousand Dollars ($300,000.00) payable to
the order of the Escrow Agent. Except as expressly provided in this Section 5.1, Purchaser shall
have no other right to adjourn the Closing.



     5.2 Possession. Possession of the Property shall be delivered to Purchaser at the
Closing, subject to the Permitted Encumbrances.



     5.3 Proration. All rents, other amounts payable by the tenants under the Leases,
utilities, water and sewer meter charges and all other operating expenses with respect to the
Property for the month in which the Closing occurs, and real estate taxes and other assessments
with respect to the Property for the tax year in which the Closing occurs, shall be prorated as of
11:59 p.m. New York time on the day before the Closing Date with Purchaser receiving the benefits
and burdens of ownership on the Closing Date, provided however, if the funds representing the
balance of the Purchase Price have not been received by Seller or Seller’s lender by 2:00 p.m. New
York time on the Closing Date, all prorations shall be recalculated as of the next business day.



               (a) If the Closing shall occur before rents and all other amounts payable by the tenants under
the Leases and all other income from the Property have actually been paid through the month in
which the Closing occurs (it being agreed that Seller is entitled to all arrears in rent), the
apportionment of such rents and other amounts and other income shall be upon the basis of such
rents, other amounts and other income actually received by Seller. Subsequent to the Closing, if
any such rents, other amounts and other income are actually received by Purchaser from the tenants
owing such amounts, all such amounts shall be applied first to the month in which the Closing
occurs, then to rents due to Purchaser, and the balance shall be immediately paid by Purchaser to
Seller. Purchaser shall make a good faith effort and attempt to collect any such rents and other
amounts and other income not apportioned at the Closing for the benefit of Seller; however,
Purchaser shall not be required to expend any substantial funds or institute any litigation in its
collection efforts. Nothing in this Agreement shall restrict Seller’s right to collect delinquent
rents directly from a tenant by any legal means, and Seller shall be entitled to keep any such
rents or other damages so collected, provided however, in no event shall Seller be entitled after
the Closing to institute any litigation in its collection efforts. At Closing, prepaid rents and
refundable security deposits in the possession or control of Seller on Closing (together with any
interest accrued thereon only if interest is specifically required to be paid thereon under
applicable law or under the terms of a specific



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Lease) at Seller’s sole option shall either be (i) transferred to Purchaser at Closing and not
subject to adjustment, or (ii) adjusted by way of a credit in favor of Purchaser. With respect to
any security deposits held by Seller at Closing in the form of letters of credit that are not
transferable by Seller as landlord, Seller shall request that the applicable Tenants deliver new
letters of credit (“New Letters of Credit”), issued in favor of Purchaser by a date not
later than the Closing, but Seller shall not have any liability for the failure of such Tenants to
so furnish New Letters of Credit and the failure of such Tenants to furnish New Letters of Credit
shall not affect the obligations of Purchaser to proceed with the Closing. With respect to any
letters of credit not transferable by Seller as landlord and for which New Letters of Credit are
not issued as of Closing, Seller shall, until a New Letter of Credit is issued in favor of
Purchaser, take all reasonable action, as directed by Purchaser and without obligation to incur any
expenses which is not advanced by Purchaser, in connection with the presentment of such letters of
credit for payment as permitted under the terms of the applicable Lease and in consideration of
Seller’s agreement as aforesaid, Purchaser shall indemnify and hold harmless Seller for liability
arising out of or resulting from Seller’s actions relating to such letters of credit after the
Closing, which obligation shall survive the Closing.



               (b) (1) If the Closing shall occur before the tax rate or the assessed valuation of the
Property is fixed for the then current year, the apportionment of taxes and assessments shall be
upon the basis of the tax rate for the preceding year applied to the latest assessed valuation,
with a further reconciliation to be made when the final rate or valuation rate is received.



                    (2) If any certiorari or other proceedings for the reduction of real estate taxes are pending
at the Closing Date with respect to the tax year in which the Closing occurs or any tax year prior
thereto, Seller shall continue the prosecution of such action. Any tax refund resulting from such
proceeding, net of Seller’s costs of prosecuting the same, and after deducting any refunds required
to be made to tenants pursuant to Leases, shall be apportioned between Seller and Purchaser in the
same proportion that real estate taxes for such tax year are apportioned.



               (c) If the Closing shall occur before the actual amount of utilities, water or sewer meter
charges or other operating expenses with respect to the Property for the month in which the Closing
occurs are determined, the apportionment of such utilities, water or sewer meter charges or other
operating expenses shall be upon the basis of an estimate by Seller of such utilities, water or
sewer meter charges or other operating expenses for such month. Subsequent to the Closing, when
the actual amount of such utilities, water or sewer meter charges or other operating expenses with
respect to the Property for the month in which the Closing occurs are determined, the parties agree
to adjust the proration of such utilities, water or sewer meter charges or other operating expenses
and, if necessary, to refund or repay such sums as shall be necessary to effect such adjustment.



               (d) If Leases contain obligations (“ Lease Obligations”) on the part of the tenants for: (i)
CPI or similar adjustments, (ii) percentage rents, (iii) escalation payments for taxes, labor or
operations, and/or (iv) other expenses including, without limitation, common area maintenance or
any other operating cost pass-throughs or retroactive charges payable by tenants which have accrued
as of the Closing Date but are not then due and payable, the amount of such Lease Obligations shall
be prorated as of the Closing Date and paid and adjusted between Seller and Purchaser when the
actual amount of such Lease Obligations with respect to the Property is



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determined and such Lease Obligations have been received by Purchaser from such tenant or
tenants.



               (e) Reletting Expenses in accordance with Section 8.2 hereof and Existing Mortgage escrows.


The agreements of Seller and Purchaser set forth in this Section 5.3 shall survive the Closing.
All prorations shall be completed and finalized no later than March 31, 2006.




     5.4 Closing Costs. Purchaser shall pay, on the Closing Date, the title insurance
premium for the owner’s policy, Lender’s policies, and any endorsements thereto, all reasonable
fees and costs required and incurred by the Lender in connection with the assumption by Purchaser
of the Existing Mortgage, all survey charges, all recording and filing charges and fees to record
the documents evidencing the conveyance of the Property (other than grantor’s tax), and all other
costs and charges of the closing and consummation of the purchase and sale transaction contemplated
in this Agreement as customarily charged to and payable by a purchaser in such transactions in the
location in which the Land is situate (including one-half of the escrow charges of the Title
Company). Seller shall pay, on the Closing Date, the cost of the grantor’s tax, costs and charges
of the closing and consummation of the purchase and sale transaction contemplated in this Agreement
as customarily charged to and payable by a seller in such transactions in the location in which the
Land is situate (including one-half of the escrow charges of the Title Company). Notwithstanding
the foregoing, each party shall pay its own attorneys’ fees and the fees of any accountants and/or
advisors incurred in connection with the transaction contemplated in this Agreement.



     5.5 Seller’s Obligations at the Closing. At the Closing, Seller shall deliver or
cause to be delivered to Purchaser the following:



               (a) Evidence of Authority. Such organizational and authorizing documents of Seller as
shall be reasonably required by the Title Company to evidence Seller’s authority to consummate the
transactions contemplated by this Agreement.



               (b) Deed. A duly executed and acknowledged Deed conveying to Purchaser the Land and
Improvements subject only to the Permitted Encumbrances, in the form of Exhibit B attached
hereto, sufficient to enable the Title Company to issue its standard form owner’s policy to
Purchaser, at Purchaser’s expense, insuring fee simple title to the Land and Improvements, subject
only to the Permitted Encumbrances. Seller agrees to execute and deliver to the Title Company such
customary certifications as are required by the Title Company in connection with the deletion or
insurance over the standard printed exceptions for mechanic’s liens, broker liens, judgments
against similarly named parties, and rights of tenants as tenants only. Purchaser shall be
entitled to request that the Title Company provide such endorsements (or amendments) to the title
policy as Purchaser may reasonably require, provided that (i) such endorsements shall be issued at
no cost to, and shall not impose any additional liability on, Seller, (ii) Purchaser’s obligations
under this Agreement shall not be conditioned upon Purchaser’s ability to obtain such endorsements
and, if Purchaser is unable to obtain such endorsements, Purchaser shall nevertheless be obligated
to proceed to close the transaction contemplated by this Agreement without reduction of or set off
against the Purchase Price, and (iii) the Closing shall not be delayed as a result of Purchaser’s
request.



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               (c) Assignment. A duly executed and acknowledged counterpart Assignment and
Assumption of Operating Contracts, Warranties and Leases in the form attached to this Agreement as
Exhibit C (the “Assignment”), and a Bill of Sale in the form attached hereto as Exhibit
C-1 (the “Bill of Sale”).



               (d) FIRPTA Affidavit. A duly executed affidavit of Seller in form attached hereto as
Exhibit D certifying that Seller is not a “foreign person,” as defined in Section 1445 of
the Internal Revenue Code of 1986, as amended, and in any applicable state laws for the state in
which the Property is located.



               (e) Tenant Notices. Duly executed notice to tenants or lessees under the Leases in
form attached hereto as Exhibit E.



               (f) Original Documents. The originals of all Leases and Operating Contracts in
Seller’s Possession.



               (g) Transfer Tax Forms. All transfer tax and other similar tax returns which Seller
is required by law to execute and acknowledge and to deliver, either individually or together with
Purchaser, to any governmental authority as a result of the sale, and if Seller is responsible for
payment of such taxes in accordance with this Agreement, checks made payable to the appropriate
governmental authority in the required amounts (unless Seller authorizes the Title Company to
deduct and pay such expenses out of monies payable to Seller).



               (h) Rent Roll. An updated Rent Roll for the Property.



               (i) Escrow Direction. A confirmation to Escrow Agent confirming the prorations and
the Closing and directing that the Deposit and Purchase Price is to be delivered to Seller (the
“Escrow Direction”).



               (j) Records and Files. Records and files which are in Seller’s Possession relating to
the current operation and maintenance of the Property, including, without limitation, current tax
bills, current water, sewer, utility and fuel bills, billing records for Tenants, repair and
maintenance records and the like which affect or relate to the Property. The parties agree to
cooperate so that, to the extent practical, deliveries of background records at or prior to the
Closing which Purchaser desires to have delivered to it will be identified to the satisfaction of
the parties at the Closing without actual delivery at Closing, provided satisfactory arrangements
for post-closing delivery are made.



     5.6 Purchaser’s Obligations at the Closing. At the Closing, Purchaser shall deliver
or cause to be delivered to Seller the following:



               (a) Purchase Price. The balance of the Purchase Price, plus or minus other
adjustments required under this Agreement, by wire transfer of immediately available funds to
Seller.



               (b) Evidence of Authority. Such organizational and authorizing documents of Purchaser
as shall be reasonably required by Seller and/or the Title Company authorizing Purchaser’s
acquisition of the Property pursuant to this Agreement and the execution of this Agreement and any
documents to be executed by Purchaser at the Closing.



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               (c) Assignment. A duly executed and acknowledged counterpart Assignment.



               (d) Escrow Direction. A duly executed counterpart of the Escrow Direction.



               (e) Transfer Tax Forms. Duly executed and acknowledged transfer tax forms described
in Section 5.5(g).



     5.7 Property Management Agreement. At Closing, Seller will terminate its management
agreement for the Property.



SECTION 6.

RISK OF LOSS




     6.1 Condemnation. If, prior to Closing, (i) the whole or any part of the Property or
any interest in the Property is taken by condemnation or right of eminent domain and (ii) such
taking by condemnation or right of eminent domain results in (A) the taking of all or any part of
the Improvements, (B) the loss of any parking spaces which causes the Property not to comply with
applicable zoning ordinances, (C) a permanent loss of any means of vehicular access to the
Property, or (D) an otherwise adverse and material effect on the value of the Property, Purchaser
may either at or prior to Closing (a) terminate this Agreement, in which case Purchaser shall be
entitled to the return of the Deposit, and thereafter neither party shall have any rights or
obligations under this Agreement, other than the Surviving Obligations or (b) consummate the
Closing, in which latter event all of Seller’s assignable right, title and interest in and to the
award of the condemning authority shall be assigned to Purchaser at the Closing and there shall be
no reduction in the Purchase Price.



     6.2 Casualty. Except as otherwise provided in this Agreement, Seller assumes all
risks for damage to or injury occurring to the Property by fire, storm, accident, or any other
casualty or cause until the Closing has been consummated. If before the Closing, the Property, or
any part thereof, suffers any damage from fire or other casualty which in Seller’s reasonable
estimate will require in excess of $750,000 to repair and restore, Seller will notify Purchaser of
such fact (the “Seller’s Casualty Notice”), and Purchaser may terminate this Agreement by notice to
the other party given within ten (10) days following Seller’s Casualty Notice to Purchaser, in
which case Purchaser shall be entitled to the return of the Deposit, and thereafter neither party
shall have any rights or obligations under this Agreement, other than the Surviving Obligations .
If Purchaser does not terminate this Agreement, it shall remain in full force and effect,
Purchaser agrees that it will consummate the Closing and accept the assignment of Seller’s right,
title and interest in and to the net proceeds (or rights under the policy) of any insurance
covering such damage, including any rent loss insurance for the period after the Closing (less an
amount equal to any expenses and costs incurred by Seller to collect or adjust such insurance or to
secure the Improvements or initiate repairs or restoration of the Property, and any portion of such
proceeds paid or to be paid on account of the loss of rents or other income from the Property for
the period prior to and including the Closing Date shall be payable to Seller (collectively,
“Seller Expenses”), to the extent the amount of such net proceeds does not exceed the Purchase
Price, plus an amount equal to Seller’s deductible under its insurance policy applicable to such
casualty, and there shall be no reduction in the Purchase Price or obligation of Seller to complete
restoration. If prior to the Closing, the Property, or any part thereof, suffers any such damage
which will in Seller’s reasonable estimate require less than $750,000 to repair or restore,



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Purchaser agrees that it will consummate the Closing and accept the assignment of the net
proceeds (or rights under the policy) of any insurance covering such damage, including any rent
loss insurance for the period after the Closing (less Seller Expenses), to the extent the amount of
such net proceeds does not exceed the Purchase Price, plus an amount equal to Seller’s deductible
under its insurance policy applicable to such casualty, and there shall be no reduction in the
Purchase Price or obligation of Seller to complete restoration. Seller agrees that from and after
the date hereof and until the Closing Seller shall carry all insurance coverage which it presently
carries on the Property. Seller’s existing liability and property insurance pertaining to the
Property shall be canceled as of the Closing Date, and Seller shall be entitled to receive any
premium refund due thereon.



     6.3 Uniform Vendor and Purchaser Risk Act. Purchaser and Seller each hereby waives
the Uniform Vendor and Purchaser Risk Act and agree that the provisions of this Section 6 shall
govern the respective rights and obligations of Purchaser and Seller with respect to the subject
matter of this Section 6.



SECTION 7.

DEFAULT




     7.1 Breach by Seller. In the event that Seller shall fail to close this transaction
because of Seller’s default in the performance of Seller’s obligations under this Agreement,
Purchaser, as Purchaser’s sole and exclusive right and remedy, shall either: (1) terminate this
Agreement and receive a refund of the Deposit or (2) pursue the remedy of specific performance of
Seller’s obligations under this Agreement, provided that (i) any such suit for specific performance
must be filed within thirty (30) days after Purchaser first becomes aware of the breach or default
by Seller, (ii) Purchaser is not in breach or default in the performance of its obligations under
this Agreement, and (iii) Purchaser has tendered the Purchase Price, less Purchaser’s good faith
reasonable estimate of proration credits that would be credited against the Purchase Price, to the
Seller in immediately available funds.



     7.2 Breach by Purchaser. In the event that Purchaser fails to consummate the
transaction contemplated by this Agreement, including delivery of the additional deposit in
accordance with Section 2.1 and Section 5.1, if Purchaser elects to extend the Closing Date, this
Agreement shall terminate and Seller shall receive and retain the Deposit as liquidated damages
(and not as a penalty or forfeiture) and as Seller’s sole remedy and relief hereunder (except for
the Surviving Obligations). Seller and Purchaser acknowledge that the actual damages to Seller
which would result from such failure would be extremely difficult to calculate or establish on the
date hereof. In addition, Purchaser desires to have a limitation put upon its potential liability
to Seller in the event of such failure by Purchaser. Seller and Purchaser specifically acknowledge
and agree, after negotiation between Seller and Purchaser, that the amount of the Deposit
constitutes reasonable compensation to Seller for such failure by Purchaser and shall be disbursed
to and retained by Seller as liquidated damages in the event of such failure by Purchaser. None of
the provisions of this Section 7.2 shall limit, impair or affect any of Purchaser’s indemnities of
Seller or other Surviving Obligations as provided for elsewhere in this Agreement.



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SECTION 8.

FUTURE OPERATIONS




     8.1 Maintenance and Contracts. From the Effective Date of this Agreement until the
Closing or earlier termination of this Agreement:



               (a) Seller will continue to operate the Property in the customary and ordinary manner
consistent with Seller’s current practices in effect as of the Effective Date, ordinary wear and
tear and casualties excepted; and



               (b) Seller will perform all of Seller’s material obligations under the Contracts. Seller will
not, without the prior written consent of Purchaser (which consent will not be unreasonably
withheld or delayed), modify, enter into, or renew any Contract which cannot be canceled upon
thirty (30) days prior written notice.



     8.2 Leasing.



               (a) Between the Effective Date and the expiration of the Inspection Period, Seller, in its
sole and absolute discretion and without the consent of Purchaser, shall be permitted to enter into
any new Lease for space in the Property which is presently vacant or which may become vacant prior
to the expiration of the Inspection Period. If Seller enters into such a new Lease, Seller will
provide Purchaser with written notice of such new Lease at least two (2) business days prior to
expiration of the Inspection Period. Between the expiration of the Inspection Period and Closing,
Seller shall not, without Purchaser’s prior written consent, which consent shall not be
unreasonably withheld or delayed: (a) amend, renew or extend any Lease in any respect, unless
required by law or the terms of the existing lease; (b) grant a written Lease to any tenant
occupying space without a written lease; or (c) terminate any lease or tenancy except by reason of
a default by the tenant thereunder. Between the expiration of the Inspection Period and Closing,
Seller shall not permit occupancy of, or enter into any new Lease for, space in the Property which
is presently vacant or which may hereafter become vacant without first giving Purchaser written
notice of the identity of the proposed tenant, together with (a) a copy of the proposed Lease and a
summary of the terms thereof in reasonable detail and (b) a statement of the amount of the
brokerage commission, if any, payable in connection therewith and the terms of payment thereof. If
Purchaser approves such proposed Lease, Purchaser shall so notify Seller within four (4) business
days after receipt of Seller’s notice if such notice was personally delivered to Purchaser, or
within seven (7) business days after the mailing of such notice by Seller to Purchaser, in which
case Seller shall enter into the proposed Lease, and the Reletting Expenses (as hereinafter
defined) shall be prorated in each case over the term of the lease and apportioned as of the
Closing and credited in favor of Seller at Closing. If Purchaser does not approve such proposed
Lease, provided such Lease was at market rates and otherwise market terms, Seller shall be credited
at Closing the rent and additional rent that would have been payable under the proposed Lease, from
the date on which the tenant’s obligation to pay rent would have commenced if Purchaser had not
objected until the Closing, less the amount of the brokerage commission specified in Seller’s
notice and the reasonable cost of decoration or other work required to be performed by the landlord
under the terms of the proposed lease to suit the premises to the tenant’s occupancy (the
“Reletting Expenses”), prorated in each case over the term of the proposed lease and apportioned as
of the Closing. In no event shall the amount so



-19-









 







credited to Seller for the Reletting Expenses exceed the sums actually paid by Seller on
account thereof.



               (b) If any space is vacant at the time of Closing, Purchaser shall accept the Property
subject to such vacancy. From and after the expiration of the Inspection Period, Seller shall not
grant any concessions or rent abatements for any period following the Closing without Purchaser’s
prior written consent. Subject to the provisions of Section 3.6(c), Seller does not warrant that
any particular Lease or tenancy will be in force or effect at the Closing or that the tenants will
have performed their obligations thereunder. The termination of any Lease or tenancy prior to the
Closing by reason of the tenant’s default shall not affect the obligations of Purchaser under this
contract in any manner or entitle Purchaser to an abatement of or credit against the Purchase
Price or give rise to any other claim on the part of Purchaser.



SECTION 9.

MISCELLANEOUS




     9.1 Notices. All notices, demands and requests which may be given or which are
required to be given by either party to the other, and any exercise of a right of termination
provided by this Agreement, shall be in writing and shall be deemed effective either: (a) on the
date personally delivered to the address below, as evidenced by written receipt therefor, whether
or not actually received by the person to whom addressed; (b) on the third (3rd) business day after
being sent, by certified or registered mail, postage prepaid, return receipt requested, addressed
to the intended recipient at the address specified below; (c) on the first (1st) business day after
being deposited into the custody of a nationally recognized overnight delivery service such as
Federal Express Corporation, Airborne Express, or United Parcel Service, addressed to such party at
the address specified below; or (d) at the time of electronic confirmation of receipt after being
sent by facsimile to the following numbers. For purposes of this Section 9.1, the addresses of
the parties for all notices are as follows (unless changed by similar notice in writing given by
the particular person whose address is to be changed):



	 	 	 
	If to Seller:

	 	c/o Sterling Advisors IV L.L.C.
	 

	 	111 Great Neck Road
	 

	 	Great Neck, NY 11021
	 

	 	Attn: Richard A. Wilpon
	 

	 	Telephone: (516) 504-2100
	 

	 	Facsimile: (516) 504-2111
	 
	 	 
	with a copy to:

	 	Schiff Hardin LLP
	 

	 	623 Fifth Avenue
	 

	 	New York, NY 10022
	 

	 	Attn: Marina Rabinovich, Esq.
	 

	 	Telephone: (212) 753-5000
	 

	 	Facsimile: (212) 753-5044
	 
	 	 
	If to Purchaser:

	 	Columbia Equity Trust, Inc.
	 

	 	1750 H Street, NW
	 

	 	Suite 500
	 

	 	Washington, DC 20006






-20-









 






	 	 	 
	 

	 	Attn: Clint Fisch
	 

	 	Telephone: (202) 303-3073
	 

	 	Facsimile: (202) 303-3088
	 
	 	 
	with a copy to:

	 	Hunton & Williams LLP
	 

	 	1900 K Street, NW
	 

	 	Suite 1200
	 

	 	Washington, DC 20006
	 

	 	Attn: John M. Ratino
	 

	 	Telephone: (202) 778-2221
	 

	 	Facsimile: (202) 778-2201
	 
	 	 
	If to Escrow Agent:

	 	Fidelity National Title Insurance Company
	 

	 	2 Park Avenue
	 

	 	New York, NY 10016
	 

	 	Attn: Kenneth C. Cohen
	 

	 	Telephone: (212) 845-3135
	 

	 	Facsimile: (646) 742-0733






     The attorneys are authorized to give any notice specified in this Agreement on behalf of their
respective clients.



     9.2 Real Estate Commissions. Seller shall pay to CB Richard Ellis, Inc. (hereinafter
called “Agent”) a commission in the amount agreed on, if and when payable in accordance with the
terms of a separate agreement between Seller and Agent. Except for Agent, neither Seller nor
Purchaser has authorized any broker or finder to act on Purchaser’s or Seller’s behalf in
connection with the sale and purchase hereunder and neither Seller nor Purchaser has dealt with any
broker or finder purporting to act on behalf of any other party. Purchaser agrees to indemnify,
defend, protect and hold harmless Seller from and against any and all demands, claims, losses,
damages, liabilities, costs or expenses of any kind or character (including reasonable attorneys’
fees and charges) arising out of or resulting from any agreement, arrangement or understanding
alleged to have been made by Purchaser or on Purchaser’s behalf with any broker or finder in
connection with this Agreement or the transaction contemplated hereby, other than claims of Agent
based on Agent’s agreement with the Seller. Seller agrees to indemnify, defend, protect and hold
harmless Purchaser from and against any and all claims, losses, damages, liabilities, costs or
expenses of any kind or character, including reasonable attorneys’ fees and expenses, arising out
of or resulting from any agreement, arrangement or understanding alleged to have been made by
Seller or on Seller’s behalf with any broker or finder in connection with this Agreement or the
transaction contemplated hereby. Notwithstanding anything to the contrary contained herein, this
Section 9.2 shall survive the Closing or any earlier termination of this Agreement.



     9.3 Entire Agreement. This Agreement embodies the entire agreement between the
parties relative to the subject matter hereof, and there are no oral or written agreements between
the parties, nor any representations made by either party relative to the subject matter hereof,
which are not expressly set forth herein.




-21-










 






     9.4 Amendment. This Agreement may be amended only by a written instrument executed by
the party or parties to be bound thereby.



     9.5 Headings. The captions and headings used in this Agreement are for convenience
only and do not in any way limit, amplify, or otherwise modify the provisions of this Agreement.



     9.6 Time of Essence. Time is of the essence of this Agreement (other than for
Seller’s rights to adjourn the Closing as expressly provided in this Agreement); however, if the
final date of any period which is set out in any provision of this Agreement falls on a Saturday,
Sunday or legal holiday under the laws of the United States, the State of New York, or the State in
which the Property is located, then, in such event, the time of such period shall be extended to
the next day which is not a Saturday, Sunday or legal holiday. As used in this Agreement, the term
“business day” means every day other than Saturdays, Sundays, or other holidays on which banking
institutions in New York or the State in which the Property is located are closed.



     9.7 Successors and Assigns; Assignment. This Agreement shall bind and inure to the
benefit of Seller and Purchaser and their respective heirs, executors, administrators, personal and
legal representatives, successors and permitted assigns. Purchaser shall not assign this Agreement
or Purchaser’s rights under this Agreement without the prior written consent of Seller, which
consent may be withheld in its sole and absolute discretion, provided however, subsequent to the
expiration of the Inspection Period, on not less than five (5) business days prior written notice
to Seller, Purchaser shall be entitled to assign this Agreement to an affiliate (with such
affiliate assuming the obligations of Purchaser under this Agreement). Purchaser shall provide
Seller with a true and complete copy of such assignment and assumption promptly upon execution and
delivery thereof. No assignment of this Agreement or Purchaser’s rights hereunder shall relieve
Purchaser of its liabilities under this Agreement. This Agreement is solely for the benefit of
Seller and Purchaser; there are no third party beneficiaries hereof. Any assignment of this
Agreement in violation of the foregoing provisions shall at Seller’s option be null and void.



     9.8 Invalid Provision. If any provision of this Agreement is held to be illegal,
invalid or unenforceable under present or future laws, such provision shall be fully severable;
this Agreement shall be construed and enforced as if such illegal, invalid or unenforceable
provision had never comprised a part of this Agreement; and, the remaining provisions of this
Agreement shall remain in full force and effect and shall not be affected by such illegal, invalid,
or unenforceable provision or by its severance from this Agreement.



     9.9 Attorneys’ Fees. In the event it becomes necessary for either party hereto to
file suit to enforce this Agreement or any provision contained herein, the party prevailing in such
suit shall be entitled to recover, in addition to all other remedies or damages as provided herein,
reasonable attorneys’ fees incurred in such suit.



     9.10 Multiple Counterparts. This Agreement may be executed in a number of identical
counterparts which, taken together, shall constitute collectively one (1) agreement; in making
proof of this Agreement, it shall not be necessary to produce or account for more than one such
counterpart with each party’s signature.



-22-









 





     9.11 Exhibits. The exhibits and schedules attached to this Agreement and referred to
herein are hereby incorporated into this Agreement by this reference and made a part hereof for all
purposes.



     9.12 Construction. Seller and Purchaser acknowledge that each party and its counsel
have reviewed and revised this Agreement and that the normal rule of construction to the effect
that any ambiguities are to be resolved against the drafting party shall not be employed in the
interpretation of this Agreement or any amendments or exhibits hereto.



     9.13 No Recordation. Seller and Purchaser hereby acknowledge that neither this
Agreement nor any memorandum or affidavit thereof shall be recorded of public record in the county
in which the Property is located or any other county. Should Purchaser ever record or attempt to
record this Agreement, or a memorandum or affidavit thereof, or any other similar document, then,
notwithstanding anything herein to the contrary, said recordation or attempt at recordation shall
constitute a default by Purchaser hereunder, and, in addition to the other remedies provided for
herein, Seller shall have the express right to terminate this Agreement by filing a notice of said
termination in the county in which the Land is located.



     9.14 Merger Provision. Except as otherwise expressly provided herein, any and all
rights of action of Purchaser for any breach by Seller of any representation, warranty or covenant
contained in this Agreement shall merge with the Deed and other instruments executed at Closing,
shall terminate at Closing, and shall not survive Closing.



     9.15 Jury Waiver. PURCHASER AND SELLER DO HEREBY KNOWINGLY, VOLUNTARILY AND
INTENTIONALLY WAIVE THEIR RIGHT TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON, OR
ARISING OUT OF, OR UNDER OR IN CONNECTION WITH THIS AGREEMENT, THE DOCUMENTS DELIVERED BY PURCHASER
OR BY SELLER AT CLOSING, OR ANY COURSE OF CONDUCT, COURSE OF DEALINGS, STATEMENTS (WHETHER VERBAL
OR WRITTEN) OR ANY ACTIONS OF EITHER PARTY ARISING OUT OF OR RELATED IN ANY MANNER WITH THIS
AGREEMENT OR THE PROPERTY (INCLUDING WITHOUT LIMITATION, ANY ACTION TO RESCIND OR CANCEL THIS
AGREEMENT AND ANY CLAIMS OR DEFENSES ASSERTING THAT THIS AGREEMENT WAS FRAUDULENTLY INDUCED OR IS
OTHERWISE VOID OR VOIDABLE). THIS WAIVER IS A MATERIAL INDUCEMENT FOR SELLER TO ENTER INTO AND
ACCEPT THIS AGREEMENT AND THE DOCUMENTS DELIVERED BY PURCHASER AT CLOSING AND SHALL SURVIVE THE
CLOSING OR TERMINATION OF THIS AGREEMENT.



     9.16 No Personal Liability of Officers, Directors, Etc. of Seller. Purchaser
acknowledges that this Agreement is entered into by a limited partnership as Seller and Purchaser
agrees that no shareholder or individual officer, partner, director, trustee, asset manager,
employee, member, agent or other representative of Seller shall have any personal liability under
this Agreement or any document executed in connection with the transactions contemplated by this
Agreement.



     9.17 Choice of Law; Submission to Jurisdiction. This Agreement shall be governed by,
and construed and interpreted in accordance with, the law of the Commonwealth of Virginia. Any
legal action, suit or proceeding in connection with this Agreement or for enforcement of any



-23-









 




judgment rendered in any such action, suit or proceeding may be brought in the federal or
state courts of the Commonwealth of Virginia, and, Purchaser hereby irrevocably accepts and submits
to the jurisdiction of the aforesaid courts in personam, generally and unconditionally with respect
to any such action, suit, or proceeding for itself and in respect of its property.




     9.18 Non-Solicitation of Employees. Purchaser acknowledges and agrees that, without
the express prior consent of Seller, neither Purchaser nor any of Purchaser’s employees, affiliates
or agents shall solicit any of Seller’s employees or any employees located at the Property. This
Section 9.18 shall constitute a Surviving Obligation.



     9.19 Access. Purchaser hereby agrees to retain all leases and lease related documents
(the “Lease Documents”) with respect to the Property and in effect on or after the Seller’s
acquisition of the Property; provided however, Purchaser shall have no obligation to retain any
Lease Documents entered into after Closing. Purchaser shall cooperate fully, as and to the extent
reasonably requested by Seller and Seller Related Parties, in delivering and/or granting access to
Seller and/or Seller Related Parties of any of the Lease Documents that Seller and/or Seller
Related Parties may require in connection with any accounting and/or tax audit with respect to
Seller’s ownership and management of the Property. Notwithstanding anything to the contrary
herein, Purchaser shall have no obligation to retain any of the Lease Documents after the date that
is three (3) years from the last day of the fiscal year to which such Lease Document relates. In
addition to the foregoing, after the Closing, Purchaser agrees to allow Seller and its designated
representatives, on prior written notice and during business hours, reasonable access to the
documents, instruments, books and records for the Property dated prior to the date of Closing (the
“Records”). Seller and its designated representatives shall have the right to make copies of the
Records and the Lease Documents.



SECTION 10.

ESCROW PROVISIONS




     10.1 The Deposit shall be held in escrow by the Escrow Agent until the earliest of (a) the
Closing, on which date the Deposit shall be released to Seller; (b) ten (10) days after the Escrow
Agent shall have delivered to the non-sending party a copy of the notice sent by Seller or
Purchaser stating that this Agreement has been terminated and that the party so notifying the
Escrow Agent is entitled to the Deposit, following which period the Deposit shall be (i) delivered
to Seller, in the case of a notice from Seller stating that Seller is entitled to the Deposit, or
(ii) delivered to Purchaser, in the case of a notice from Purchaser stating that Purchaser is
entitled to the Deposit; provided, in each case, however, that within such ten (10) day period the
Escrow Agent does not receive either a notice containing contrary instructions from the other party
hereto or a court order restraining the release of all or any portion of the Deposit; or (c) a
joint notice executed by Seller and Purchaser is received by the Escrow Agent, in which event the
Escrow Agent shall release the Deposit in accordance with the instructions therein contained. The
Escrow Agent shall reasonably promptly deliver a duplicate copy of any notice received by it in its
capacity as Escrow Agent to Seller and Purchaser. Notwithstanding anything to the contrary set
forth herein, if Purchaser advises Seller and the Escrow Agent in accordance with Section 3.1 or
3.2 that Purchaser has elected to terminate this Agreement, then Escrow Agent shall promptly return
the Deposit to Purchaser.



-24-









 





     10.2 The Deposit shall be held by the Escrow Agent in a separate interest-bearing money market
or bank account. The Deposit may be invested on behalf of Seller or Purchaser; provided that any
direction to the Escrow Agent for such investment shall be in writing and a completed, signed W-9
Form accompanies it. The Escrow Agent is not to be held responsible for the loss of principal or
interest on any investment made pursuant to the aforesaid instruction or in the redemption thereof.
If the Closing occurs, the Deposit shall be paid to Seller and applied to the Purchase Price. In
the event that there is no Closing hereunder and the Deposit is to be paid to Seller pursuant to
the terms of this Agreement, such payment shall be made to Seller, otherwise, the Deposit shall be
paid to Purchaser.



     10.3 In the event that (i) the Escrow Agent shall have received a notice containing contrary
instructions or a court order as provided for in Section 10.1 hereof and within the time therein
prescribed, or (ii) any other disagreement or dispute shall arise between the parties hereto
resulting in adverse claims or demands being made for the Deposit, whether or not litigation has
been instituted, then and in any such event the Escrow Agent shall refuse to comply with any claims
or demands on it and continue to hold the Deposit until the Escrow Agent receives either (a) a
written notice signed by both Seller and Purchaser directing the disposition of the Deposit, or (b)
a final order of a court of competent jurisdiction, entered in a proceeding in which Seller,
Purchaser and the Escrow Agent are named as parties, directing the disposition of the Deposit, in
either of which events the Escrow Agent shall then dispose of the Deposit in accordance with said
direction. The Escrow Agent shall not be or become liable in any way to any person or entity for
its refusal to comply with any such claims or demands until and unless it has received a direction
of the nature described in (a) or (b) above. Upon the taking by the Escrow Agent of any of the
actions described in (a) and (b) above, the Escrow Agent shall be released of and from all
liability hereunder. Notwithstanding the foregoing provisions of this Section 10.3, the Escrow
Agent shall have the following right in the circumstances described in subdivision (i) or (ii)
above: (y) if the Escrow Agent shall have received a written notice signed by either Seller or
Purchaser advising that litigation between Seller and Purchaser over entitlement to the Deposit or
any portion thereof has been commenced, the Escrow Agent may, on written notice to Seller and
Purchaser, deposit the Deposit with the clerk of the court in which such litigation is pending, or
(z) the Escrow Agent may, on written notice to Seller and Purchaser, take such affirmative steps as
it may, at its option, elect in order to terminate its duties as escrow agent hereunder, including,
but not limited to, the deposit of the Deposit with a court of competent jurisdiction and the
commencement of an action in interpleader. Upon the taking by Escrow Agent of either of the
actions described in (y) or (z) above, the Escrow Agent shall be released of and from all liability
hereunder except for any previous willful misconduct or gross negligence.



     10.4 The Escrow Agent shall not be liable for any error in judgment or for any act done or
omitted by it in good faith, or for any mistake of fact or law and shall not incur any liability in
acting upon any signature, notice, request, waiver, consent, receipt or other paper or document in
good faith believed by the Escrow Agent to be genuine and is released and exculpated from all
liability hereunder except as aforesaid or for willful misconduct or gross negligence. The sole
responsibility of the Escrow Agent hereunder shall be to hold and release the Deposit in accordance
with the provisions of this Agreement. The Escrow Agent shall be entitled to consult with counsel
in connection with its duties hereunder. The Escrow Agent has executed this Agreement solely to
confirm that it is holding and will hold the Deposit in escrow pursuant to the provisions of this
Section 10 and for no other purpose.



-25-









 






	 	 	 	 	 
	SELLER:	 	 
	 
	 	 	 	 
	PATRICK HENRY ASSOCIATES L.P.	 	 
	 
	 	 	 	 
	By:

	 	SAP IV Patrick Henry NF GP L.L.C.,	 	 
	 

	 	its sole general partner	 	 
	 
	 	 	 	 
	 

	 	By: SAP IV manager, Inc.,	 	 
	 

	 	          its manager	 	 
	 
	 	 	 	 
	By:

	 	/s/ Richard A. Wilpon	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	Its:

	 	Senior Executive Vice
President	 	 
	 
	 	 	 	 
	PURCHASER:	 	 
	 
	 	 	 	 
	COLUMBIA EQUITY TRUST, INC.,	 	 
	a Maryland corporation	 	 
	 
	 	 	 	 
	By:

	 	/s/ Clinton Fisch	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	Its:

	 	Director of
Acquisitions 	 	 




The undersigned Escrow Agent hereby acknowledges receipt of the Deposit and a copy of this
Agreement, and agrees to hold and dispose of the Deposit in accordance with the provisions of this
Agreement.




	 	 	 	 	 
	ESCROW AGENT:	 	Fidelity National Title Insurance Company
	 
	 

	 	By:	 	 
	 

	 	 	 	 
	 
	 

	 	Its:	 	 
	 

	 	 	 	 
	 
	 	 	Date of Execution
	 	 	by Escrow Agent:
	 

	 	_______, 2005






-26-









 





SCHEDULE 1




ITEMS TO BE DELIVERED

TO THE EXTENT IN SELLER’S POSSESSION





	a)	 	The last two years’ real estate tax bills;
	 
	b)	 	All utility invoices for the three (3) most current months (electric,
water, sewer and trash removal);
	 
	c)	 	The last three (3) years operating statements;
	 
	d)	 	Delinquencies Report (up to 90 days);
	 
	e)	 	Copies of the Leases (if too many, Purchaser may examine Leases at the
offices of the managing agent on prior notice);
	 
	f)	 	Copies of Operating Contracts;
	 
	g)	 	A rent roll (the “Rent Roll”) identifying all leases of space within the Property (the
“Leases”) current as of a date not earlier than thirty (30) days prior to the Effective Date;
	 
	h)	 	Existing Mortgage documents.





 









 





SCHEDULE 2




Tenant Improvements Allowances payable after Closing




None




 









 





SCHEDULE 3




List of Brokerage Agreements providing for payment of leasing commissions after Closing.




None




 









 





EXHIBIT A




LEGAL DESCRIPTION OF LAND




 









 





EXHIBIT B




DEED




SPECIAL WARRANTY DEED SUBJECT TO THE ASSUMPTION OF THE EXISTING DEBT




 









 






EXHIBIT C




FORM OF ASSIGNMENT




ASSIGNMENT AND ASSUMPTION OF OPERATING CONTRACTS, WARRANTIES AND LEASES




                                             
(“Assignor”), for good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, has Granted, Sold, Assigned, Transferred,
Conveyed, and Delivered and by these presents does Grant, Sell, Assign, Transfer, Convey and
Deliver unto                                         , a                                
          (“Assignee”), all of Assignor’s
rights, title, and interests in and to the following items arising or used in connection with the
improved property situated on the land in the
                     County, State of                      more
particularly described on Exhibit A attached hereto and made a part hereof (hereinafter
called the “Property”):



     (a) Any leases for space in the Property (the “Leases”), together with refundable security and
other deposits owned or held by Assignor pursuant to the Leases, and any and all claims against
tenants under the Leases for past due rents or otherwise, which Lease security deposits and claims
are described on Exhibit B attached hereto;



     (b) The assignable service, maintenance, or management Agreements relating to the ownership
and operation of the Property (the “Operating Contracts”) attached hereto as Exhibit C; and



     (c) Any assignable warranties and guaranties relating to the Property or any portion thereof
(collectively, the “Warranties”).



Assignor and Assignee hereby covenant and agree as follows:



     (i) Assignee accepts the aforesaid assignment and Assignee assumes and agrees to be
bound by and timely perform, observe, discharge, and otherwise comply with each and every
one of the agreements, duties, obligations, covenants and undertakings upon the lessor’s
part to be kept and performed under the Leases and any obligations of Assignor under the
Operating Contracts, from and after the date hereof.


     (ii) Neither this Assignment nor any term, provision, or condition hereof may be
changed, amended or modified, and no obligation, duty or liability or any party hereby may
be released, discharged or waived, except in a writing signed by all parties hereto. Except
to the extent expressly set forth in this Assignment, Seller has not made, does not make and
specifically negates and disclaims any representations, warranties, promises, covenants,
agreements or guaranties of any kind or character whatsoever, whether express or implied,
oral or written, past, present or future, of, as to, concerning or with respect to the
Property, Leases, Operating Contracts or Warranties.


 









 





     IN WITNESS WHEREOF, Assignor and Assignee have executed this Assignment of Operating
Contracts, Warranties and Leases effective as of the                      day of                                          ,2005.



Assignor:




	 	 	 	 	 
	 

	 	 	,	 
	 

	 	 	 	 
	a

	 	 	 	 
	

	 	 	 	 
	By:

	 	 	 	 
	Its:

	 	 	 	 
	 
	Assignee:

	 	 
	 
	 

	 	 	,	 
	 

	 	 	 	 
	a

	 	 	 	 
	 

	 	 	 	 
	By:

	 	 	 	 
	Its:

	 	 	 	 






 





 









 





EXHIBIT C-1




BILL OF SALE




     Seller,                                         , a                                         , in consideration of Ten and No/100
Dollars ($10.00), receipt of which is hereby acknowledged, does hereby sell, assign, transfer and
set over to Purchaser, the following described personal property, to wit:




All of the furniture, fixtures, equipment, machines, apparatus,
supplies and personal property, of every nature and description, if
any, now owned by Seller and located in or on the real estate
commonly known as
“                                        ”,                     County,
                    , which real estate is legally described on Exhibit “A”
attached hereto and made a part hereof, excepting therefrom the
following: (a) any fixtures, furniture, furnishings, equipment or
personal property, if any, of tenants occupying the improvements
situated on the real estate; (b) any fixtures, furniture,
furnishings, equipment or personal property, if any, used by the
property manager at the real estate; and (c) fixtures, equipment,
and machines, if any, leased by Seller under any Agreements.



     This transfer is made without representation, warranty or guaranty by, or recourse against,
Seller of any kind whatsoever.



     IN WITNESS WHEREOF, Seller has caused this Bill of Sale to be signed and sealed in its name by
its officers thereunto duly authorized this
                     day of                                        , 2005.



                                        




a                     corporation




By:                                         




Its:                                         




     [EXHIBIT “A” WILL BE LEGAL DESCRIPTION ATTACHED TO AGREEMENT]



 









 





EXHIBIT D




FORM OF FIRPTA AFFIDAVIT




TRANSFEROR’S CERTIFICATION OF NON-FOREIGN STATUS




     To inform                                         , a                                         
(“Transferee”), that withholding of tax under Section 1445 of the Internal Revenue Code of 1986, as
amended (collectively, the “Code”), will not be required for transfer of certain real property to
Transferee by                                         , (“Transferor”), the undersigned hereby certifies the following
on behalf of Transferor:



     1. Transferor is not a foreign person, foreign corporation, foreign partnership, foreign
trust, or foreign estate (as those terms are defined in the Code and the Income Tax Regulations
promulgated thereunder);



     2. Transferor’s U.S. taxpayer identification number is as follows:                                         .
Transferor is not a “disregarded entity” as defined in 26 CFR Section 1:1445-2(b)(2)(iii).



     3. Transferor’s office address is as follows:



 






 






 






     Transferor understands that this Certification may be disclosed to the Internal Revenue
Service by Transferee and that any false statement contained herein could be punished by fine,
imprisonment, or both.



     Transferor understands that Transferee is relying on this Certification in determining whether
withholding is required upon said transfer.



     Under penalty of perjury I declare that I have examined this Certification and to the best of
my knowledge and belief it is true, correct and complete, and I further declare that I have
authority to sign this document on behalf of Transferor.



Date:                                         , 2005




TRANSFEROR:




	 	 	 	 	 
	 

	 	 	 	 
	 	 	 
	 
	 	 	 	 
	 	 	 
	By:
	 	 	 	 
	 

	 	 	 	 
	Its:
	 	 	 	 
	 

	 	 	 	 





 









 





EXHIBIT E




FORM OF TENANT NOTICE




                                        , 2005




	 	 	 
	 

	 	 
	 	 	 
	 
	 	 
	 	 	 
	 
	 	 
	 	 	 





     This
is to notify you that                     , a                      (“Seller”), has sold its
interest in the property described above and in connection therewith has assigned its interest as
landlord under your lease to
                                         , a                      (“Buyer”).



     You are further notified that any refundable security deposits or any prepaid rents under your
lease have been transferred to Buyer.



     Commencing
as of                                          all rental payments under your



lease shall be paid to Buyer or as Buyer shall direct. Please make your rent checks payable to
Buyer at the above address.



Any written notices you desire or are required to make to the landlord under your lease should
hereafter be sent to Buyer at the above address.




	 	 	 	 	 
	 

	 	Very truly
yours,
	 
	 	 	 	 
	 

	 	SELLER:
	 
	 	 	 	 
	 

	 	a	 	 
	 

	 	 	 	 
	 

	 	By:	 	 
	 

	 	 	 	 
	 

	 	Its:	 	 
	 

	 	 	 	 






 









 





EXHIBIT F




TENANT’S ESTOPPEL CERTIFICATE




     This TENANT’S ESTOPPEL CERTIFICATE is executed as of this                     
day of                                         , 2005 by
                    
which is the Tenant (hereinafter referred to as the “Tenant”) under that written lease
agreement dated as of                                         
by and between                                         , as Landlord (or “Seller”),
and                                         , as Tenant (hereinafter referred to as “Lease”) as amended by
                                         and relating to premises known as                                          (the “Leased
Premises”), which are part of the property known as                                         
(the “Premises”).


Tenant
represents and warrants to Seller,                                         , (the “Purchaser”) and Purchaser’s
successors and assigns, and to the Purchaser’s lender, if applicable, each of the following:



1. The Lease (annexed hereto as Exhibit “A”) is presently in full force and effect and has not been
amended, supplemented, modified or otherwise changed, except as set forth therein and as noted
above. The Lease represents the entire agreement between the parties as to the leasing of the
Leased Premises. All capitalized terms used herein but not defined shall be given the meaning
assigned to them in the Lease.



2. Neither the Landlord nor the Tenant is in default or breach of the Lease; nor does a condition
exist that with the giving of notice or passage of time would constitute a default by Landlord;
there is no pending litigation between the Landlord and the Tenant; and Tenant has no claim against
Landlord.



3. Tenant is currently obligated to pay the base rental in the amount of $                                        
per month;
further, additional rental pursuant to the Lease is payable as follows: Tenant pays its pro-rata
share of operating expenses in excess of $                                         and real estate taxes in excess of
$                                        ;



4. Tenant has paid the monthly rental required under the Lease through                                         .



5. The term of the Lease commenced on                                         . The Rent Commencement Date was
                                        . The Lease will terminate on                                         . The Tenant has no option to
terminate or cancel the Lease. The Lease provides for the following extension option (if none,
please state “none”):                                         .



6. There are no offsets or credits against any rentals payable under the Lease and Tenant has made
no payment to Landlord as an advance or prepaid rental.



7. Tenant has deposited $                                        
as security deposit under the Lease.



8. Tenant has no option right or right of first refusal to purchase the Leased Premises or the
Premises or any portion thereof.




 









 




9. Landlord has performed in all respects all of Landlord’s obligations with respect to the
performance of work or installation of equipment, and Tenant is not entitled to any tenant
improvement allowance after the date hereof.



10. Except as may be otherwise provided in the Lease, the Tenant is not entitled to any rental
concessions or abatements.



11. Tenant has not transferred, assigned, or sublet any portion of the Leased Premises nor entered
into any license or concession agreements with respect thereto except as follows (if none, please
state “none”):                                         .



Tenant makes this statement for the benefit and protection of the Seller, Purchaser, its successors
and/or assigns, and/or Purchaser’s lender, with the understanding that such parties intend to rely
upon this statement in acquiring the Premises and/or making a loan to Purchaser.




 









 




IN WITNESS WHEREOF, Tenant has executed this Tenant’s Estoppel Certificate as of the date first
above written.




	 	 	 
	 
	 	 
	 

	 	TENANT:
	 
	 	 
	 

	 	 





 









 





TABLE OF CONTENTS




	 	 	 	 	 	 	 
	 	 	 	 	Page
	SECTION 1.
	 	PURCHASE AND SALE	 	 	1	 
	1.1
	 	Purchase and Sale	 	 	1	 
	1.2
	 	Land	 	 	1	 
	1.3
	 	Improvements	 	 	1	 
	1.4
	 	Personal Property	 	 	1	 
	SECTION 2.
	 	PURCHASE PRICE	 	 	2	 
	2.1
	 	 	 	 	2	 
	SECTION 3.
	 	DELIVERIES, INSPECTION AND REPRESENTATIONS	 	 	2	 
	3.1
	 	Delivery Obligations	 	 	3	 
	3.2
	 	Inspection Period	 	 	3	 
	3.3
	 	Title and Survey	 	 	5	 
	3.4
	 	Purchaser’s Representations and Warranties	 	 	6	 
	3.5
	 	Seller’s Representations and Warranties	 	 	8	 
	3.6
	 	Tenant Estoppel Certificates	 	 	10	 
	SECTION 4.
	 	ACCEPTANCE OF PROPERTY	 	 	11	 
	4.1
	 	“As Is”	 	 	11	 
	4.2
	 	 	 	 	12	 
	SECTION 5.
	 	CLOSING	 	 	12	 
	5.1
	 	Closing	 	 	12	 
	5.2
	 	Possession	 	 	12	 
	5.3
	 	Proration	 	 	13	 
	5.4
	 	Closing Costs	 	 	14	 
	5.5
	 	Seller’s Obligations at the Closing	 	 	15	 
	5.6
	 	Purchaser’s Obligations at the Closing	 	 	16	 
	5.7
	 	Property Management Agreement	 	 	16	 
	SECTION 6.
	 	RISK OF LOSS	 	 	17	 
	6.1
	 	Condemnation	 	 	17	 
	6.2
	 	Casualty	 	 	17	 
	6.3
	 	Uniform Vendor and Purchaser Risk Act	 	 	18	 
	SECTION 7.
	 	DEFAULT	 	 	18	 






 









 





	 	 	 	 	 	 	 
	 	 	 	 	Page
	7.1
	 	Breach by Seller	 	 	18	 
	7.2
	 	Breach by Purchaser	 	 	18	 
	SECTION 8.
	 	FUTURE OPERATIONS	 	 	18	 
	8.1
	 	Maintenance and Contracts	 	 	18	 
	8.2
	 	Leasing	 	 	19	 
	SECTION 9.
	 	MISCELLANEOUS	 	 	19	 
	9.1
	 	Notices	 	 	19	 
	9.2
	 	Real Estate Commissions	 	 	21	 
	9.3
	 	Entire Agreement	 	 	21	 
	9.4
	 	Amendment	 	 	21	 
	9.5
	 	Headings	 	 	21	 
	9.6
	 	Time of Essence	 	 	21	 
	9.7
	 	Successors and Assigns; Assignment	 	 	22	 
	9.8
	 	Invalid Provision	 	 	22	 
	9.9
	 	Attorneys’ Fees	 	 	22	 
	9.10
	 	Multiple Counterparts	 	 	22	 
	9.11
	 	Exhibits	 	 	22	 
	9.12
	 	Construction	 	 	22	 
	9.13
	 	No Recordation	 	 	22	 
	9.14
	 	Merger Provision	 	 	23	 
	9.15
	 	Jury Waiver	 	 	23	 
	9.16
	 	No Personal Liability of Officers, Directors, Etc. of Seller	 	 	23	 
	9.17
	 	Choice of Law; Submission to Jurisdiction	 	 	23	 
	9.18
	 	Non-Solicitation of Employees	 	 	23	 
	9.19
	 	Access	 	 	23	 
	SECTION 10.
	 	ESCROW PROVISIONS	 	 	24	 
	10.1
	 	 	 	 	24	 
	10.2
	 	 	 	 	24	 
	10.3
	 	 	 	 	24	 
	10.4
	 	 	 	 	25	 






-ii-









 





PURCHASE AND SALE AGREEMENT




by and between




PATRICK HENRY ASSOCIATES, L.P.




as Seller




and




COLUMBIA EQUITY TRUST, INC.




as Purchaser